Among marketers with brands that have a high brand equity, an increasingly common issue is assessing the potential synergy of allying with other brands. Situations where brand synergy is an issue include: marketing alliances; licensing arrangements; and acquisitions/mergers. In each situation, management is interested in the impact of allying one brand with another, and must make decisions such as whether or not to proceed with an alliance and which names to feature most prominently.
To illustrate, one Rockbridge client in the entertainment industry was considering licensing and joint venture agreements with dozens of companies. The organization had an impeccable image in the marketplace, and was concerned with the effect on its own image of being affiliated with different brands. At a minimum, a brand the client affiliated with should not bring down the image of the client’s brand. Ideally, the market might view a natural compatibility or synergy between the brands. Further, the brand the client allied with might impart attributes consistent with the long-range positioning strategy for the client’s brand. For example, if the client wished to be viewed as more “family-oriented,” it might be able to achieve this goal through a joint marketing arrangement with a solid family brand in a non-competitive industry.
One of the major issues in addressing the brand equity/synergy problem with research is that a good match is likely to be more complex than just being a well-known brand or having a positive market image. There is an abundance of syndicated studies offering information to help assess brand equity, but the information is usually shallow and superficial. Another issue is that the definition of a good brand synergy match can be subjective, with different management teams holding different views based on their goals.
Rockbridge has addressed these problems through a three-step research/consulting process consisting of (1) developing a brand synergy framework that has management buy-in, (2) gathering information on multiple indicators of brand equity and synergy, and (3) developing a synergy index that evaluates brands on multiple criteria.
Step 1: Developing a Brand Synergy Framework
A good starting point for assessing brands for potential synergy with your own is to develop a formal framework of what a good synergy should be. The consulting team and project leaders should work with the internal decision-makers to develop a set of criteria, present these in writing, and get agreement. Examples of criteria that might constitute a brand that has high equity and is a good match with your own include:
- High awareness/recognition in the market
- Positive impression in the market
- Perception of market leadership
- Momentum, i.e., a brand on its way up
- An image compatible with the desired image for your brand
- High penetration
- Satisfaction among customers
- Perceived compatibility with your brand
Step 2: Gathering Data
Having agreed upon the criteria for a good synergy, the next step is to translate the criteria into measures that can be administered to a sample of the target market. This process requires a set of proven questions and formats for capturing each construct in the framework. These items come from different practice areas; for example, questions on perceived quality or satisfaction would draw from measures proven to be effective in quality studies.
The most interesting research consists of studying a large number of brands simultaneously and being able to compare them in the same study. However, doing so can be challenging; there is a limit to how many brands can be presented in a single interview, and there may not be a huge budget for a large sample size. We have addressed this issue using a unique design consisting of multiple questionnaire versions that capture data for multiple brands at once, minimizing the sample requirements. However, we do not rate all brands in each interview, rather, we keep the number of brands per interview to a reasonable maximum. Brands are assigned to different questionnaire versions in a systematic fashion that minimizes the influence of including certain brands together in the same interview too often.
Step 3: Developing a Brand Synergy/Equity Index
One way in which managers can analyze the results to a brand synergy study is to examine every piece of information gathered for each individual brand. This works fine when only one brand is being evaluated, but can be overwhelming when multiple brands are being examined, as is often the case. A better way is to present data is to offer a single number a brand synergy index to identify the overall potential for a given brand. With multiple brands, this approach allows managers to set broad priorities, while using the more detailed diagnostic information to break ties and study the subtleties that go into the overall evaluation.
An index can be developed through a modeling approach, an area we specialize in at Rockbridge. The first steps are likely to consist of comparing brands via perceptual maps and studying the drivers behind key measures. In the final stages of index development, measures are combined into an index using a combination of weights developed through statistical relationships, and weights developed using logical assumptions from the brand synergy framework.
The End Result
The method we describe for assessing brands for their synergy with your brand may seem paradoxical. It starts with a highly disciplined approach that could be called academic. Yet the end result proves to be actionable and practical; in other words, anything but an outcome of an Ivory Tower exercise. The output makes it easy for managers to pick true winners. They can readily understand the factors that make different brands succeed, and have ample information for making informed exceptions.