In the last installment in our Brand Architecture series, we addressed how mergers and acquisitions often serve as a survival strategy for brands across the consumer landscape. In this fast-paced environment, brands may be tempted take the path of least resistance with their brand architecture, allowing their acquired entities to run independently with little alignment to the parent brand. Yet, it’s those brands that take the time to strategically and holistically address their structure that achieve the greatest brand success. In our third article on brand architecture essentials, we are exploring the critical questions to ask to inform decision-making around structures that will help future-proof your brand.
Following M&A, one of the first crucial questions to ask is whether the audience for the parent and acquired brand is the same. Most brands undergo a merger or acquisition to expand and enhance their reach to new audiences. This can mean that they enter a market for the first time or reach a different demographic after merging. If the answer to this key question is that there is significant overlap geographically – like a retail store or bank branch in the same market – or if the ideal persona for each brand is quite alike, the parent brand should question the wisdom of operating with an affiliate model.
The next key question after an M&A is whether the two merging brands have different brand promises. Is each brand providing a good or service that is distinctive? And if not, is there geographic separation between the two brand’s service areas? That means that if each brand’s good or service is comparable, but separated geographically – like between cities, states or regions – then there may be a case for separate brands. Although, if there is a benefit to the parent brand demonstrating increased threshold and scale thanks to the merger, then one should consider unifying under the parent banner.
Diving even deeper into geographic areas, a crucial consideration after a merger is whether you have distinct geographic areas and you are intentional about keeping them that way. In healthcare, for example, you may have clinics in a large metropolitan area, but not in other cities across the state. Here though, the healthcare brand likely merged to get a foothold in new markets – in other words, expansion – so there is likely little to any strategic advantage for keeping the previous brand other than name recognition. Geography alone is usually not enough to justify a multiple brand structure.
In financial services, many banks are using M&A to expand their customer base and achieve a certain threshold of scale. Gina Bleedorn, CXO at Adrenaline, says, “Most banks and credit unions use statewide service as their benchmark for scale. That’s because that’s the size that consumers are looking for in a bank. If you answered yes to the key questions, your financial institution might be a candidate for successfully operating under either an Endorsed Brands or a Sub-Brands model, but you’d need a strong strategic case because of the operational inefficiencies involved with multiple brands.”
With successful unified brands, merged entities coordinate their activities around a singular brand purpose and promise, reaching distinct audience demographics and geographics. This focused effort gains power and prominence thanks to holistic branding and marketing, reaffirming the brand in the minds of consumers. While there may be complexities in managing an identity change, these challenges can be managed through purposeful strategy and thoughtful execution. In the long run, a singular brand clearly communicates strength and provides scalability for future acquisitions and growth.
In an upcoming article our the Brand Architecture series, we will address a real-world example of a financial services brand that had separate state and regional institutions operating under a House of Brands model and their decision to unify under a singular brand. How this institution addressed internal and external stakeholder concerns is a case study in change management. To speak with one of brand or M&A experts, contact us at email@example.com.
Adrenaline is an experience design agency that creates and implements end-to-end branded experiences through creative and environmental design. We enhance our clients’ customer experiences across digital and physical channels, from their branding and advertising to design and technology in their spaces. After transforming an organization’s brand, Adrenaline extends it across all touchpoints — from employees to the market to in-store environments. And, we focus on serving industries that sell human experiences including financial, healthcare, sports and entertainment.