The Two Brand Names Predicament – Separate or Merge?

Anything-brand-by-Shamli071-300x199-1

If you have two or more businesses, should you keep their names and brands separate or should you look at merging them?

This is a predicament that I have come across a few times with clients recently.

The reason it comes up is because those with strong entrepreneurial traits often see an opportunity to expand into different businesses. After all, if you can run a business, why stop at just one?

I won’t sidestep the question like most of our politicians will – I’m sure you’ve heard enough of that lately!

The answer, however, is not a ‘one size fits all’ solution!

The answer is a resounding, ‘That depends…’

Cover Image -Anything Brand – *Image courtesy of Shamli071

 

There are arguments for and against such things, but for me, the main considerations are, ‘What are your long term goals?’ and ‘How will your customers perceive this?’

Business names are a hugely debateable topic in their own right, but let’s address just a few of the many factors and variables.

The Business Name

  1. Own Name – Many small businesses start off as a sole trader, so they frequently trade under their own name, e.g. ‘John Hughes’ , ‘McDonalds’ or ‘Joe Bloggs’. Some may stick with that while others wait until the business reaches a certain size, then maybe change it if it no longer suits or if the new structure dictates it (partnership, company etc.)
  • Advantages – People in this decade like to buy from people they know and trust, so you are making your name recognisable.
  • Disadvantages – If you go to sell the business, customers may not like the fact that you are no longer there (though that wasn’t a problem at McDonalds!). When you are there, people want to still deal with you, even when the business may have grown beyond that possibility! If you have an unusual name, you may need to be careful!
Business Names *Image courtesy of Keith Edkins via Wkimedia Commons

Business Names
*Image courtesy of Keith Edkins via Wkimedia Commons

2. Combination Name & Occupation – Some owners name their business with a combination of ‘their name’ and ‘what they do’, e.g. ‘Leroy Brown Carpentry’ or ‘Commonwealth Bank of Australia’.

  • Advantages – Customers know who you are and what you do, or at least they think they do. You are making your name synonymous with what you do and what you stand for as a brand.
  • Disadvantages – Answer as per point one, plus you are labeling or possibly pigeonholing your business, which may not be strictly accurate, because there may be a wide spectrum of niches within that industry           category. E.g. ‘Joe Bloggs Panel and Paint’ my be a car repairer, but he might focus on luxury cars only. The name would not necessarily convey that niche to the market. The bank for example has many other products and services that are not really banking, such as insurance or trading.
Lesspay Motel *Image courtesy of Mary via Wikimedia Commons

Lesspay Motel
*Image courtesy of Mary via Wikimedia Commons

3.  Conceptual Name – Others come up with a conceptual name to convey what they do and what is unique about them in comparison with their competitors. In other words it reflects their Unique Selling Proposition                      (U.S.P.) e.g. ‘Half Price Lattice’ or ‘Cheap Domains’. The implication there is that they will be way cheaper than their competition.

  • Advantages – At least initially, potential customers may perceive that your offering is true. This could therefore generate extra business.
  • Disadvantages – In the above examples, it is actually a risky move because you might ask, ‘Half the price of what?’ So there is only an implied comparison. If the competition also drop their prices, you might reach a point where your margin is eroded to the unachievable! Consequently, your competitive advantage will be lost when customers discover that you are not actually selling for half the price of someone else’s products. This can then lead to suspicion or scepticism about the credibility of the offering.

4.  Abstract Name – This is a name that inherently has no specific relationship to any industry, except that which is communicated by marketing. E.g. ‘Virgin’ , ‘Apple’ or ‘Attitude’.

  • Advantages –The name becomes a brand that has no boundaries in terms of adapting itself to different products and services in any number of industries.
  • Disadvantages – The name itself doesn’t tell the customer what you do. That will only be communicated over time by repetitive marketing.

The Brand

Your trading name becomes your brand in the eyes of the customer and for your name to be a success, you must build its reputation and create brand recognition. This is where logo design can be a critical feature. For example, you can ask just about any child in the western world what the so-called ‘Golden Arches’ mean and they will quickly respond that it means ‘McDonalds’ , even though that symbol doesn’t say ‘McDonalds’. The child will also be able to tell you that it is a place that sells you ‘Happy Meals’ , ‘hamburgers and gimicky toys and often has a playground.

If you show just about anyone not living in a third world country the ‘silver apple’ logo, they will recognise it as the Apple brand and that they sell I-phones, I-pads, I-pods and computers.

