Life Science Marketing Challenges During M&A – Relationships Among Families of Brands – Part 2

The key question that must be asked during mergers, acquisitions, and even during product and service launches is this: How should the relationships among different brands in a family be portrayed to the audience?While the astute reader will notice that this diagram has been updated since our last issue to adapt to recent mergers and acquisitions in the bioscience industry, the concepts embodied in the diagram remain unchanged, and are valuable for asking and answering questions concerning the family relationships among brands in the biosciences. Please note that all trademarks shown in the diagrams belong to the respective trademark owners. Their use in this diagram is for illustrative purposes only.

Choosing among the four possible answers to maximize your bioscience marketing effectiveness.

There are some very important reasons why marketers would choose one answer over the others when deciding how to present the relationships among two or more brands.

Choosing one answer over another requires careful study of the advantages and disadvantages that each approach can offer. As we discussed  in the last issue of this newsletter, a few factors to consider include those that are specific to your individual situation, such as the audience, the current “brand equity,” the strategic direction of the two entities, the positioning of the two entities, the size of the two entities, the amount of competition between the two entities and the overall marketing budget. These important factors all rely on the specifics of your individual situation when choosing an approach from among the four outlined in figure 1.

In addition to these factors, there are other issues that are generally applicable to all situations. I want to take the remainder of this newsletter to review these, including:

• The voice of the organization
• The complexity of the relationship among the brands
• The number of impressions of each brand the audience will see
• The overall budget efficiency of creating these impressions
• The ability to tailor the messages
• Damage control (protecting individual brand reputations)
• The ability to add products or services.

The overall voice of the organization will affect bioscience marketing during mergers and acquisitions.

Organizations that structure their brand family relationships using a Parent only model (at the left side of Figure 2) will communicate with a single voice. As organizations choose approaches that are farther to the right, more voices are added. Each voice that is added will add complexity in management for the marketing team and potential confusion for the audience.

The complexity of the presented relationship will affect bioscience marketing during mergers and acquisitions

The approach that is the simplest for the consumer to understand is that at the left end of this model: Parent only.

Choosing different relationships among you family of brands will affect the complexity of the relationships that your bioscience marketing audiences will perceive.The approaches in the middle are more complex and more difficult for the consumer to understand. Simply put, the Parent dominant or Children dominant approaches require that the consumer understand several key points: that there is more than one brand, that one brand is dominant, and which particular brand is dominant. This may sound simple, but audiences have limited capacity for any particular marketing message, and asking the audience to understand the complex relationships among brands could detract from their ability to understand other parts of the message.

The approach on the right – Children with no visible parents – is simpler than the two in the middle, but it still requires that the audience understand that there are multiple brands, each with its own position and message.

Viewed from the standpoint of the complexity of the presented relationships, an approach from the left side of the model – such as Parent only – communicates most clearly with the audience.

The number of impressions the audience will see will affect bioscience marketing during mergers and acquisitions

The number of impressions seen by the audience is a crucial factor in determining the effectiveness of delivering a brand message or cementing a brand’s position: more impressions will be more effective.

Different approaches to the relationships among the family of brands will affect the number of impressions that bioscience marketing audiences will see.

Each of the four possible approaches depicted in Figure 4 will have very different results in this regard. In the Parent Only approach, there is only one bioscience brand, so every impression will carry the same message (assuming that the marketers are doing their job by remaining consistent and “on-target” with their message). Because there is no other message – that is, because there is no other brand being presented to the audience – the total number of impressions of this message seen by any audience member (known as message frequency) will be the highest. This increased frequency increases the ability to affect the audiences’ attitudes, beliefs and behaviors.

In the middle of the model, both the Parent dominant and Children dominant approaches, which present multiple brands to the audience, dilute the number of impressions of any one brand received by the audience. The more children there are, the more diluted the parent’s message will be. The less emphasis given to the parent (that is, the farther to the right on this model), the more diluted the parent’s message will be.
If we look at the Children with no visible parents approach, no impressions received by the audience will carry the parent’s message; all will carry one of the messages of the various children. Given a constant total budget, the more children there are, the fewer impressions each child will receive. So this approach dilutes the overall message by decreasing the number of impressions carrying each child’s message.

Viewed from the standpoint of the number of consistent impressions, an approach from the left side of the model – such as Parent only – will maximize your life science marketing impact.

Budget efficiency will affect bioscience marketing during mergers and acquisitions

Budget efficiency – as measured by the total number of impressions for any one brand divided by the marketing dollars spent – will vary. The Parent only model is the most efficient, because all impressions are of a single brand.If we combine the two factors I’ve just discussed, and add the fact that life science marketing budgets are not infinite, then it should be clear that the approaches to the left of the diagram will deliver more consistent impressions per dollar spent than those approaches on the right. And the impressions will be more understandable as well, being simpler.

