High Wire Act: Building Brand Value During an M&A Transition

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E x E c u t i v E P E r s P E c t i v E

Mike Taylor, Executive Director, Strategy & Research, Interbrand

Jean Campbell, Brand Identity Director, Interbrand

Rhonda Hiatt, Director, Interbrand Design Forum

Scott Lucas, Executive Director, Interbrand

Dyfed “Fred” Richards, Global Executive Creative Director for Consumer Packaged Goods, Executive Creative Director, North America, Interbrand

When brands merge or are acquired, a collaborative approach to rebranding encourages teamwork and leverages knowledge and expertise.

23© 2012 The Design Management Institute

differences, exploit synergies, and cre-ate a design framework that promotes innovation and additive brand value… crossing the high wire from what’s now to what’s next.

M&A branding and design challenges

When two or more brands join forces through a merger or acquisi-tion, their owner can leverage the brands’ combined competencies to reach more and/or new consum-

to rebranding. However, a rush to rebrand can cause the brand to tumble in value and consumer loyalty. Far better to carefully place one foot in front of the other and traverse the wire a step at a time.

Adopting an integrated, collab-orative approach to rebranding during and after an M&A transition—one that synthesizes strategy, design, and implementation across former and new brand owners and their agen-cies—can help to balance corporate

A corporate merger or acquisition can generate unique branding and package design needs and challenges, particularly during the transitional period when the new entity and its brands are being readied for their market debut. It’s analogous to em-barking on a trip across a high wire. Many companies try to scurry across, quickly folding a new asset into an existing corporate template and adopting a “just repaint the store walls and put up new signage” approach

High Wire Act: Building Brand Value During an M&A Transitionby Scott Lucas, Dyfed “Fred” Richards, Mike Taylor, Jean Campbell, and Rhonda Hiatt

Design collaboration

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balance sheet but not in front of a shopper. Any time there is a change that affects what shoppers are used to seeing in the retail environment (whether in-store or online), they can get confused. How can companies avoid losing or turning off consumers with new branding offers?

To mitigate these common M&A branding and design challenges, new brand owners should carefully choose

their steps along the high wire. Based on Interbrand’s experience, we suggest that companies move forward using an integrated and collaborative approach that consists of the following:

portfolio and brand analyses; con-sumer, shopper, and design research; and strategic design.

Portfolio and brand analyses

A sure-footed start to brand owner-ship involves examining the expanded portfolio under a strategic lens through a market, brand, and busi-ness audit (Figure 1). Are the brands targeted to different consumer seg-ments? Same segment but different price points? What is the role of each brand in the portfolio, and where does the company want to take them? While conducting this analysis, be

resources, the premium position-ing with retailers?

Unfocused opportunities: Under its new owner, a brand likely will have access to different innova-tion processes, distribution chan-nels, and consumer segments. Which opportunities are the right ones to support/pursue?

Global-local issues: Many of the brands at the center of current M&A activity are either global or being purchased by global orga-

nizations. What happens when a brand is acquired by a foreign company that has a limited view of the specific market dynamics under which the brand operates?

Design dilemmas: Mergers and acquisitions can generate design issues for newly melded brands. For instance, which will be the master brand on packaging, in store environments, and in digital applications? Which verbal and visual language should be retained, which discarded?

Shopper confusion: A merger or acquisition might add up on a

ers, enhance reputation, enter new channels or businesses, increase price premiums, and protect itself from competition. However, to at-tain these end-game benefits and, ultimately, enhanced brand value, the company typically has to step over some significant branding and design challenges that, if left unresolved, could impede its efforts to deliver on a great new brand promise. Among these challenges are:

Ownership hand-off: When a brand moves from one com-pany to another, who determines its future? Who serves as the brand’s advocate, the seller or the buyer?

Lost history: The original owner (and its agency) holds the history of its brand, and more important, the history of market-ing the brand—what was tried, what worked, and what failed. Who will preserve (and leverage, as opposed to repeat) that history post-M&A?

Internal competition: Upon the completion of a merger or acqui-sition, there may be a number of brand owners (new and old) jockeying for executive atten-tion. Which brands in the newly expanded portfolio will get the biggest budgets, the best agency

To mitigate these common M&A branding and design challenges, new brand owners should carefully choose

their steps along the high wire.