These are powerful global brands that have achieved market domination, yet they all began with a humble idea.

The name is the initial label for the enterprise, to get it started, but as you trade over time it becomes a brand and has a life of its own.

Sir Richard Branson

Sir Richard Branson of Virgin

 

Sir Richard Branson of Virgin fame said, “Once you have a great product it is essential to protect its reputation with vigilance. It’s not just a question of getting it into the marketplace.”

*Image courtesy of Bing Norton via Wikimedia Commons

 

 

Multiple Business Ventures

This leads me on to the question of what to do when expanding your operation into different markets.

Should you use the brand name so that customers can easily connect the relationship dots or should you keep them separate?

In reality, even though the brand name may be the same, eg Virgin Atlantic and Virgin Music, they can of course be completely separate entities, owned and staffed by different people. In Sir Richard’s case though, he is the common link. People associate those businesses with him and what he stands for, because he is the face behind the brand.

People know that he challenges the status quo and that his brand stands for qualities such as ‘value for money’, ‘quality standards’ and ‘fun’.

That brand can be damaged so easily though with bad customer service in any one of the companies and that is why he monitors the feedback so stringently and insists on high standards throughout the group of businesses that bear the name.

Sir Richard also said that, “If you can run one business well, you can run any business well.”

That is true, as long as you recruit the right people and apply the right systems and processes. The principles are the same.

The issue I came up against with my chain of businesses is that as an entrepreneur you will see the opportunities – you can’t switch off the entrepreneur in you. What I have learned, however, is that just because you could do something, doesn’t always mean that you must!

The question of which name to use will often come down to a couple of considerations:

  1. The Endgame – If you plan to keep one business longer, but sell the other one, or perhaps bring in different partners or shareholders, you might choose to keep the names separate. If you sell one of your businesses off and the new owner gives bad service and destroys the reputation that you carefully built up, it may not matter any more, because you are no longer linked.
  2. Market Recognition – You can often accelerate the acceptance of a new business venture if it bears the same name as the brand you have already established. Virgin is the best example I know, because anything Sir Richard touches has that immediate customer awareness. That still doesn’t guarantee long term success however. Some of his products started with a bang but didn’t really conquer the new market, such as Virgin Cola.
  3. Possible Customer Confusion – Some clients have asked me about this. If you start a second venture in something completely unrelated to your first venture, will that confuse the customer? I don’t think so, because today’s consumer has become used to brands that progressively extend their reach across multiple markets.
  4. Economies of Scale – If you keep various entities under one umbrella, you may be able to reduce marketing and advertising costs if the brands are symbiotic in nature. E.g. My ‘Club Red Backpackers’, ‘Club Red Cars’ and ‘Club Red Tours’ fitted together really well and could sometimes be advertised together in one medium.

The Club Red Group 2000 - 2010

Club Red BackpackersClub Red CarsClub Red Tours

The Club Red Group 2000-2010

The Name of the Game

Ultimately, the big question is, ‘Will your business succeed or fail if you choose the wrong name?’

I’m sure someone will come up with an example or two to prove or disprove either answer.

So marketing specialists may well disagree with me (their livelihood might depend on it) but I believe that the business world has shown us time and again that there is no right or wrong, there is only perception.

The ‘right name’ in one person’s opinion is a ‘ridiculous choice’ to another customer.

Whether the business stands or falls will come down to the old truths of business. It will depend on the right products and services (in quantity and value) at the right price at the right location in the right time; the right people and systems; the right funding and financial controls; the right marketing, message and medium; licences, government regulations, legalities, the competition and all the other myriad of ancillary matters that make up the worlds of business and lifestyle.

Business demands of us owners that we wear many different hats and wear them competently. In reality, none of have all of the answers and that’s why it’s important for you to have a mastermind group surrounding you.

If you need clarification on any of these issues or would just like to discuss your next moves forwards in business or life, please don’t hesitate to call or drop me an email.

Until next time, ‘Seize the day!’

Tony Inman

Tony Inman - business and lifestyle coach, consultant and mentor

Tony Inman

 

by Tony Inman

TONY INMAN is the CEO of Club Red Inspiration. An entrepreneur who has set up over 20 businesses, Tony is a business, life and mindset coach, consultant, mentor, presenter and trainer. A former mentor at Curtin University’s Centre for Entrepreneur-ship, he has coached hundreds of business owners and executives across the globe. Tony is the author of several books including ‘If Life’s Worth Doing, It’s Worth Doing Well.’ He is passionate about helping people to fulfil their potential and follow their dreams.