AT&T's Baggage Weighs Down SBC

By Scott M. Davis

If the old AT&T had been able to rise above its reputation for poor customer service and an unreliable network, we'd still consider the AT&T brand as one of the world's strongest trustmarks. Its venerable name would connote a company that was widely admired, well-managed

and known for keeping its customers happy. As we all know, the telecom giant faltered and the AT&T brand suffered great damage. All of which has left me scratching my head as to why the newly merged SBC Communications and AT&T would take on the AT&T name, much less use it to underscore a lofty new brand campaign promise tagged, "Your world. Delivered."

What's in a name? Plenty. It's the most obvious representation of a brand and comes with all sorts of positive and negative associations, externally and internally. Those nuances are critical to leverage or downplay, whether for a new concern or one newly created by merger or acquisition. Naming strategies vary too. Small wonder that the practice has spawned a category of brand specialists dedicated to helping management chart what can be treacherous waters.

Consider a few of the strategies that have helped some major merged businesses solidify and advance their brand positioning:

The third-largest automaker in the world was created by the 1998 merger of Daimler-Benz and Chrysler. The DaimlerChrysler brand was adopted for the new holding company because both brands had strong legacies in the auto world, and both were solidly linked with their key product brands of Mercedes-Benz and Chrysler. Opting for a combined brand reflected the scale and global presence believed to be highly important in the consolidating industry, and was a strategy sure to appeal to shareholders.

• As a means of differentiating their new company from the other "Bell" operating companies, GTE and Bell Atlantic opted to create the new master brand of Verizon following their 2000 merger. Soon after, the Verizon Wireless name became a sub-brand of the joint venture between Bell Atlantic and Vodafone-AirTouch. Aside from differentiating the service, the new name signaled a business that would offer both stability and a forward-looking vision to customers.

• In a different twist, when J.P. Morgan and Chase Manhattan Bank merged, so did the name of the holding company—to J.P. Morgan Chase & Co. An octagon symbol was also incorporated into its logo to signify the unified family. But with strong equities in the distinctly separate sectors of retail (Chase) and commercial (J.P. Morgan) clients, those names were retained as sub-brands and strongly leveraged in every aspect of their identities.

It's important to keep in mind that these decisions involved far more than just a name game. They reflected well-thought-out strategies that signaled how the products and services under a brand umbrella would be organized and marketed so as to most effectively leverage the brand's power.

Which is why the decision to adopt the sole brand of AT&T remains so curious, when another option—the bifurcated J.P. Morgan Chase strategy, for example—might have allowed the merged company to better capitalize on the strong equities each brand had achieved in distinct segments of the market.

SBC built an excellent consumer franchise, going beyond its regional roots as a Baby Bell through moves like its strategic alliance with Yahoo!, adding some new media gloss that gave it relevance with a younger demographic. It all adds up to brand equity that AT&T on its own may struggle to rebuild.

For AT&T, its storied history, one-time reputation for innovation, and an ongoing stronghold in the business marketplace, add positively to its brand equity. Yet its struggles on other fronts, from the way service deteriorated in its consumer business to botched acquisitions to ill-conceived new product launches like its credit card, created an equity-draining confusion among consumers.

Despite very high consumer and business awareness of the AT&T name, what matters from a brand perspective are the associations—good and bad—that are tied to it.

Choosing a new mantle doesn't have to be an either/or proposition opting for one partner's brand over another. With no hard or fast rules, a key insight is to build on each mark's hard-won equity. Make sure that the "new" brand has less ground to make up in solidifying its positioning with all its constituents, and establishes a strategic footing for brand-based business success down the road.

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