Indians do an elaborate consulatations with pandits and astrologers before selecting marriage partners. Similarly companies do elaborate exercise before mergers and acquistions. This is also true in branding. The decision to merge two brands may be taken by top managers but it has everything to do with non-managers, i.e. consumers. What may ring excellent in rational calcuations may not make much sense from consumers’ perspective.
Strong brands derive their strenght from dedicated often fanatic like consumer following. Brand is another synonym of bond. And this bonding is based on multiple layers of mutually satisfying intersections. Further, what sits at the heart of strong brands is uniquness or distinction based on functional or psychological value delivery. Consider: Volvo for long stood for safety,BMW defines itself as ultimate driving machine and pleasure, Mercedes is stately and engineering excellence, Coke is ‘real’ and Pepsi is for new generation. It is brand’s distinction which connects it with a specific consumer group.
Now consider the rationality of brand merger: two strong brands if merged would bring two consumer franchises together under one mega identity. So if Coke and Pepsi come together in one idenity it would create one huge cola brand and Nescafe and Bru would create a big coffee entity. So CokePepsi would seamlessly merge two consumer segments and transfer their allegiance to combo brand. The reason from one side is often non-reason from the other side.
Consumers develop allegiance, affinity and loyalty based on the principle of singularity. That is, a brand appropriates singularly one proposition relevant and meaningful to a segment. The consumers of Closeup want ‘freshness’ and Pespodent’s consumers want ‘germi-check’. And there is little un-substantial number of consumers who want both. The segmentation and market slicing is essence of strategy that aims to ‘carve out’ a niche out of an existing market. The consumer heterogeniety manifests in segments and ultimately creation of multiple brands.
What effects would a combo brand would have on their previously committed consumers? They are likley to disenchanted, disgusted and raged depending upon their level of involvement. The core consumers are likley to feel abandoned, betrayed and violated. The combo brand assumes that consumer differences are superficial and open to merger. Which is far from truth especially in high involvement emotional situations? However, for the indifference fence sitters nothing matters.
Now consider what happened to SP, a strong brand whose franchise was cultivated on certain principles that made sence to a select group. The votes polled in favor of SP came down from 2.20 crores in 2012 to 1.89 crores in 2017. Now consider Congress, it votes came down from 28 lakhs to 7 lakhs in 2017.
So one plus one is not always a good strategy in marketing and branding. Never try to make a brand which creates it value proposition by borrowing elements of available strong brands.