Merging On The Ridiculous

The chaotic situation in the financial sector is creating a branding headache for banks’ marketers.

My wife comes from Tasmania, a weird and wonderful island off the southern tip of Australia. It has some of the slackest planning provisions in the Southern Hemisphere. As a result, when her friends there build their houses, they invariably do so without the input of an architect or interior designer.

The results are inevitably awful. You have staircases in the wrong places, and, in one drastic case, a downstairs lavatory off the main dining room. This house has had a lot of money spent on it; both the bathroom and dining room have been beautifully done. It’s just hard to enjoy dinner when you know someone only a thin layer of plasterboard away is on the crapper. An architect would have ensured that these lovely rooms would stay far enough apart to avoid either impinging on the other.

This is why brand architecture is such an important topic for marketers. It is not related to the strength or weakness of individual brands in a portfolio, it’s about how they can be best combined, or kept apart, to ensure maximum impact on the market and maximum value to the organization.

With all the shenanigans in banking at the moment, brand architecture is set to become an even more important topic. If the cavalcade of distressed banks are not nationalized, they are absorbed by rivals. As brand acquires brand, the challenge of maintaining a strategically sensible brand architecture becomes more difficult. Santander, for example, now has to find a place for Bradford & Bingley’s savings business and branches next to Abbey and Alliance & Leicester within its group. Meanwhile, Barclays has to absorb the bits of Lehman Brothers it picked up in the garage sale caused by the US investment bank’s collapse late last year.

However, the mother of all brand architecture case studies is brewing at Lloyds TSB. Its very name tells you how advanced it is at brand architecture. It is merging with HBOS, that other maestro of branding. The result? Well, nobody knows. These deals are done by the finance chiefs and the government; only later do the marketers get to try to make some branding sense out of it all.

The less bold option would be to run the banks as separate entities in a house of brands structure. In this scenario, Lloyds TSB’s relatively tight brand portfolio would balloon to include Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance, plus licensed relationships with Saga, the AA and Sainsbury’s. While this kind of structure protects brand equity, employer brand and corporate culture, it makes for very expensive overheads and the kind of super-complexity that got HBOS into trouble in the first place.

A more brutal approach, exemplified by HSBC, is to bundle all the banks into a new entity – one brand offers better strategic focus and more appealing profits. Lloyds TSB’s problem is the relative lack of synergy in its portfolio. HSBC spent years acquiring the right banks and building a common culture before merging them, but the shotgun marriage of Lloyds TSB and HBOS is a sudden, incongruous cocktail of different customer segments, contradictory brand positions and contrasting organisational cultures.

Even if Lloyds TSB can come up with an architecture that works, there is still the question of what to call the new organisation. Based on its previous approach, it looks likely that it will follow the model beloved of most UK and US ad agencies: just keep adding names. We might soon see a bank with a brand based on the ridiculous conflation of Lloyds TSB Halifax Bank of Scotland.

Or LTSBHBOS for short.

Courtesy of Marketing Magazine

The Blake Project Can Help: The Brand Architecture Workshop

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

FREE Publications And Resources For Marketers