CPG Acquisitions: Smoothing It Over With Consumers

Today, in the world of tech and software start-ups, mergers and acquisitions are happening almost as fast as the businesses are being launched. However, we often forget how often M&As are happening in the consumer and retail world. According to PriceWaterHouseCooper, the total value of consumer and retail deals exceeded the value of Internet and software M&A combined. In 2013, the Internet and software industries had a total of $55 billion and the consumer and retailer market was a staggering $91 billion in M&A. 

During an acquisition, brand teams often find themselves in two scenarios. They have either scooped up the smaller, independent brand or they must grow an existing brand. Many independent brands such as Honest Tea, Essie and Mrs. Myers, acquired by Coca-Cola, L’Oreal and SC Johnson respectively, were part of the simple strategy: don’t try to build a competitive brand when you can just own the competition and gain share. 



Many of these successful independent brands have cult-like following in common. This makes it easy for the parent company to not only leave the brand independent, but also immediately realize the return on their investment. 

Some brands that are acquired need a jump-start and the buying company feels they have the skills and resources to reinvigorate them. To some marketers it seems more attractive to maintain an old brand, versus launching a new one. The residual awareness, according to Max Brand Equity, is what makes it tempting to buy an old brand and just revitalize it. Let’s take for example brands such as Duncan Hines, Ajax or Famous Amos. The acquiring company is relying on brand awareness and in fact, these brands may have been the leader in their category at some point in their lifetimes; unfortunately they led two or three generations ago. How many times have you heard “that was my grandmother’s brand?” The purchasing company is counting on this awareness as a starting point on which to turn the brand around. 

In either case, we can agree the brand is the most important element, and the brand is defined, supported and trusted by their customers. Undoubtedly, one of the heftiest challenges for marketers is to create a smooth transition for the consumers. We know some consumers may be unhappy about the acquisition. When General Mills purchased Annie’s, consumers expressed their outrage on both General Mills and Annie’s Facebook pages. The brand was in a pickle. For new acquisitions of old once-beloved brands, marketers must strategically plan to win and maintain consumer trust. Connecting and engaging with them will help engender trust. Here are three things to keep in mind:

Tell its story. Tell the real story, where the brand came from, why it was developed and how it achieved its original success. According to Matt Rubel, CEO of Collective Brands, which bought Sperry Top-Siders and Keds Sneakers and made them relevant to today’s consumers, story telling is a part of his four-step process for reinvigorating old brands. He focuses on bringing brand stories to life through visuals, words and the product and leveraging a wide range of vehicles including social media to amplify those stories. 

Find consumers who have made a connection with the brand. Whether from their parents, or grandparents, let these new consumers help you formulate the new brand. Activating consumers to do the story telling for your brand can have a far greater impact than trying to push the brand message on your own. As most of us know, social media platforms, like Facebook and Twitter, make it easy for a brand to connect, or in this case, reconnect, with those consumers who once purchased the product in its hey day. 

Leverage the love. A cult-like following is a powerful tool. Engage those brand evangelists and wield their influence to help grow the brand exponentially. The brand’s disciples want to be in the know and they want to spread the word. Connect with the most influential advocates early. Show them how they are significant and they will advocate without you asking. In the Annie’s example, could both brands have done a better job leveraging those fans to help explain the acquisition’s value and thus avoid some of the negative push back?

No acquisition is easy and requires dedication from marketers and patience from consumers. These ingredients can help build the recipe for a successful relaunch for your newly acquired brand.

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