How to Establish Post-M&A Product Architecture: M&A Minute
Welcome to M&A Minute. I’m Bill Gullan, President of Finch Brands. We are a real-world brand consultancy. We help companies at key moments activate the full potential of their brands and businesses. I’m excited that you joined me today.
Exploring product brand architecture during M&A
Today’s topic is not exclusively relevant to mergers and acquisitions, but we find that it often takes on significant relevance during periods of time when organizations are coming together. That is at the level of product brand architecture.
We talked a lot about brand architecture as a whole, company names, how acquired names ought to be handled and managed and migrated. But often within product groups and within the overall product assortment, an M&A transaction creates additional complexity.
In some cases, there may already be a heck of a great deal of complexity to manage. We often find that the M&A branding process is a unique opportunity to address clutter and confusion within product brand architecture. So, here’s how to think about it.
Clarifying product brand architecture
First of all, you are hopefully not part of an organization that has fallen prey to the temptation of naming everything. As a best practice, it only makes sense to name products and services if they have some independent objective of earning equity and recognition in the marketplace if they’re bought or sold to distinctive audiences.
If you find yourself in a situation where you have 25,000 skews in the product assortment and there are 150 or 200 brand names, it’s time to clean that up. There are often products that have been named for one reason or another in sections of the category where a brand name isn’t important or for whatever reason they’ve been named.
But those names don’t really mean much in the marketplace. So, it is time to think about clarifying a product brand architecture.
Step one: Audit your existing product architecture
As mentioned, it only makes sense for product names of either distinctively equity-holding assets or that represent new technologies or different market segments to have fanciful creative marketing-oriented brand names in the first place.
The first thing to do is really audit the full range of names that exist and understand which of those fit the criteria. We often find that one of the most effective measures for simplifying, clarifying, and strengthening a product brand architecture is to move from naming everything into a power brand alignment.
Let’s maintain, strengthen, and clarify what we would call “power brands”.
Step two: Build around power brands
Power brands are brands that have distinctive market equity. They are asked for and understood by name. Those names mean something. Those names trigger awareness. Those names evoke some sets of reliability or innovation or whatever the right brand attributes are.
One method is to build around power brands. So, how do you do this? First of all, embark upon a research and assessment process. Study the equity of the brands in the marketplace. Those brands that have meaningful equity in the past, present, and future become power brands and are elevated.
Step three: Define brand product categories
Within the product architecture, define which segments or categories those power brands have a right to play. Where do they already or where could they easily play effectively through adjacencies? Those products may be named today, but those names don’t have a really affirmative right to exist moving forward.
They could be sort of orphans that exist within the category but really aren’t attached to something larger. They could be gap fillers, products that sort of exist within categories that certainly play a role and generate revenue.
But where the brand isn’t sort of dependent on that success and path forward, those should be reapportioned. And there’s a couple of ways to do that.
Step four: Allocate product names to the corporate identity
Sometimes you move in a more descriptive direction when naming a product. Often, the brand name that is attached to that product is the corporate identity. There’s a lot of reasons to do that, particularly in cases where you’re elevating a new or evolved corporate identity in an M&A moment.
If you have the corporate identity representing a portion of the product brands, that helps you build their enterprise value in the corporate identity. It helps create greater simplicity. It becomes a flexible brand architecture that you can build around and grow with, particularly if you’re thinking about incubating or acquiring new products.
Translating the corporate ID to products
So again, how to do it? Study the equity, elevate power brands, allocate those gap fillers or orphan products to the corporate identity, and then get the corporate identity itself ready to encompass the rest of the assortment.
That involves some look and feel translation from corporate ID to product level. It requires some additional thinking around how the corporate brand has the broad shoulders to work in product applications.
There’s a lot more to the story. The right answer is situational. But that is what we have today on M&A Minute! If want to be a champion of purposeful change, please contact us today and subscribe to our YouTube channel for future videos.
Finch Brands is a real-world brand consultancy that specializes in insights, strategy, and design, and has helped dozens of clients build successful post-M&A brands. We do this by helping clients win when it matters most by helping them own the change moment.