Agrium's headquarters is pictured in Calgary, on Wednesday, May 7, 2014. Potash Corp. of Saskatchewan and Agrium have agreed to merge in a deal that would create a global agricultural giant worth an estimated US$36 billion.Larry MacDougal/The Canadian Press
The proposed $36-billion (U.S.) mega-merger of Potash Corp. of Saskatchewan Inc. and Agrium Inc. is a bid to create a Canadian giant in the fertilizer market. It is also a union of two thoroughly boring brands.
One is literally named for the thing it sells and the location of its headquarters. The other is slightly more creative – named for a reference to agriculture with the "ium" suffix meant to symbolize "a close connection to the earth." A key decision in the merger is still unknown: What will the new company be called?
"Agrium and PotashCorp are aware that naming the new company is one of the most important marketing activities that they will undertake. They intend to take their time to do it right and will provide an update on this in due course," the companies said in an e-mailed statement.
When companies merge, their brand identity is an important consideration. Will one brand prevail over the other, or will the companies seize the opportunity to overcome the naming constraints of the sector and create a brand that gets attention?
"There may not be a high bar of creativity, because it's industrial and we're looking at commodities," said Anthony Shore, a brand-naming expert responsible for the Taco Bell, KFC and Pizza Hut parent company's moniker, Yum! Brands Inc. "But people who do business in this scenario are still people, and will react to creative names. Now, it doesn't make sense to have a name that will undermine the value or the stability of the company, but that doesn't mean you have to throw in the towel and choose something purely descriptive."
It's not just cosmetic: The decision can help to communicate to investors, staff and customers the companies' strategic priorities.
"You want a distinctive, memorable name that stands out in the marketplace," said David Placek, founder of Sausalito, Calif.-based Lexicon Branding Inc., who created such memorable brand names as Swiffer, Dasani and, in Canada, Tangerine bank. In addition to such consumer-facing brands, he has also worked on naming industrial companies, such as a building-supply firm he is currently rebranding (the project is under wraps for now).
The first thing Mr. Placek always does is to research the strengths of each brand in a merger.: How long they have been in market, how actively they advertise, how much awareness the brand has among clients, and whether it has strong "brand equity." His primary instinct is to keep one of the names, if it is strong. For example, last year, when insurer Ace Ltd. announced its intention to acquire Chubb Corp., Mr. Placek's firm counselled Ace to adopt the stronger Chubb brand, which is what it did in January.
"If you have a valuable brand, you should never let it go," Mr. Placek said.
Other options for merging companies include merging the names, which is how a consulting firm ended up with what Mr. Shore calls the "abomination" that is PricewaterhouseCoopers, mercifully shortened to PwC. Other examples include GlaxoSmithKline, Penguin Random House and Molson Coors Brewing Co. If companies are not careful, this can lead to some unfortunate consequences, as in the case of the joint venture between Russian firm Gazprom and the Nigerian National Petroleum Corp.: The name Nigaz was criticized by some for having racially insensitive connotations in English.
Sometimes, it's useful to keep them separate, because they fulfill different purposes. A good example is in the packaged goods space: Procter & Gamble Co. likes to attach its parent brand to its products, but keeps recognizable brand names such as Gillette intact. Years of consolidation in the car rental industry have not cut down the number of brands as much as might be expected: Companies have kept Avis and Budget separate, although they are owned by the same company – ditto Enterprise, National and Alamo – because they are betting that those brands mean different things to different consumers.
That was also true for Canadian Tire Corp. Ltd. after its acquisition of Forzani Group Ltd. – there was no reason to subsume the latter's Sport Chek brand into Canadian Tire's; they had fundamentally different retail identities. However, in 2012, after a spate of acquisitions of sports retailers, Canadian Tire did realize it had too many brands and announced a "superbranding" strategy, consolidating its sports stores under the Sport Chek, Sports Experts and Atmosphere names.
The final option is to create an entirely new brand. That requires analyzing the name in a variety of languages to ensure there are no problematic or offensive meanings, and vetting with trademark offices in every country where the company does (or may do) business to ensure no one else has a claim on the brand. With more than 26.6 million global trademarks in existence, that's no mean feat. Firms often come up with thousands of possible names just to find a few that could be viable.
"We are greatly constrained by language and the legal system. Every combination of every letter has been done," said Thomas Ordahl, chief strategy officer at renowned San Francisco-based branding firm Landor Associates. The firm named metals firm Alcoa's spinoff Arconic this year. (The A was a nod to Alcoa; "Arc" was meant to represent an arc of progress, and "conic" was meant to create the impression of an iconic company.)
"B-to-B branding is changing," Mr. Ordahl said. "It's a lot more emotional than we previously thought. Because it's very risky … you're making, often, multimillion-dollar decisions on behalf of your boss."
Industrial companies' branding has traditionally been boring because marketing was simply not a focus as the way it is with consumer brands.
"Particularly within engineering, science or finance cultures, there's a widespread belief that marketing and advertising are just communications and pretty packaging. It is not perceived to be a major contribution made at the strategic level. So a lot of these decisions are an afterthought," said Jonathan Knowles, chief executive officer of New York-based Type 2 Consulting, which specializes in brand consulting following mergers. "In my experience, it's shocking how infrequently people have thought through the branding implication."
While with another firm, he was responsible for naming spirits giant Diageo following the merger of Grand Metropolitan PLC and Guinness PLC.
Diageo, which Mr. Knowles calls "a terrible mishmash of Latin and Greek" was mocked at the time, but communicated the firm's strategic goals of global expansion. "Dia" and "geo" were meant to connote "every day, around the world."
In the case of Potash and Agrium, "they'd be insane to continue with either of the existing names, because they're so limiting," Mr. Knowles said. "If you want people to think of this as a growth-oriented Canadian champion on the global stage, that's what your name should aim to communicate."
The brand does not have to eschew creativity simply because it is in the industrial sector, he added.
"So many of these types of corporations describe the what – we make potash or phosphates or whatever – but people want to know why this is important," Mr. Knowles said. "They're in fertilizers. If we help grow the world's food, that sounds like something I'd get out of bed for in the morning. It's a great opportunity to tell a story."