For me, there can be no more exciting project than assessing how to accommodate a new brand in the stable: whether to kill it or keep it and how to align that new brand with the global brand hierarchy. Clearly, if you are the brand being taken over, this process won’t be as much fun, not least on a personal level.
One aphorism that bizarrely has stood the test of time is “the best way to create a small business is start with a big business, and wait”. How many M&As have destroyed shareholder value? Sadly, most of them: NatWest/ABN Amro; Daimler/Chrysler; AOL/Time Warner.
One reason for this is that the business case for an acquisition is usually put together by the finance department – rarely the marketing team. But the reason why most brands put themselves in the shop window to be acquired is because of the way they have developed their proposition, served their customers, and established their brand – all responsibilities of marketers. Yet, the argument for most M&A decisions is the ability to crash the two brands together and drive through synergies, which in most cases destroys the very culture that created the brands’ success.
Take Tesco Express. Tesco is a great brand – delivering consistently good service, great products and true innovation. But that cannot be said for its small stores – stores that in many cases started life as a corner shop that provided communities with an essential lifeline, delivered by people who worked every hour to deliver that little bit extra. With the big boys in charge, those stores have lost the essence that made them successful.
These stores have been replaced by mere outposts of the mothership which provide a functional commodity in a competitive market. To see products double in price, in the knowledge that they will be displayed as ‘50% off’ a few weeks later, does not instil lasting brand confidence. And don’t get me started on their anti-customer self-service checkouts.
Customers are not stupid – destroy the DNA of a favoured brand at your own cost.