Linköping University-Master Thesis Rebranding after M&A Rebranding after Mergers and Acquisitions (The effect of product brand in corporate brand architecture) Zeng Long & Wan Ling Linköping University Department of Management and Engineering Steategy Management in International Organizations Summer 2011 IISRN No: LIU-IEI-FIL-A--11/01031--SE Linköping University-Master Thesis Rebranding after M&A Title: Rebranding after M&As (The effect of product brand in corporate brand architecture) A thesis on Master of Science in Business Administration (Strategic Management in International Organizations) Authors: Zeng Long ([email protected]) Wan Ling ([email protected]) Supervisor: Alf Crossman Background: Recent years, M&As have increased sharply. Brand as one of the most precious assets has unavoidably been taken into consideration in these deals. Company can gain great benefit when handle acquired brand properly. Responding to rebranding issue, a clear designed rebranding strategy is considered a solution to deal with it, and brand architecture can be a useful tool to help adjusting the relationship between acquiring and acquired brand. Aim: The purpose of this research is to explore how firms can strengthen its corporate brand after acquired a strong product brand through proper rebranding strategy and well designed brand architecture. Definitions: Brand: a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. Rebranding: the creation of a new name, term, symbol, design or a combination of them for an established brand with the intention of developing a differentiated (new) position in the mind of stake holders and competitors. Brand architecture: the relationship among and between corporate, company (subsidiary), and product brands. Such relationships embrace products and services, or a mixture of the two across the hierarchy of brands. Results: There are possible options that companies can strength its corporate brand by acquired product brand, when company take brand integration strategy. Moreover, choosing suitable brand architecture during brand integration process is very important for a company Key words: Brand, Rebranding, Product Brand, Corporate Brand, The Brand Relationship Spectrum, Brand Architecture, Dynamic Brand Architecture Linköping University-Master Thesis Rebranding after M&A Acknowledgement Five months of confusion, suffering, ambition, excitement. Finally, we finish our thesis in such a high pressure environment. We think now it is time to give our thanks to everyone who gives us help on our study and especially on conducting this research. First, we would like to thank our supervisor, Alf Crossman. There is a Chinese proverb said that ―It is better to teach a man how to fish than give him fish‖. Without his good idea and guidelines on product brand, we cannot finish this thesis. We also would like to thank Mattias Johansson, our PPP course (People, Project and Processes) tutor. In fact, the original ideas about the thesis form from the course final paper. Thanks a lot for your suggestion. Meanwhile, especially thanks to the Lenovo‘s middle-level manager who accept our interview request. You provide us so many important primary data which is crucial to finishing the empirical study. Thank you very much for your cooperation. We should thanks to all of the teachers in this two years study in the master‘s program: SMIO (Strategic Management in International Organizations) at Linkoping University. Without your directing, assistance and encouraging, we could not achieve this. We also would like to say ―thank you‖ to our lovely classmates at SMIO‘s 2009 group. We will never forget you or the times that we have shared. Of course, we cannot forget our family. We cannot study in Sweden without their support. Thank you so much! Finally, we should thank ourselves. Even though the research process is full of quarrel, tolerance, and reconciliation, we indeed learned a lot from each other. We truly understand the meaning of ―teamwork‖ from this great experience. Zeng Long & Wan Ling Linkoping, Sweden May 2011 I Linköping University-Master Thesis Rebranding after M&A Table of Contents 1. Introduction .................................................................................. 1 1.1. Chapter introduction.......................................................................................... 1 1.2. Research concepts .............................................................................................. 1 1.3. Research context ................................................................................................ 2 1.4. Branding problems in M&A ............................................................................... 2 1.5. Research purpose and questions.......................................................................... 3 1.6. Methodology ...................................................................................................... 3 1.7. Overview of chapters.......................................................................................... 4 2. Literature review .......................................................................... 5 2.1. Chapter introduction ................................................................................. 5 2.2. Brand ....................................................................................................... 5 2.2.1. The history of brand .................................................................................. 5 2.2.2. The impact of branding on customers and brand owners............................. 7 2.3. The relationship between brand and customer..................................................... 7 2.3.1. Brand identity ........................................................................................... 7 2.3.2. Brand equity ............................................................................................. 9 2.3.3. Establishing relationship between brand and customer ............................. 11 2.3.3.1. Brand awareness........................................................................... 12 2.3.3.2. Brand associations ........................................................................ 13 2.3.3.3. Brand loyalty ................................................................................ 13 2.4. Brand merger .................................................................................................. 14 2.4.1. Mergers and acquisitions (M&As) ............................................................ 14 2.4.2. Merging brands and re-branding ............................................................. 15 2.4.3. Leveraging brand equity in rebranding .................................................... 16 2.5. Corporate brand & product brand.................................................................... 17 2.5.1. The concept of product brand .................................................................. 17 2.5.1.1. Product brand strategy ................................................................. 17 2.5.2. The concept of corporate brand ............................................................... 18 2.5.2.1. Different roles of corporate branding............................................. 19 2.5.2.2. The characteristics of corporate brand........................................... 20 2.5.2.3. Corporate brand strategy .............................................................. 23 2.5.3. The differences between product brand and corporate brand .................... 24 2.6. Brand architecture ........................................................................................... 26 2.6.1. The brand relationship spectrum ............................................................. 26 2.6.1.1. A house of brands ......................................................................... 29 2.6.1.2. Endorsed brand ............................................................................ 29 2.6.1.3. Subbrands .................................................................................... 30 II Linköping University-Master Thesis Rebranding after M&A 2.6.1.4. A branded house ........................................................................... 31 2.6.2. The dynamic brand architecture .............................................................. 32 2.7. Summary of theoretical framework................................................................... 35 2.8. Chapter summary ............................................................................................ 35 3. Methodology ............................................................................... 36 3.1. Chapter introduction........................................................................................ 36 3.2. Research strategy ............................................................................................. 36 3.3. Research approach ........................................................................................... 36 3.4. Research design ............................................................................................... 37 3.5. Data collection ................................................................................................. 37 3.5.1. Secondary data........................................................................................ 38 3.5.2. Primary data..........................................................................................