A brand's identity is its outward appearance and reputation to consumers; typically, it includes visual aids like logos, slogans, and the reputation that brands cultivate within the community.
Some classic and readily identifiable brand identities are attached to companies like Coca-Cola and Ben & Jerry's. You read the words "Coca-Cola" and visualize their iconic red packaging, the unique shape of a Coke bottle, and taste crisp bubbles on your tongue. Ben & Jerry's brand identity is different. This iconic ice cream brand is known for imaginative flavor names, social activism, and the personalities behind the name itself.
What are the Different Elements of Brand Identity?
There are endless possibilities for brand identity elements, and selecting the appropriate combination can make or break a company's consumer base. Think about what separates Keurig users from Nespresso users – Keurig's mission statement aims to put "a Keurig brewer on every counter and a beverage for every occasion."
Nespresso's mission statement is "A cup above." They're both selling single-serve coffee makers, but Keurig casts a wide net, and Nespresso aims to capture a more elite consumer base. It may not be that each brand's consumers are incompatible, but rather that they can't afford the other or see the brand as elitist.
Many critics of Starbucks name their high prices as the reason they don't spend money at the coffee giant. If 7-Eleven started to serve Starbucks coffee for $6.00 per cup, it's likely that their consumers, even if they could afford the price, would go elsewhere for their morning cup of joe.
Why is a Brand Identity Important for a Company?
Brand identity is crucial in capturing a consistent consumer base and creating both repeat consumers and recommendation chains. A distinct identity sets a brand apart from the many other products and services on the market.
There are entire aisles in grocery stores dedicated to breakfast cereal – what makes a parent choose Pops instead of Kix? Is it brand recognition? The appeal of the packaging? Or how do these brands advertise to children, who persuade their parents? Differentiation is the key to success in a market saturated with copycat products and generic grocery store "dupes." If consumers weren't loyal to brands, generic grocery store substitutes would become market kings.
Brand Identity to Attract and Keep Customers
After a product is differentiated, why do consumers keep coming back? Consistency and loyalty. You know that a bottle of Heinz ketchup will taste the same every time you purchase it because Heinz has promised you that much. Consumers become attached to the identities of their favored brands – they see the brand's values as their own values. Often, sports fans will say, "We won the championship." These consumers align themselves so closely with their favorite "brand" of sports teams that they lump themselves in with the brand itself. I know my neighbor is not a Dallas Cowboys football player, but how he speaks about the team begs to differ.
Brand Identity and Business Practices
Over the last ten years, consumers have become increasingly concerned with the business practices and political actions that corporate entities are taking. Certain political parties call for boycotts of brands based on whether or not they label them as "woke” while other groups call on boycotts of those same brands because they donate to causes that are not aligned with their own political values.
What Risks Exist to an Established Brand Identity in a Merger/Acquisition Situation?
The first and most obvious risk in acquiring or merging with an existing brand is the alienation of the consumer base. Especially in cases of mergers, changing the brand identity begs the aphorism, “if it isn't broke, why fix it?”
Imagine a scenario where Delta Airlines merges with Southwest Airlines. What would this theoretical DeltaWest Airlines present itself to be moving forward? A cheap, speedy alternative to the stress of air travel, or some “purpose beyond flight?” These two brands would need help reconciling their identities despite offering almost the exact same services.
Recognizing Consumer Base
However, Patagonia and Olipop would have a much easier time blending their consumer base. Patagonia’s mission statement focuses on integrity and justice, and Olipop aims to adapt and respect the environment and nutrition. Yes, Patagonia is a clothing retailer, and Olipop is a soda alternative, but their identities are uniquely intertwined. They could easily project themselves as improving life from outside the body and inside the body.
