Will Bayer’s Merger with Controversial Monsanto Require Brand Repositioning? Not Necessarily

When you consider the biggest corporate mergers of all time—Heinz and Kraft, Exxon and Mobil and America Online and Time Warner, among them—normally the trades focus on how each will affect shareholders, headcount or price points.

"Positioning the brand and regaining trust are all smart things for us to do and those are the litmus tests for any decisions we make."

John McKinley

The reputation of either of the two merging parties is rarely considered; often, it’s because any company participating in a merger that demands antitrust approval has already earned consumer confidence and, consequently, billions in assets.

Bayer’s takeover of Monsanto, however, in a deal estimated at $66 billion, is a different kind of beast. Almost immediately Bayer, the German pharmaceutical and chemical company perhaps known best stateside for its titular aspirin, announced it will drop the Monsanto name from its portfolio, for reasons related to brand health. According to 24/7 Wall St., the St. Louis-based Monsanto is the 16th most hated U.S.-based company in the world and, in 2017 and 2018, it ranked #97 and #95, respectively, among the 100 most visible companies on Harris Poll’s annual corporate reputation ratings.

Reasons for Monsanto’s sullied reputation are myriad, but mostly are related to agrochemical and agricultural biotech perpetuation of GMO crops and their position against efforts to create GMO labelling laws, both thorns in the sides of environmentalists.

That’s not to say that this marriage will be tacitly toxic. That’s where consumer research plays an important role. Not long ago, for example, a gas utility company came to Marketing Workshop seeking counsel about a series of unflattering articles a local newspaper had printed about them. Marketing Workshop advised to take a quantified approach to assessing existing brand image which resulted in conducting a consumer-perception study in the market to gauge awareness and attitudes of the company and assess any negative impact the publicity was having on the company’s image. Based on our research, we recommended the client not attempt to address the issue with an ad campaign, as the research had revealed few households were actually aware of the negative publicity and identifying with it would create an expensive self-inflicted wound, considering the cost of advertising and the cost of customer attrition.

The results of the gas-company study could be a harbinger of Bayer’s situation. Regardless, it’s important for organizations facing these evolutions to get a real handle on public awareness and brand perception, and in this case specifically, awareness of the merger and how the merger is perceived before devising re-branding or brand association strategies. What we do know is that we should not assume consumer’s behavior without first getting that real read. What if research reveals that negative impact impressions are held by only a small minority of consumers? Or, conversely, what if research reveals a large majority of consumers would abandon the brand altogether, imposing an intolerable financial impact. Those two different findings would influence two different business strategies. Interesting to note; a 2017 Cone Communications CSR Study revealed that 75% of consumers would refuse to buy a product if they found out a company supported an issue contrary to their beliefs.

But, again, that’s assuming consumers (“Extra! Extra!”) know all about it. In other words, just because people who get paid to report on mergers and acquisitions know Monsanto is now part of their Bayer’s family and it doesn’t mean a significant portion of the world will, or to what end it’ll matter to them going forward. That’s why before any brand repositioning occurs, Marketing Workshop would recommend understanding the brand’s current position in terms of consumer perception and loyalty. Brand repositioning is a lot like a sign you sometimes see posted in retail stores going out of business: You buy it, you own it, no returns! To circumvent buyers’ remorse, strategic consumer-led brands do their brand-health research before making business critical decisions like re-positioning or re-branding.

~ Marketing Workshop

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