Corporations often grow their market share through acquisitions and mergers. These collaborations most frequently occur with related companies offering similar goods and services. However, there are also times when an executive committee determines that acquiring a new company with unrelated business practices is within the strategic guidelines for productive growth. Regardless of how a new business is acquired, there are further and more pressing decisions to be made.
Brand recognition is the staple among virtually every successful corporation. Marketing professionals utilize a healthy budget to create and promote brand recognition. Brand placement in various media sites help increase that recognition. Logos, colors, and even script fonts are all recognizable features that consumers readily relate to a specific brand. Further, these specific characteristics which are subconsciously linked to the brand are also associated with every product within that brand umbrella. Consolidating multiple products within a brand or multiple brands within a corporation can affect how consumers view or understand these brands.
Benefits of Brand Consolidation
There are certain benefits to brand consolidation. Specialization is one of the main considerations that a corporation will utilize to determine their course of strategic action. Companies who specialize in a particular area build a brand reputation based on their expertise. They literally become known in the industry for a particular product or service. Bringing that positive reputation to another brand through consolidation could help elevate an unknown or otherwise struggling brand by virtue of association. In many cases, brand consolidation can revive companies who were on the verge of being out of touch with the consumer pulse.
Drawbacks to Brand Consolidation
The flip side of brand recognition and specialization is that companies take a risk when it comes to brand consolidation. Partnering with other brands or companies requires at least some portion of unpredictable exposure to the new parent company. Taking ownership of total accounts is necessary during brand consolidation projects. The consolidating company must absorb the previous consumer interactions, whether positive or negative, when they choose to proceed with consolidation. There is also a risk of potentially alienating an existing customer base during brand consolidation. This happens when people are uncomfortable with change or are unfamiliar with the new brands or products. Many consumers and investors are tentative to embrace newly consolidated brands.
The choice to consolidate is never an easy one, but it can be a successful venture when properly executed.