Viewed from the standpoint of budget efficiency, an approach from the left side of the model – such as Parent only – is best. Given that the three factors just discussed – the number of repetitions, the complexity of the relationship and budget efficiency – urge us to choose an approach from the left side of the model, why then would you choose an approach from the right of the model? The answers are simple yet compelling.

The ability to tailor messages will affect bioscience marketing during mergers and acquisitions

The approaches on the right of this model – such as Children with no visible parents – has an overwhelming advantage. It is easiest to deliver a tailored message to multiple audiences using this approach. Zyrtec and Tylenol are two “children” of McNeil Consumer Healthcare (see figure 1). By using two brands, McNeil has the freedom to communicate relief from allergy symptoms (Zyrtec) in a different way than it communicates relief from headache pain (Tylenol). The ability to tailor the exact type of relief being offered is important, and is one of the strongest reasons to keep “children” brands distinct from “parent” brands.

But this is not the only reason; there are several other reasons to separate the messages of “parent” brands from those of the “children.”

Damage control affects bioscience marketing during mergers and acquisitions

When children brands are distinct from their parents, damage control is easier. By this I mean that a scandal that affects one child brand may be kept isolated from another child brand, or even from the parent brand. The classic example is the Tylenol poisioning scandal (1982). In this case there was minimal damage to the other brands owned by McNeil and Johnson and Johnson, even though the damage to Tylenol sales was substantial – including a temporary drop in market share from 37% to 7%.

When the “family relationship” among brands is not strongly portrayed, as in approaches from the right of this model, it is easier to prevent a crisis in one brand from damaging the reputation of another brand.

Other McNeil brands did not suffer much from this drop in market share. The difference is mainly attributable to the relationships (or lack thereof) among the brands. By following a Children with no visible parents approach, McNeil prevented trouble in one brand from contaminating another.

The ability to divest (or acquire) assets affects bioscience marketing during mergers and acquisitions

Brands have value, above and beyond the physical assets or the products and services that they represent. This “brand equity” can be significant. With separate brands, following the approaches on the right side of the model, this brand equity can be kept distinct from other brands. This distinction means that it is possible to divest or acquire an asset without the entanglement of trying to rebrand.
When messages are tailored and the relationship to a parent is downplayed, life science marketing assets can be more easily divested. This not only applies to brands themselves, but to products and services as well.

Approaches from either end of the model allow the greatest flexibility in adding or divesting products, services or even brands.

On the other hand, if a life science organization follows the approach from the left side of this model – that of Parent only – then individual services are not branded. Therefore, services can be added (or removed) from the overall mix of services at will, without having to devote life science marketing resources to creating and promoting a new brand.

So, approaches from either end of the model allow greater freedom in adding or divesting products and services. But when the Children with no visible parents approach is used, marketing resources must be dedicated to the children. The amount of marketing resources that must be devoted to creating and promoting a new service will rise the farther to the right an organization moves on this diagram. At the far right, a new service would require its own brand, marketed separately from the rest of the organization’s brands.

Conclusion:

There are many reasons to choose one approach over another when deciding how to present the relationships among a family of brands in the life sciences. These criteria do not uniformly favor one approach over all the others; there are good reasons to choose each individual approach I have outlined. Some of the criteria to consider when making your choice include:

• The voice of the organization – a single voice or multiple voices.
• The complexity of the relationship among the brands.
• The number of impressions of each brand the audience will see.
• The overall budget efficiency of creating these impressions.
• The ability to tailor the messages for each brand.
• Damage control (protecting individual brand reputations).
• The ability to add products or services.

In our next issue we will look at several sectors in the life sciences and show that among specific sectors, there is often a common approach. We’ll examine the reasons for this.

Summary

• The fundamental question for life science marketers during mergers and acquisitions is: What happens to the life science marketing assets (the positioning, the messages, the taglines, the names, the identities and the “look and feel”) of the two organizations?
• There are four typical answers to this question.
  • A parent-only model, where only one entity survives
  • A parent-dominant model, where the parent can have many children, but the parent is the dominant marketing entity.
  • A child-dominant model, where the many children are presented as more important than the parent.
  • A children only model, where the parent is not presented.
• Many factors will influence the answer of which life science marketing relationship should be chosen. Factors that are specific to each individual situation include: the audience, the current “brand equity”, the strategic direction of the two entities, the positioning of the two entities, the size of the two entities, the amount of competition between the two entities and the overall marketing budget are all important when choosing a marketing strategy.
• There are other factors that are generally applicable to all situations, including:
  • The voice of the organization
  • The complexity of the relationship among the brands
  • The number of impressions of each brand the audience will see
  • The overall budget efficiency of creating these impressions
  • The ability to tailor the messages
  • Damage control (protecting individual brand reputations)
  • The ability to add products or services.
• Choosing the proper approach for any individual situation requires an astute balance among the various issues raised by these different factors.