Tropicana – An Example of Broadening an Identity Too Far
Alienation of consumers is not the only risk in blending brand identities. Broadening an identity too far can untether a product from its spot in the marketplace. Tropicana refreshed its image in 2009 by removing the longstanding logo of an orange with a straw from its packaging. The orange juice carton sported a glass of orange juice and a rounded cap for only 30 days before sales plummeted enough to urge some backtracking. Sales crashed, and much of this was attributed to consumer confusion – grocery shoppers thought that the carton they saw was the generic version of their beloved juice brand.
Tropicana's mistake was eliminating their consumer's ability to identify their products – change isn't necessarily bad, so long as consumers can still recognize their trusted brand partners.
What are Some Red and Green Flags to Look for When Deciding to Merge With or Acquire Another Company?
As discussed above, the most important consideration regarding brand identity when planning a merger or acquisition is determining whether the values of the two brands match. Can ExxonMobile reconcile its image with National Geographic? Probably not. However, Walmart and Kirkland Signature Products could blend their reputations effectively.
Daimler Benz and Chrysler
A perfect example of a merger that did not consider consumer status is the Daimler-Benz/Chrysler merger in 1998. The plan was to create a car company that was a worldwide force in the market. Instead, Daimler Benz found it nearly impossible to reconcile Chrysler's culture and consumer demographic with their own high-end consumer base. The people purchasing a Mercedes-Benz in Berlin, Germany, were incongruous with people buying a Chrysler Sebring in St. Louis, Missouri.
Look at the consumer bases for each company – are they similar in age, income, and/or lifestyle? A fitness brand's consumer base probably wouldn't buy into a merger with a fast-food franchise. Their values may not be in direct conflict, but the demographics they appeal to are.
Taking into Account Each Company's Marketing Strategy
The marketing strategy for each brand could also affect the success of a merger. Take Krispy Kreme, for example; they don't invest in traditional means of marketing like television commercials or sponsorships. Dunkin Donuts, however, employs the most conventional forms of marketing to lure customers in for a treat. These two companies sell the same things, yet their strategies are incredibly disparate. Brands that rely on word-of-mouth and recommendations to grow their consumer base would lose that valuable chain of growth if they suddenly promoted their products through traditional means. It's the "I listened to that band first" effect. Once something becomes mainstream, consumers who identify as unique don't want it anymore.
How Do You Establish a New Brand Identity Post-M&A?
There are several ways to establish a new identity post-M&A.
Keeping Identities Separate
The first is to keep the identities separate. Proctor & Gamble owns over 30 brands over a spectrum of products, but consumers don't identify these brands with P&G. Over the years, each brand that has been acquired has kept its unique identity intact. A consumer may be a Tide loyalist, but Bounce, Gain, and Downy fans are all contributing to the same pockets.
Brands can also blend their identities. Take Sirius and XM Radio, which merged in 2008. Now known as SiriusXM, it's hard to imagine a world where these two services existed separately. This is partly due to how similar these two brands were before merging. The more closely aligned the values and consumer bases of the two merging companies are, the more likely a blended rebranding approach would be successful.
Absorption is also common. Disney acquired Pixar in 2006 to usurp Pixar's advanced editing and creative advantages. After this merger, Pixar essentially ceased to exist. Movies like Luca, Ratatouille, and Wall-E were released as "Disney Pixar” films, but the enormity of the Disney name essentially overpowers any Pixar-based identity the products may have.
Last, creating an entirely new brand can eliminate any stigmas attached to the old identities and help refresh the image of both companies. When Bell Atlantic merged with GTE in 2000, Verizon was born. Verizon didn't exist before this merger, but it entered the market as a powerhouse of communication technology.
Overall, the most important considerations when merging or acquiring an existing company are whether each party's values are reconcilable with the other and whether the established consumer base of each brand would be receptive to the products of the other. Researching marketing strategies, mission statements, consumer demographics, and product quality can be vital in determining the viability of a merger or acquisition. Attempting to mix oil and water, or Ruth's Chris Steak House and McDonald's will never work.
If you are a part of a merger or acquisition and have questions about brand identity, contact our experienced lawyers today for a free consultation.