Current issue in marketing Essay Example

resulting in turf wars and ownership disputes and it can also compromise customer expectations, employee morale, and long-term competitiveness. Allowing pre-merger brands to go their separate ways without taking any action can be even more damaging as co-brand mergers driven by short-term goals often result in mistrust and failure.In order to effectively tap into the market potential of a merger, it is crucial to adopt a strategic approach. This involves developing clear branding strategies and identifying appropriate co-branding tactics that align with the core competences and goals of both firms (The Journal of American Academy of Business, Cambridge * Vol.15 * Issue 1 * September 2009).

To achieve success in co-branding, it is essential to establish a suitable co-brand architecture that defines the desired relationship between brands within the merged portfolio (The Journal of American Academy of Business, Cambridge * Vol.15 * Issue 1 * September 2009). Additionally, making decisive choices regarding coalition, coordination, collaboration, and cooperation lays a strong foundation for successful co-brand mergers (The Journal of American Academy of Business, Cambridge * Vol.15 * Issue 1 * September 2009).

Once the fundamentals of a co-branding strategy are set in place, five critical factors play key roles in determining success: cost, capital, culture, critical factors,and core consumer (Figure 1) (The Journal of American Academy of Business,Cambridge*Vol.15*Issue1*September2009).

Considering transition costs is important when embarking on a successful co-branding strategy involving two companies.For instance,in a joint venture arrangement,businesses share equal responsibility for profits and liabilities,resulting in symmetrical transition costs(as exemplified by Sony and Ericsson). However,a merger scenario like Been merging with Siemens would involve one party assuming responsibility for the other.In this particular case, Been had to continuously provide

financial support due to Siemens' loss in profit. However, Ben's financial resources were not enough to cover the expenses needed in order to turn around Siemens' performance. As a result, there was an unequal distribution of the cost burden between the two parties involved. The future of participating companies is greatly affected by co-branding costs. Co-branding strategies are significantly influenced by cultural differences, especially when merging companies from different countries with contrasting corporate cultures such as conservatism versus innovation. Collaboration efforts can encounter difficulties due to potential cross-cultural factors that have been documented in literature. Despite working alongside Siemens employees for nine months, Ben's team failed because they underestimated the complexity of German labor laws. Cultural differences heavily influence the direction and outcome (success or failure) of co-branding strategies. Lesson two emphasizes the importance of considering these differences beforehand and requires effective management. Understanding customers is also crucial for a successful co-branding strategy. Sony and Ericson provide an example with their consumer-centric mobile phones which incorporate cyberspace technology as a way of designing products with a consumer-focused approach.
Been and Siemens initially targeted teenage customers with their slogan "enjoy matters" and aimed to provide various models for different consumer groups, such as classical and business models. However, they faced challenges in Germany and Taiwan due to varying consumer preferences. To overcome this, they needed to identify the specific wants and needs of consumers in each country to find common ground and satisfy their diverse customer base.

The core competence of a brand plays a significant role in attracting customers and positioning it effectively. When forming a brand alliance, it is important for a strong brand to clearly

identify and position its core competence so that the second brand can integrate effectively. The core competence can be similar or different between brands. Brands with similar core competencies ideally generate a stronger co-branding effect, while those with different core competencies can complement each other and create substantial synergy.

After facing failure in a previous venture, Been and Siemens replaced their original slogan "enjoy matters" with the new brand position of "keep exploring." It is crucial for companies to clearly identify the core competencies of both parties involved in order to successfully position the new brand.

Co-branding can take two operational types: joint-venture and merger.In a joint-venture situation, both companies restructure the capital structures of their original corporations, with each member being responsible for the new joint-venture company. In a merger scenario, the dominant company takes responsibility for any gains or losses after merging. After the merger with Siemens, Been's capital structure underwent reorganization, resulting in a loss of approximately 810 million US dollars.

It is crucial for both companies to have sufficient capital before evaluating each other and organizing a co-branding plan. A co-brand encompasses various constituencies, including customers who shape brand image and expectations. For companies operating in multiple product markets like HP-Compact, the co-brand embodies overarching consumption values such as reliability for both desktop and laptop markets.

Similarly, a co-brand establishes shared image and expectations among business partners. The SONY Ericson brand exemplifies this concept by combining SONY's brand image with Ericson's expertise in manufacturing telecommunications equipment, thereby representing high-quality mobile phones. Internally, a co-brand serves as a unifying force between two companies by fostering trust and loyalty through shared values.

