Merging Brands : Recreating Business Dynamics

Posted in Marketing & Strategy Articles, Total Reads: 2422 , Published on 18 July 2011
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Competing brands in the same sector often end up either buying out competition completely or merge with each to unite to fight competition. Joint ventures and mergers & acquisitions happen across every sector so as to boost the company’s brand and market value. However, when two organisations merge there are a lot of factors like managing human resources, organizational hierarchy etc which arise as challenges. Apart from these another factor which becomes critical are merging brands which often redefines the dynamics of the business.

 

Merging Brand Names

 

Mostly whenever a merger takes place, companies prefer to combine their brand names so as to leverage on each other's existing brand equity. This becomes a win-win situation for both the companies as one brand gets the support of the other thus strengthening the value of a brand.

 

A few brand names which have been able to use each other’s support in gaining momentum and strengthening their position are discussed below. Hero Honda is one of the most popular motorcycle and scooter brands in India since decades. The merging brands were global motorbike giant Honda and Indian two-wheeler manufacturers Hero. Both these brands proved mutually beneficial to each other, and now it’s such a prominent name that 'Hero Honda' in itself has become a top of the mind brand name.

 

Another major success story in the Indian automobile market was the merger of Maruti with Japanese leaders Suzuki to be known as 'Maruti Suzuki'. With Maruti's strong brand name and Suzuki's technology and innovation, Maruti Suzuki emerged as the undisputed leader in the automobile industry. Thus, two successful brands often change the dynamics and scenario in the market with the sheer symbiosis of their brand names.

 

Another Indian market leader which has grown in various sectors by joint ventures by combining brand values and brand names is Tata. Tata tied up with global giant Sky TV to launch 'Tata Sky' to tap the dish TV market in India. Such was the impact of the two merging brand name that Tata Sky emerged as the leading brand in the dish TV industry. Even today, 'Tata sky' is a brand which commands a high brand equity and presence in the market. Other ventures by Tata are 'Tata Docomo' to create their market share in the ever growing mobile telecommunication market. Tata also combined its brand power with leading financial institution AIG to tap the insurance market in India through 'Tata AIG'. Thus the power of two strong brands when combined together can script great success stories.

 

On the contrary, it’s not necessary that two leading brands would always combine to form a successful force. There have been quite a few incidents where top brands have plunged after combining as a single brand in trying to leverage each other's strengths.

 

In India, global automobile manufacturer Renault joined hands with Indian automobile manufacturer Mahindra. Both these brands held a successful position in their respective target group. But when they decided to join their brands, they launched a weak product which was marketed by poor advertising and promotion. Thus, despite being prominent brands, 'Mahindra Renault' as a combined brand failed. Another big failure was between luxury automaker Daimler and heavy construction equipment manufacturing leader. Despite being the leaders in their respective segments, they failed when their brands were combined.

 

Extensive brand competition would always exist between companies in the ever growing world of business. Joint Ventures and M&A's have become a medium for companies to strangulate competition and flourish together. However, only time tells whether a brand succeeds or fails. But whatever happens, the market dynamics surely change.


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