Medical Device Link.

Originally Published MX May/June 2002

ADVERTISING, DISTRIBUTION, & SALES

Ken DeLor

The new look of Élan Pharmaceuticals was revealed in this compilation for posters and various trade ads. (click to enlarge)

Building a Foundation for a Strong Brand

During the 1980s, corporations bought smaller companies that were very different, and put them into holding companies. And in that less-global climate, without the open borders of today, those corporations could do very well without directing each individual member company. That is not the case today. In today's environment, companies are buying complementary companies in order to become broad and deep—and thereby to withstand the withering blows of international competition.

But according to KPMG Consulting (McLean, VA), nearly 83% of mergers have historically not delivered on anticipated value.¹ This is most often because deals touting efficiencies of scale rarely rise to the level of expectations. Successful mergers and acquisitions focus on integrating companies with synergistic services or products, and then explaining that synergy to the market.

Discovering and understanding where the synergies lie are essential steps toward building an effective positioning platform. But to successfully implement such a branding platform, one must also have a firm base of knowledge about the company and the ways it is perceived by a variety of stakeholders. Such an understanding can best be achieved by conducting interviews with members of the financial community, company employees, and the company's customer base, and submitting the results to careful analysis. This has been the starting point used by The DeLor Group (Louisville, KY) in its work for such medtech companies as Élan Pharmaceutical, Mallinckrodt, and others.

The more diverse a company becomes, the harder it is for the market to understand what it does. Companies must be able to explain their array of products and divisions in a way that makes sense to the marketplace. Branding helps bundle those products and unique selling points in visual and verbal ways to show that what may appear diverse is actually complementary.

Branding is about creating differentiation and determining both the core promise and the personality of an organization. It's the promise that tells the customer what a company does and how the company does it better. It is the personality that permeates through a company and its products, making the organization unique to the marketplace and inviting customers to create a relationship with a brand.

In a highly competitive market such as that for medical devices, differentiation must mean more than simply identifying product features and benefits. It means identifying what's at the core of a company's message—what makes its brand unique—and creating a distinct and memorable visual attitude that conveys that message at every touch point.

Fulfilling the M&A Promise

The newly formed organization needs to communicate one vision, one identity, and one strategy. First, the company must understand the equity it has in each individual entity and their products and services. In some cases, the acquiring-company brand has the most equity, so the acquired companies lose their individual brands and are wrapped under the stronger brand of the acquirer. For instance, General Electric is such a powerful brand that it can retain its brand while bringing in other medical companies. GE Medical Systems could simply absorb acquisitions under its name without holding those units as separate entities.

Out of many, one. As part of the rebranding of its component companies, the new green and dark blue Élan Pharmaceutical logo replaced a number of older company logos (top).

Sometimes an acquired product will have such equity that it overshadows the corporate identity. In such cases, it makes sense to retain the equity in the product while still tying in the corporate connection. When Mallinckrodt acquired the respiratory product giant Nellcor Puritan Bennett (NPB), for instance, our firm helped Mallinckrodt to reposition itself and sort out its brand architecture. The equity in NPB was so strong that we recommended it be retained as a divisional brand. This strategy permitted the strength of the NPB identity to gradually transfer to Mallinckrodt, thereby reinforcing the corporate brand.

But in other instances, a merged company will seek a new brand to better represent its new personality. The large combined company may be willing to give up the equity in the acquired companies for the long-term gain of having one united brand—even if it means developing a unique name separate from any of the original companies. That's called bravery. Examples in other industries include Gulf Oil, which gave up its well-known U.S. name to become BP. Taking this route requires an extraordinary commitment to communication—both within the company and with those outside the company's walls.

Projects of this nature are perceptual and objective, and everyone involved will have ideas and opinions. This is another reason why it is essential to first conduct thorough research and develop a strong strategic plan.

Research Determines Direction

The ultimate goal is to put forward a single corporate brand that will permeate all corporate communications. There is only one brand to manage and promote, which ultimately makes it easier for the financial community, employees, and current and future customers to grasp.

