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Brand Integration post M&A
June, 08th 2009

India continues to make its mark on the world stage with the Bharti-MTN merger being the most recent example. And while mergers and acquisitions have been synonymous with India's growth, we analysed on how it impact the company's brand. UTVi seeks the help of marketing experts to list out some dos and donts for brand integration during mergers and acquisitions.

Bharti Chief Sunil Mittal laid out his ambitious plans soon after Airtel crossed the 100 million customer mark. A year after their talks fell apart, Mittal was once again looking to South African telecom giant MTN for a possible merger. And while talks of a complex share swap between the two companies are still on, Bharti has a month to go before MTN can initiate talks with any other players. The $23 billion deal when it happens will catapult Bharti as the world's fourth largest telecom player. So when it comes to Airtel, barriers will truly break.

Industry experts feel that while there maybe numerous branding options, a name change might impact consumers since the benefits of the deal will be restricted at the boardroom level.

Nabankur Gupta, Founder CEO, Nobby Brand Architects said, "You can't convert the MTN consumer into a Bharti Airtel consumer, in that sense, he may not like it. Perhaps a conjunctive branding at that stage which is like say a Bharti-MTN or a MTN-Bharti would work much better where Bharti becomes the global brand or Airtel becomes the global brand and all these brand that you keep acquiring are in terms of an integration, only then become a conjunctive positioning."

But mergers and acquisitions are not new to the Indian telecom space. One of the biggest buyouts was between Vodafone and Essar. The $11 billion exchange of power resulted in consumers swapping the hutch brand for Vodafone. Skilled at name changes, since the brand had at least 5 changes in the past decade, a multi media campaign that cost nearly Rs 250 crore was successful in communicating the change.

Experts attribute the smooth transition to the fact that the company chose to use the product name Vodafone and keep Essar to the minimum. However a criticism is that the NEW brand brought in little value addition to the product. Biju Dominic, CEO, Final Mile said "There's a certain perception of hope that Vodafone comes in and brings something new to the table. But you realize within one month that with Vodafone coming in they have not brought in anything new, that wasn't already there with the existing players like Airtel or Reliance. So obviously the consumer moves away."

Another merger in the telecom space was between Idea and Spice Communication last year. Idea bought out the 40.8% stake in Spice for Rs 77.30 crore. The primary objective was to gain entry into the Punjab and Karnataka circles which comprises of 11% of India's wireless subscribers. While marketing experts warn that imposing one brand on another can lead to cannibalisation, the brand integration in this case has been smooth since Spice was a new entrant in the market. Thus the brand presence in the consumers mind was limited.

Pradeep srivastava, CMO Idea Cellular said, "In Punjab, spice Communication had a heritage so we had to reassure the consumer of a larger national footprint, better service, better network and customer care. The consumer needed to re-assured."

It's not only the telecom space that's buzzing with acquisitions, after buying out Fords Land rover and Jaguar brands for $2.3billion, TATA is set to launch the brands later this year. After creating the world's cheapest car, the Tata's have established themselves on the global platform and the learning's from the Nano are bound to make these legendary brands a more cost effective operation.

But at brand level, marketing experts say its best if Tata stayed back stage. Sunil Alag, Chairman, SKA Advisors said, "If you want to add Tata Jaguar, if you really want to talk about an emphasis- the Tata name should be 20% space and 80% should be with jaguar because these are very powerful product names and they shouldn't lose it because they've been built over the years and Tata gives it a little stamp of trust and quality which it stands for in India and Tata today is getting to be known for that all over the world."

While the world is only now taking notice of India in the auto sector, the IT sector has always been the poster image for the country. But that image was quick to be tarnished post the Satyam scandal. Tech Mahindra swooped in just four months later to save Satyam at a price of over Rs 1700 crore. After internal restructuring and branding, Tech Mahindra will reportedly run Satyam as an independent company with separate liabilities, but our experts feel that the tarnished brand name should be dropped.

While the brand integration strategy is mostly subjective to each merger and acquisition some of the main rules to follow post the deal, (when there is a consumer interface to the brands involved), is to communicate to the consumer the benefits of the deal.

If post an M&A, a brand undergoes a change without any tangible benefit to the consumer, there is a chance that the same consumer will fail to connect with the brand.

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