Many organizations have acquired brands and kept them, temporarily or permanently, under their original brand. In order to make an informed decision on if, when, and how to migrate, a thorough study should be conducted. The overall brand architecture should be at the foundation of this study. This strategy is always directly derived from the business goals. The aim of this assessment is to give a clear understanding of the risks and opportunities and to help determine which migration strategy is more suitable for the organization.
Focus On Brand Migration
Brand change as a result of acquisitions isn’t always applicable. In most cases, the brand change process begins with an initial phase that provides guidance and understanding on how to manage the branding aspects of new acquisitions, specifically on:
- Considerations for migrating new acquired businesses to the masterbrand—a specific overarching brand name that serves as the main anchoring point on which all underlying products are based (Investopedia 2017)
- Review of different brand migration scenarios for new acquisitions
- Assessment of the best migration scenarios
- How to get organized for the chosen scenario
Reasons To Migrate
As a general rule, intangible assets are a big portion of the value of M&A deals and, in most cases, brands account for a major part of those assets.
Considering the migration of a new acquisition’s brand will depend primarily on how well it fits within the existing brand architecture and strategy. That said, it helps to keep these facts in mind when migrating a newly acquired company to the masterbrand:
- Consolidating brands is a smart way to increase the main organization’s market share and realize value
- Migrating allows for the transfer of the acquired company’s brand equity to increase the overall brand value of the masterbrand
- Migration makes sense if the brands belong to a sector where marketing costs may be high and the potential for generating value through segmentation is low; all marketing support will be focused on one global brand with one positioning
- Synergies and more coherent customer experiences can be created
- Bigger, global brands attract more employee talent than local, less well-known brands
Reasons NOT To Migrate
Any of the factors listed below may seem to be insufficient reasons to keep the newly acquired brand separate from the masterbrand. However, they can bring greater complexity to the feasibility of the migration and influence the approach needed to minimize risks.
Grounds to refrain from a brand migration or an aggressive timeline:
- Loss of brand equity of the newly migrated company is possible due to its strong position in specific local markets
- Withdrawing well-known brands that people love could result in a loss of customers and market share
- Acquired company offering does not fit with the masterbrand positioning and/or segmentation
- Quality and/or price of the acquired company’s products is not within the main organization’s market segment
- Acquired company has a strong brand culture which will bring internal challenges as a result of the migration
Contributed to Branding Strategy Insider by: Marc Cloosterman, CEO, VIM Group. Excerpted and adapted from his book Future Proof Your Brand.
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