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ChangingMinds Blog! > Blog Archive > 18-May-14

 


Sunday 18-May-14

Brand collision

In the UK news this week is the proposed merger of two big companies, each with a history of daft naming that I suspect has affected sales. Yet both companies have still been successful and I am left wondering about the real reasons for the merger, beneath the predictable PR hype.

Dixon's were the big tech retailer on the high street. If you needed a TV or computer, you went to Dixon's. Then along came the internet and internet prices. Dixon's wanted to compete in this market but didn't want to have shop and internet prices conflicting. So in a crazy move (that I blogged about at the time), they changed the name of the retail store while using the Dixon's name online (while, oddly, retaining the name their airport stores). Worse, they called the stores 'Curry's, which was the name of a white goods retailer they owned, with a little '.digital' postfix. Confused customers? You bet.

Carphone Warehouse got into the mobile/cell phone business really early. You guessed it: when there were those clunky big things in cars. And then when things went properly mobile, rather than biting the bullet and re-branding, they dragged the clunking name with them. The original smart name then became something of a millstone. More confused customers.

So when I heard these two behemoths were merging, I groaned. The market groaned too as both their share prices fell at the news.

I've worked in M&A and there's no such thing as a merger. There's always a 'leading partner', and I suspect it will be Dixon's, who are more dominant in their sector as they have little real high street competition, although they have already failed with a phone retail chain (in a rising market, how??). On the other hand, Carphone Warehouse is the newer company and may have more youthful drive. Sometimes even acquired companies do a reverse on their purchaser. Both companies have relied on strong marketing, and no doubt this will continue, though merging the two marketing departments will likely be horribly messy and political as people fight for power or just to keep their jobs.

Unless somebody wakes up, I'd predict another high street train wreck in a couple of years, perhaps starting with more naming weirdness. I just wonder how big companies survive without that most important of abilities: a deep understanding of human psychology.


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