Analysts determine which companies are successful by examining products coming down the pipeline, so it is important that this audience knows that the whole is greater than the sum of the parts. The financial community needs to see the big picture—what the company is doing as a whole, and where it intends to go. This is why one effective brand that encompasses all areas is necessary.

Employees also are important players in a merger or acquisition. When Siemens Medical Engineering Group announced a definitive agreement to acquire Acuson Corp. for an estimated $700 million, for instance, "employee morale and employee retention and integration issues" were among the chief risks listed as having the potential to delay or hinder the completion of the megadeal.

According to the management consultancy firm of A.T. Kearney (Chicago), the greatest barrier to integration during a merger or acquisition is failure to achieve employee commitment.² Employees are typically the last to find out about a merger or acquisition, and the unknown can create a significant amount of fear, causing them to pursue opportunities elsewhere.

Companies need to let employees know how a merger or acquisition will affect them and how it will affect the acquired company's success—and give them something to embrace as they become part of a new enterprise. That is when the company needs to develop materials to tell employees what is going on with the merger.

In some cases, the employee base is so valuable that its retention is a primary goal. The sales force should be treated as a separate entity from other employees, requiring separate branding communications. These individuals are on the front lines carrying the message and the products to the customer, so they must understand why the deal was necessary, how the new products are related, and the benefits to the customers.

A study recently conducted at Northwestern University (Evanston, IL) supports this notion.³ According to Patricia Whalen, PhD, an assistant professor in the integrated marketing communications program at Northwestern's Medill School of Journalism, due diligence should include an examination of how employees will be affected and how information is distributed to them. Managing such factors, she notes, is particularly important to firms "whose most valuable assets walk out the door each day." The study also concluded that communicating the motives underlying a merger or acquisition was perhaps more important than detailing the nuts and bolts of the deal.

Similarly, the customer base must make the connection between the formerly separate companies and the advantages provided by the larger, merged company. It must be clear and easy for anyone to understand the company's reasoning and strategy, and to accept the new organization as an expert in its field.

Putting the Brand in Motion

Upon implementing a new brand, a company must tailor launch communications to its target audiences. Such an effort means developing separate strategies designed especially to meet the information needs of such stakeholders as market analysts, customers, the sales force, and employees. The portfolio of communication materials should include a consistent strategic and visual presence, bringing all pieces under one umbrella that naturally ties them all together.

Fortunately, an effective core brand builds a foundation for a consistent visual presence. Companies know when it has been done correctly, because communication to a variety of audiences ceases to be a struggle and starts to make sense.

The sales launch meeting has provided The DeLor Group one of the most powerful opportunities to create the brand experience and communicate the new brand message. Such a multimedia event—aided by a launch kit, sales training, and specialty items—educates and motivates the sales force, who in turn become the brand's best ambassadors.

Communication must also be planned and implemented to operate at various local and regional levels. This consideration can be especially important for global corporations that are more likely to encounter and have to deal with difficulties arising from cultural differences. Typography, trademark issues, and logistics become increasingly important when a corporate brand is rolled out globally.

An Investment in the Future

The globalization of the medical device industry has spurred a number of mergers and acquisitions. In such a changing industry, branding is becoming increasingly important. Given the high stakes and expectations for such consolidated enterprises, companies cannot afford to ignore the one thing that can often carry them through good times and bad: a solid reputation built on a brand that truly reflects the promise and personality of the company, its people, and its products.

Properly defining and communicating a company's brand message requires a significant investment of time and resources into the tasks of research, analysis, and planning. However, successful completion of such an effort will pay dividends in customer retention and growth, employee loyalty, and company value over the life of the enterprise.

References

1. World-Class Transaction Survey (McLean, VA: KPMG Consulting, 2001).

2. After the Merger: Seven Rules for Post-Merger Integration (Chicago: A.T. Kearney, 1999).

3. P Whalen, "How Communication Drives Success," in International Association of Business Communicators Research Foundation Home Page [on-line] (San Francisco: IABC Research Foundation, 2001 [cited 15 April 2002]); available from Internet: http://www.iabc.com/fdtnweb/merger.html.

Ken DeLor is president of The DeLor Group (Louisville, KY), a corporate and product brand identity firm.

Images courtesy of The DeLor Group

Copyright ©2002 MX