H igh Wire Ac t : Bui lding Brand value D uring an M&A transit ion

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it moved some of the Lipton food products to the Knorr brand, allow-ing Knorr to become a global culinary masterbrand and Lipton to focus its consumer promise on beverages).

consumer, shopper, and design research

At Interbrand, we firmly believe a company’s most valuable asset is its brands. As such, brands are often the driver of an acquisition or merger. The draw is the equity, credibility, stretch potential, and consumer base that come with the acquired brands. Also, the umbrella or halo of these new brands can provide a lower-risk platform for introducing new brands and products. The watch-out is to make sure that each brand’s new role in the overall portfolio isn’t based on newly acquired operational advan-tages and an instant revenue bump, but rather on a true understanding of shoppers and consumers, as well as on insight into their unmet needs.

Consumer, shopper, and de-sign research—typically provided by a branding agency’s strategy and research group—can offer strategic insights to support a company’s post-M&A rebranding process, promote innovation, and build brand value. The outside perspective that research provides can function as a safety net that allows companies to take risks

individual brand analyses is the all-important question: Where will the company invest going forward? Typically, some brands’ strategies and budgets will change because the com-position and dynamics of the overall portfolio are different. Options include merging two existing brands into one master brand (for example, Procter & Gamble merged Top Job into Mr. Clean); co-branding two brands for a period of time, then merging them into one (for example, the Federal Ex-press and Kinko’s merger was initially co-branded as FedEx/Kinko’s and is now FedEx Office); or using the newly expanded portfolio to redis-tribute products to different brands with more-relevant consumer brand promises (for example, after Unile-ver’s acquisition of the Lipton brand,

sure to continue managing both exist-ing brands and the newly acquired brand as singular assets. Do not diminish any brand’s equity assets, and be careful to maintain all brands’ current level of marketing support. Any changes may affect a brand’s financial value and, thus, the value of the overall portfolio.

Next, examine the value of the individual brands. Pertinent ques-tions include: Is there anything to be gained by consolidation or, conversely, by pushing brands further apart? Who are the targeted consumers? What has been the brand’s growth over the past five years? What is the overall financial health of the brand? Where does it stand against other brands in the category?

Following the portfolio and

Figure 1: Market, Brand and Business Audit Framework

Organizational/Brand Values & Capabilities

Customer Needs andDrivers of Demand

Organizational/Brand VisionMarket Opportunities

“SWEET SPOT”

Current

Future

BRAND POSITIONING


Organizational/Brand Values & Capabilities

Customer Needs andDrivers of Demand

Organizational/Brand VisionMarket Opportunities

“SWEET SPOT”

Current

Future

BRAND POSITIONING

© 2012 Interbrand. All rights reserved.


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when exploring new territory with consumers, shoppers, and brand stakeholders.

Quantitative and qualitative research can help to answer im-portant questions such as: What shared qualities do the brands hold in consumers’ minds? What does each brand uniquely bring to the new equation? Which equity assets from each brand have powerful mean-ing and should be retained? Which consumer behavior and marketplace trends might contribute to brand

growth and shrinkage? Strategic research can help a company decide whether to consolidate, push apart, or merge brands—and at what pace—to achieve the desired end state.

In addition, research such as Interbrand’s Customer Journey Map-ping can help a company understand where a consumer and shopper is having the most relevant interaction and connection with a brand, whether it is online, via advertising, or in the store. By mapping the journey from brand awareness through purchase

(Figure 2), it is possible to answer the important question: What is the best way to communicate with the cus-tomer to circumvent any confusion or frustration that may result from post-M&A rebranding? This will give the new brand owners a clear view of the shopper and consumer as a com-mon reference point throughout the journey.

strategic design

Strategic design can enhance post-M&A brand value and consistency,

Impo

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ce

Consumer Journey

Figure 2: By understanding the customer journey, we can increase productivity of the story

Actual

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Figure 3: If managed well, brands shoulddeliver three things…


H igh Wire Ac t : Bui lding Brand value D uring an M&A transit ion

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from innovation mapping through packaging to the retail experience. Building on consumers’ inherent ac-ceptance of the familiar can earn their trust when introducing new brands and products; therefore, it is impor-tant to balance the desire to develop a compelling new identity and design language with the need to leverage existing brand equities that can keep a newly acquired brand centered over its base of (consumer) support.

