Importance of Strategic Branding in Inorganic Organizational Growth

Debiprasad Mukherjee | September 30,2014 01:34 pm IST

Brand is a strategic asset that needs to be managed. This is an increasingly important issue for businesses that favor or have favored inorganic growth strategies.

To ensure optimal strategic value from the brands they are buying and selling, just calculating brand value does not suffice.

They need a process for integrating brand and corporate finance M&A practices and for determining how to brand the acquired company and how to manage the migration of the brand to the new company. Also the impact of brand planning from the perspective of customer's perception, employee motivation, organizational goal & cultural aspect are key issue to be analyzed. The ultimate goal is that customers remain happy and loyal to the brand. This article helps to equip acquiring companies with a guidance or framework for incorporating brand evaluation and brand strategy into the M&A transaction process. It helps non-marketers and marketers alike better understand how to conduct marketing due diligence before the deal; think about brand strategy in the context of a portfolio; establish brand migration plans to help maximize the value of brand in the deal. Don't think legal & financial factors are the penultimate; Brand management and associated planning has equal impact; only difference lies in terms of tangibility. And intangible assets like brand and culture driving much of the corporate value in the 21st century business arena.

Today, inorganic organizational growth that arises from mergers or takeovers is one of the hot topics. Strategic decisions are grounded in geographic / footprint expansion, product / service / competency diversification, and brand leveraging. Companies for a long time now have readily adopted this route to business domination and market leadership. Examples of glorious and often controversial M& As are galore in the business world - Procter and Gamble's acquisition of Gillette, Adidas's merger with Reebok, Mittal Steel's merger with Arcelor, HP's merger with Compaq, Tata Steel merger with Corus, Nike with Umbro and the list goes on.

While businesses clearly address the associated legal and financial issues, they often ignore a critical component-brand management. Effective brand management requires an integrated approach to ensure consistency of your corporate message and identity throughout all aspects of your business. Without careful brand management, your M&A effort is vulnerable to failure. Nearly 50% of all mergers fail to sustain or bolster shareholder value.

Merged / Acquired organizations are so much focused on financial plans and strategy but often overlook the importance of proper branding strategy. Due to the lack of vision of highest management, due to the carelessness about brand importance realization, due to scarcity of Brand-expert professionals in the organization brand management frequently overlooked in the M&A process. In most of the cases, branding for a new born (after merging) organization means a new name for the company. That's it. But ultimately it matters a lot in long run.

Improper planning regarding the brand may cause the following problems:
Inconsistent brand management.
Lower Brand equity.
Communication confusions.
Company image loss / brand dilution / devaluation in the market.
Decrease of employee morale decreases.
Increase of employee turnover.
Loss of customers confidence.
Customer Churn and gain for competitor.

Hiring an outside brand management strategist can bring dedicated resources and an independent perspective to the process. Or an organization can plan to build a dedicated team to focus on branding issues and led by highest level of management (CxO). All successful companies make brand management a cornerstone in their overall M&A strategy. By incorporating brand management in the early discussions around a merger or acquisition, your organization will come out stronger and more focused. Best of all, shareholders, clients, employees and the public will remain loyal to your brand. Brand is not an event but a process. A brand management strategy ensures that your business can withstand the challenges associated with M&A, both today and through future market fluctuations.

Considerations During Pre merger Brand Strategic Planning
M&A effort requires a significant investment in time and money. At this critical juncture, take into careful consideration one of the most critical aspects of this effort - your brand. Addressing brand management as an integral part of the merger or acquisition process will help ensure your company's success and competitive edge in the marketplace.
Feel the essence of business before starting any brand strategic planning.
Brand planning should not only focus on the business domain and nature but also encash the customer perception.
Perform SWOT / TOWS analysis to broadly identify the factors and actors.
Marketing communication initiatives for the company. Marketing communication should be smart.
Evaluation to avoid devaluation of branding with quantitative as well as qualitative brand equity analysis.
Survey internally and from external experts to analyze the best possible nomenclature.
Assess brand expansion/elimination possibilities.
Communicate the merger to employees, clients, shareholders and the public. Brand policies and guidelines as well as training and compliance are critical in helping employees understand and effectively communicate the new brand.
New Brand strategy should support the cultural harmony among the merged entities.

This is important for the deal makers in mergers and acquisitions to feel what the organization's brand strategy is prior to cutting the deal. Usually they don't have a clear understanding of what the value of that brand is over time, they may claim a larger value than the brand really has.

With intangible assets driving much of the corporate value in the 21st century, identifying the value of a brand and specifically its equity as an "intangible asset" on the balance sheet is critical to M&As. In most of the cases, branding agencies are called in post-merger(s) to sort out the jambalaya of brands collected from both big and small acquisitions. Intangible assets often outweigh the tangible. Coca-Cola's market capitalization of US $ 112.5 billion is 91 percent intangible assets. That adds up to US $ 102 billion tied up in the brand, strength of management, and patents. (Source: Interbrand's World's Most Valuable Brands study).


Debiprasad Mukherjee is a Business Process Management Consultant in IT Telecom domain. He has experience of working with Siemens, IBM, Tech Mahindra in India and abroad. He holds Post graduation in Management from Indian Institute of Social Welfare & Business management, India with Marketing and HR Management as ...