The merged brand can be positioned

in one of four ways: Coalition, Coordination, Collaboration or Cooperation (refer to Figure 2). These positions are determined by the type and level of co-branding employed.The co-branding type refers to the specific form of operation, such as a merger or joint venture, while the co-branding level indicates whether it encompasses only one department or extends throughout the entire enterprise. A Coalition represents the union of two companies at both the merger type and enterprise level, resulting in a single company with dual branding. During coalition processes like HP-Compact (2002), the initial brand name used by HP, which is HP-Compact, dominates and targets their entire customer base. The coalition of these two firms integrates their resources, reinforcing the brand image and increasing market share for the newly co-branded product. These resources consist of both tangible and intangible assets. Tangible resources such as assets, equipment, plants, employees, and customers are easily identifiable after merging. However, evaluating and measuring intangible resources like brand value, brand image, and perception poses a challenge. Integrating these intangible resources can be seen as unpredictable and uncontrollable synergies between two individual brands.In order to enhance the co-brand's image,Hp leverages Compact's good manufacturing qualityandbrandimage.Nevertheless they did not significantly surpass Vim's market share due tounforeseen synergies.Coordination involves aligningtwo companies of equal rank or order interms ofmerger typeanddepartment levelCoordinating allows for the consolidation of different departments from both firms into a single department under a dual brand name company. Similar to Been-Siemens (2005), when it comes to co-brands, the first brand name tends to dominate during its emergence and be more noticeable. Been had the vision to expand its global market by incorporating Siemens' brand name

as a co-brand.Siemens was one of the top 5 mobile phone manufacturers worldwide before the merger.The coordination between two departments has the potential to align resources and enhance competitive advantages for both companies. For instance, one company allocated a significant portion of its assets, excluding its telecommunication department, to support Siemens' telecommunication department.However, it failed to acquire Siemens' core intellectual property rights at the agreed time and faced challenges due to cultural, legal, and regulatory differences. Global market share data shows that it lost its initial advantages and ended up with an unsatisfactory partnership.When one brand negatively impacts either tangibly or intangibly, coordinating between the two departments becomes more difficult.Collaboration refers to a company working together with another company on a joint venture or enterprise level while sharing resources, tacit knowledge, and expertise in pursuit of a common goal.Miller collaborated with the second and third largest brewers in the US to merge their operations, creating a stronger competitor against Enhances-Busch Corporation (Tom, 2007). Gabrielle and Nelson Coors will each have a 50% stake in the joint venture and five representatives on its board of directors. In terms of economic interest, Gabrielle will hold 58% based on asset value, while Nelson Coors will hold 42%. Millimeters is expected to achieve annual beer sales of 69 million barrels in the US market, representing about 29% market share and generating $6.6 billion in revenue. Currently, Enchantresses holds approximately a 48% market share. The collaboration not only increases market share but also reduces costs for both companies by leveraging shared resources, knowledge, and strategies. Although initially challenging, this cooperation at both the joint venture level and department level aims

to achieve common goals. An example of successful collaboration is seen with SONY and Ericson (2001), who maintained their individual companies while jointly venturing into a new company. SONY contributed superior design capabilities while Ericson brought excellent R&D competences together to enhance their reputations through this collaboration. By combining their strengths and offsetting weaknesses through collaboration, Sony and Ericsson were able to create a stronger entity.Before the merger, Sony's market share was only 1% to 2%, while Nokia, Motorola, and Ericsson held a dominant 15%. However, after the merger, Sony-Ericsson faced losses with a deficit of $13.6 million in the first quarter and a decreased market share of 5.4%. Despite this setback, they experienced significant growth in 2006 by increasing their market share from 6.3% to 7.4% after acquiring authorization for "Walkway" brand technologies from Sony in 2005. Currently, Sony-Ericsson is one of the top four mobile phone manufacturers.

Co-brands have a narrower target audience compared to corporate brands as they convey specific image and expectations within a particular market. The merged firm must decide on its co-branding strategy by considering whether to maintain or eliminate existing strategies from both Sony and Ericsson while managing similarities and differences between customers and inherited brands through clear co-branding strategy. This strategy is determined by two dimensions: the co-brand name and the intended market.

When it comes to branding strategies, companies have two options. They can choose to use the same brand name across all customer segments regardless of their differences or create different brand names that reflect each segment's specifications and quality. Careful consideration is needed when choosing either a new or existing brand name for its co-branding approachThe

positioning of products or services within the market is related to the intended market dimension. Companies have a choice to either stay in their current market and maintain the same positioning across all segments, or explore new opportunities in different markets and adapt their positioning based on customer and competitive dynamics.

