In 1994, Quaker Oats acquired Snapple, a soft beverage company. They aimed to rebrand the firm and expand its market. The deal worth $1.7 billion was too high of a price. The holder firm exhausted all its financial gains from this acquisition. Soon, the beverage company lost its distributors due to its mediocre marketing and strategic positioning. The acquiring firm also faced high competition from Coca-Cola and Pepsi, which wiped Snapple out of the market. Later, Quaker Oats sold Snapple to another firm for $300 million.
The acquisition model can be challenging. Yet, it is the most common way for small companies to get a boost and big companies to expand.
This integration process is used widely for value creation. It is beneficial for startups in dire need of an upgrade in both offline and online markets. For the acquiring management, it is an opportunity to grow into new sectors and broaden their market size.
Here is a detailed explanation of how acquisitions can bring home profits to the brand owners who are planning to exit.
Brand Positioning: A Win-Win
For a startup, the core branding takes the backseat. Understandably, the start-up has begun its journey, hence will pay attention to sales and revenue. Brand awareness, brand reach, and brand promotion will practically be the last ones on the task list. Although a few brave brand owners might step up regularly to publish posts on social media and invest in paid promotions to gun for brand awareness, such brand owners are few in numbers, and those exercises are irregular to get counted as enough.
Once acquired, the ownership of brand building falls on the acquiring company. Besides, the acquiring company focuses on developing a defined brand strategy and works out a process that runs like a well-oiled machine. They prepare a roadmap to present a brand to the target audience and make it stand out in the market. In tandem, they look into two other crucial factors: customer value propositions and brand messages. They go for creating a strong message that attracts stakeholders. The exercise forces to get two things right – strategic intent and brand value. Quaker Oats failed on those two counts. Their acquisition went through alright but it lacked strategic intent and brand positioning for Snapple.
Once those two are in place, the game steps up to the next level – enter “marketing” to establish a proper positioning for the brand.
Marketing is a big concept, and big ideas require big bucks. The acquiring company uses a mix of appealing marketing strategies and campaigns to reach target customers and stakeholders. Dynamic brand promotions, search engine optimization (SEO), and social media marketing are a few ways they implement to establish brand communication.
Technology and Workforce: The Best of Both World
Creating unique brand positioning requires a dedicated team of brilliant minds. Hence, it is no wonder that an experienced and dedicated workforce makes any acquisition model a success.
The fact of life is (harsh but true) startups are understaffed. Hence, for a startup to establish a brand position in the market, the acquisition is the way to go. Besides a pool of experts to execute plans, the acquirers step in with a proven system designed to amplify a brand presence. The dedicated workforce picks up the command to ensure a seamless implementation of all strategies through a series of structured processes. From HR to finance, every personnel dives deep into the brand transformation mission.
In this entire model, stakes on technology always remain high. Since many startups do not have adequate technical or financial support, their business often lags in performance. The issue creates challenges for them during product upgrades, operational processes optimization, or CRM strategies implementation.
Once acquired, these challenges flatten quickly. The cranked-up efficiency in the technical backbone shows in robotic process automation and automated customer support solutions that include automated messages, virtual assistants. Also, it ensures data security, automated audit of erroneous transactions, and monitoring of processes. From order processing to customer issue resolution, technology plays a crucial role in uplifting the performance of the acquired brand.
Global Markets, Distribution, and Consumers: The Road to Revenue
Nearly 90% of startups know their market and, accordingly, design their products. However, limited resources hold back many startups from building both offline and online presence. In the cases where online presence takes the hit, the expansion gets narrowed. As a result, the reach, too, gets compromised.
In a world where e-commerce rules, it’s vital for a firm to reach global markets. In this scenario, acquisitions stand to help.
A buyout takes a business online and exposes it to a global audience. In the process, the market expands.
Take the example of Bloomingdales, a perfect destination for shoppers. Despite having a huge brand name, they were limited to an offline presence only. While this became a disadvantage for them, many competitors swooped in and made their space in the online channel. Slowly and steadily, Bloomingdale opened its online store so that fashion lovers could order their products from anywhere across the world.
Winning global markets not only pivots on the establishment of the online channel. Distributors and multi-channel distribution bolster the win, as well. A brand turns profitable when the acquiring management puts the brand within a solid network of distributors. The distribution network rests on the seamless connection of strategically located warehouses and logistics services. Effectively, it gives a brand an edge over its competitors by ensuring on-time last-mile delivery. The network helps in delivering the products to the end-users, irrespective of their locations.
Multi-channel retailing offers the same benefits; however, the system delivers through more than one sales channel. Alongside the brand’s website, products listed on third-party marketplaces like Amazon and eBay push sales. For easy order management, in multi-channel retailing, brands are set to ride on the fulfillment services these platforms offer. In totality, this mass distribution ensures maximum sales and revenue.
The easier it is to comprehend, the harder it is to apply. Success with acquisitions does not come overnight. It takes time and effort. However, with deliberate planning and thoughtful execution, it assures a sure-shot approach to grow a brand. It’s not by chance that more than 3.2 million M&A deals are ready to happen this year. As entrepreneurs and business owners aim to develop their brand and are confident in seeing that shape up overtime under the wings of the acquirer, they are making educated decisions by rooting for buyouts. Now all that is left for them is to evaluate and pick a reputable firm capable of transforming their brand.
For any brand owner who focuses on making the brand big, introspection is a must. The result offers acquisition as one of the options.
The brand gets to grow within a supportive system. It gets a strategic path to follow, additional resources to scale business, advanced technological solutions to optimize operations, and dedicated marketing plans to generate more leads.
The acquirer, on the other hand, stands to gain as well. The company that is acquiring gets to plug in an existing and stable business unit into their system. Moreover, it gets an expanded market, a pre-built customer base, and an opportunity to build something sophisticated on an existing product.
Acquisitions can be tricky. If you are wary of how to go about it, get in touch with us. At Ergode, we follow a completely transparent process that starts with brand evaluation and ends at a fair deal for you. Throughout the process, our brand acquisition experts stand by your side to answer questions you may have or clarify the legalese that you may be worried about. Get in touch with us today to initiate the acquisition process.