Looking back over the chequered past of corporate mergers and
acquisitions, one confronts a striking variety of justifications. The
claimed benefits, though many, were generally either internal, those
related to organizational synergies and expected savings, and external,
those involving a more coherent and persuasive presentation to the market.
However just as striking as the plethora ofclaimed benefits is the disparity in
available measures to determine success.
A great deal of attention has been focused on assessing the “inside” benefits—
not only the systems, structures, and resources to be rationalized and better
exploited, but also the people and organizational cultures that have to be
meshed together.1 Correspondingly little attention, however, has been paid to
the“outside” factors—ways to assess the market benefits in terms of brand
architecture and strategy. Decisions on brand mergers have by and large tended
to follow rather than lead with regard to internal decisions.
Not surprisingly, such a reactive approach can be deeply damaging. At
best, it results in confusion and conflict among brand managers who hold differing
views regarding the merged firm’sbrand mandate. At worst, it results in turf
wars between rival managers about who owns the “top” post-merger brands.
Alternatively, brand managers can find themselves caught up in a post-merger
fever to reach ambitious revenue targets in order to allay market fears over the
merger. The result, all too often, is a slash-and-burn strategy involving a single
“winner” brand that seriouslycompromises customer expectations, employee
morale, and long-term competitiveness.
The most damaging response, however, is to do nothing at all, allowing
the pre-merger brands to go their separate ways in the pious hope that the market
will settle the brands merger issue one way or another. This tactic rarely
28 CALIFORNIA MANAGEMENT REVIEW VOL. 48,NO. 4 SUMMER 2006
after MergersKunal Basu
leaves the merged firm better off. The expected synergies of a merger can easily
turn into a nightmare if the joined up sales force finds itself having to sell
incompatible product lines that straddle vastly different brand positions, including
both up-market and down-market brands within the merged portfolio.2
In the absence of a clearly defined strategy, brand mergers are toofrequently
driven by short-term goals or by personal agendas leading to mistrust
and failure. A recent report claims only one in five brand mergers succeed.3 Several
U.S. studies have found that the larger the target firm acquired, the greater
the percentage loss in terms of market share after acquisition.4 Clearly, something
more strategic than an adaptive response is needed to harness the marketpotential of a merger. A clear branding strategy is vital in both directions: managing
marketplace perceptions given the strategic intent of the merged firm as
well as motivating the internal stakeholders (the managers and employees) to
align their efforts behind a common set of goals.
Such a strategy should take into account issues and options involving
both the corporate brand and thespecific product brands. It should also define a
suitable brand architecture, i.e., the desired relationship between brands within
the merged portfolio. Clear decisions on the four key aspects of branding strategy—
corporate branding, product branding, brand identity, and brand architecture—
provide a robust underpinning for successful brand mergers.
Strategies for Integrating Corporate Brands
Acorporate brand has many constituencies. Externally, among customers,
it guides the formation of image and expectations. Generally, for firms that are
present in a variety of product markets, the corporate brand stands for overarching
consumption values (e.g., reliability and hi-tech for Yamaha, which serves
product markets as varied as concert pianos and motorcycles). Similarly, a...
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