Avoid the temptation to make immediate, wholesale design changes when undergoing an M&A-induced rebranding, particularly if mul-tiple brands have been added to the company portfolio or if consumers have strong favorable perceptions of a particular brand. Changing visual equities should be approached in an evolutionary rather than revolution-ary manner; defining each brand’s key equities to determine what they have in common, as well as how their differences can complement each other, is a critical and important step. If multiple brands are being merged into one, the goal should be to use the strongest equities of each in a way that supports development of a new design language that is recognizable by the consumers of each brand. For example, while AT&T ultimately decided to retire Cingular’s Jack icon after acquiring the brand, it did adopt

Cingular’s core color equity of orange to help welcome Cingular customers to the new organization. After a sig-nificant amount of research and work by Interbrand’s strategy team, it was determined that Cingular’s orange was a perfect fit for the next genera-tion of the AT&T brand expression.

Ways to foster branding and design collaboration

Interbrand has seen many mergers and acquisitions in which valuable brand equity, assets, and insights are lost or discarded in the post-M&A transition. One common cause is the restriction of information between the previous and new brand owners’ agencies. Typically, numerous confi-dentiality restrictions exist during an M&A transaction and agency interac-tions are off-limits, so the incoming agency isn’t privy to the historical knowledge that the outgoing agency has accumulated. Inheriting a brand and having to evaluate whether its eq-uities are being used correctly is chal-lenging when no historical references are available and the information flow is restricted.

Collaboration and the effec-tive transfer of knowledge between outgoing and incoming agencies can prevent this pitfall and place the brand on solid footing in its new home. The incoming agency can offer

a fresh look at the category, consum-ers, competition, and brand, while the outgoing agency can provide a valuable historical perspective. It knows which brand equity elements are sacrosanct and which can be safely reworked or discarded. Brands with strong equities that score high in consumers’ minds can experience a decrease in loyalty if those equities aren’t respected during a rebranding. Both agencies’ brand identity manag-ers should serve as arbiters during the transition, encouraging new perspec-tives while ensuring that core equities aren’t compromised during the design strategy and execution process. This requires a certain amount of steel in decision-making, with sensitivity to what the consumer considers equity, what the company considers an asset, and what the agency considers an in-novative design.

Brand asset management should include robust brand identity guide-lines and asset distribution controlled by a single source to help ensure consistency and eliminate duplication (that is, multiple agencies creating or recreating the same elements). Also, if multiple branding and design agencies are retained after a merger or acquisition, leveraging existing brand assets and defining clear ownership among agency partners can streamline design efforts and reduce the creative


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acquiring company should give the lo-cal offices of their new brands leeway when it comes to regional executions, providing comprehensive brand guidelines and other design templates can keep the brand on equity.

safely on the other side

People love brands, and love is not a rational thing. Consumers have relationships with “their” brands, as evidenced by women’s affection for the cherry-almond smell of Jergens lotion and the rabid loyalty of Guin-ness drinkers. It is possible and, at times, easy to alienate core consumers if, as a result of a merger or acquisi-tion, a company tries to foist a new or dramatically overhauled brand upon them—particularly if it replaces a favorite, routine, or trusted brand. It is essential, therefore, that companies deeply understand and tap into both the functional and the emotional benefits that drive consumer loy-alty for a brand before undertaking major branding changes (Figure 3). Also, don’t rush the process, leaving consumers anxiously waiting to see if a beloved brand makes it to the safety of its new platform. Balancing branding and design needs during an M&A transition should proceed step-by-step, carefully traversing the wire to enhanced brand value. n Reprint #12231LUC22

a jointly developed, 360-degree view of strategic, graphic, and structural possibilities and accompanying guide-lines. Most important, the process en-sures that the client, partner agencies, and Interbrand disciplines are aligned prior to creative exploration and have success criteria to reference during the design process.

Collaboration can also help to reduce cross-border design chal-lenges. Interbrand’s work on global brands has taught us that even a well-executed plan for an optimal mix of global brand equities and regional customization must vary from region to region. It is imperative that an organization start with a strong brand strategy that, despite regional execu-tion nuances, still delivers against the brand proposition. And although the

and production costs associated with multiple agencies.

Collaboration is essential when multiple agencies are asked to partner on post-M&A branding and design initiatives. Interbrand regularly partic-ipates in such projects. To encourage teamwork and leverage each agency’s knowledge and expertise, we use a collaborative design process called Pointing North. We gather client stakeholders, agency partners, and representatives from each of Inter-brand’s four disciplines—strategy and research, account management, design, and implementation—in a room to identify what project success looks like, explore each direction of a creative compass (hence Pointing North), and evaluate the results. At the session’s conclusion, the team has

Drive choice

Command premium

Engender loyalty

Figure 3: If managed well, brands should deliver three things...



Figure 3: If managed well, brands shoulddeliver three things…


High Wire Act: Building Brand Value During an M&A Transition

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