After the merger of Vodafone and Idea was announced and Kumar Mangalam Birla was made the Chairman of the new merged entity speculations were rife about both companies coming out with a new brand identity. Ending speculations temporarily, Vodafone Group CEO Vittorio Colao on Tuesday said that both brands are very strong and that both will continue to operate in the market. The new company, with more than 400 million customers with this in one stroke has become the number one mobile operator in India
Different experts have different opinions about the same for instance Santosh Desai, Managing Director of Futurebrands feels that “Vodafone has an urbane connect while Idea Cellular is more popular in the tier II and rural areas. They have a balance and it does not make sense to fold one brand under another.” There are experts who believe that it is better to merge both brands and come out with a new brand like Brokerage firm Credit Suisse, for instance, said that the strategy to retain both brands is intriguing as it could keep the combined entity from realizing the “full extent of synergies”, especially when “competing brands from the same company are out in the market”.
Here at Passionate in Marketing (www.passionateinmarketing.com) we try to analyse why Vodafone and Idea should maintain a separate brand identity post merger.
The first and the foremost reason why one brand should not envelope another or a new brand identity should not be created is that both brands are very strong brands and they both can concentrate on their strongholds. While doing so the unhappy subscribers will have the option of selecting either of the two firms rather than go for a third network provider.
Another reason being that since in the telecom sector price points are more or less the same, brand becomes the biggest differentiator. Especially when there is lot of consolidation happening in the telecom sector and the companies trying to match the onslaught of Jio from Reliance, it is better that both Vodafone and Idea leverage there brand equity.
Cost wise it makes better sense to maintain two different identities and maintain accountability than creating a new one.
Though there is a bit of cannibalization expected among brands but it is still preferable to subscribers moving out. A friendly battle between brands within the family is healthy. It is advisable to keeps the teams behind them motivated and ramp up the numbers.
It looks like in the near future both Vodafone and Idea with their merged entity would not be coming out with a new brand and would rather stick on to their brand names and offer their services but the possibility of a new brand entity emerging from their stable cannot be ruled out. Though there are lots of ifs and buts and various possibilities can be discussed here, the feasibility of coming out with a new brand name depends on how far the other operators like Jio, BSNL and Airtel increase their onslaught.