Based on these dimensions (co-brand name: existing or new; intended market: existing or new), Figure 3 classifies co-branding strategies. The four co-branding strategies described are Market Penetration, Global Brand, Brand Reinforcement, and Brand Extension. These strategies integrate brand names and customer positioning in the intended market.

The Market Penetration Strategy involves staying in the existing market and using either a single brand name or a combination of both company's names for products or services. This strategy aims to maximize benefits by sharing resources through horizontal convergence between the two companies. An example is the merger between HP and Compact which resulted in a global brand while still maintaining certain products under the HP name.

Miller and Coors have merged to form a co-brand called "Millimeters", positioning itself in the current market while maintaining both original brands. This merger allows for Coors products to be brewed at Miller plants and vice versa, reducing shipping costs and bringing production closer to end markets.It is important to acknowledge that concentrating solely on established markets and brand names may not necessarily result in increased efficiency and synergy within the merged firm. The merger between HP and Compact serves as an example of this, as it did not lead to HP surpassing IBM. Both firms must possess high customer segments and reputation to successfully execute a Market Penetration strategy.

Conversely, a Global Brand

strategy assumes that preferences across different segments will converge. The merged firm aims to take advantage of this convergence by gaining global recognition and achieving desired goals through enhanced benefits. In the telecommunication sector, Been has pursued market share expansion and global visibility by merging Siemens' telecommunication department with its own existing brands under the name "Been-Siemens". This merged brand stands to gain advantages as a global product brand in terms of scale and scope, outweighing partial benefits on the supply end while offering unique qualities and premium value compared to local or regional brands on the demand end.

Focusing solely on expanding into current markets can result in failure and loss of original advantages. Companies have experienced a significant reduction in assets after merging with Siemens. To successfully implement a Global Brand strategy, it is crucial to appeal to diverse customer segments and adapt to changing preferences.A Brand Reinforcement Strategy involves two firms using a new co-brand name in the existing market to strengthen the brand image by emphasizing desired goals and benefits through a unique name and representation style. The reputation of the original brands should be enhanced without causing harm, but creating an entirely new brand name may result in losing certain advantages. Success depends on creating an appropriate co-brand name that distinguishes itself from the originals.

On the other hand, a Brand Extension Strategy involves two firms using a newly co-branded name to enter a new market by effectively combining cross-segment preferences, similar to Sony's partnership with Ericsson. The merger occurred in 2001 with horizontal integration as its strategic purpose. Prior to the merger, Sony had only 1% to 2% market share and

was considered a minor player in telecommunications despite its superior design capabilities due to lacking core telecommunication competences.

The merged firm's objective is to utilize the union of Sony and Ericson to maximize desirable goals and benefits across different segments. Ericson has established itself as a major player in the industry due to its embedded camera function and advancements in mobile phone technology. Currently, Sony-Ericson ranks among the top four mobile phone manufacturers, thanks in part to their effective co-branding plan.This paper examines the risks associated with introducing a co-branded extension into an unfamiliar market or customer segment. To succeed, both firms must leverage their core competences, create positive synergy, and develop a long-term co-branding plan. The analysis covers legal, economic, and cultural perspectives of co-branding strategies. From a legal standpoint, consideration should be given to antitrust issues when forming alliances or merging. The economic aspect is vital for joint ventures or mergers as factors like transition cost and capital restructuring determine success or failure. Cultural factors also impact the effectiveness of co-branding strategies; existing cases demonstrate how culture plays a role in this regard.

In terms of legality, a merger serves as a strategic alliance aiming for vertical or horizontal integration within the industry. Mergers offer advantages such as expanding market share; however, potential antitrust issues can lead to imbalances in the market. An example is the Miller and Coors merger which was announced to compete against Budweiser, the industry leader. Before finalizing the merger, it must undergo an antitrust review by either the Federal Trade Commission or the Department of Justice. While analysts do not expect the government to block this deal, regulators are closely

scrutinizing it as an opportunity to address Budweiser's dominant positionPre-merger notifications enable companies to address concerns identified by regulators and minimize Supreme Court involvement, so it is important for co-branding firms to approach antitrust matters carefully in their specific context. The merger of the Siemens unit resulted in uneven economic costs for both parties, creating asymmetry. Co-branding can be achieved through joint ventures or mergers, with joint ventures involving restructuring the capital structures of the original corporations involved. In a merger scenario, the dominant company takes responsibility for gains and losses after merging. The Been-Siemens merger caused a decrease in Been's brand value from 7 billion to 2 billion (-34%), emphasizing the need for adequate capital to effectively evaluate and organize a co-branding plan. Therefore, it is crucial to proactively address cultural disparities between companies beforehand and ensure efficient management.