The Growing Battle Between Products and Brands

If you’ve seen the film Inception, where mercenaries try to plant an idea in someone’s mind by literally entering their dreams, you’ve seen a flavor of how brands work on us.

Brands can perform a heist in your mind. They can infiltrate your dreams with subliminal messages, and make you think someone else’s thoughts are your own. And we can totally forget it, as if it never existed.

“Let’s say people get dementia or something like that. Then they forget a brand called Coca-Cola,” says Kiran Pedada, Associate professor of Marketing at the Asper School of Business.

So in the business landscape, the question becomes, can a brand compare to tangible things, like new and improved products?

Pedada addresses the minefield companies must cross when they decide whether to focus more on research & development, or brand in his article “To Acquire or to Ally? The Impact of Strategic Emphasis on Governance Mode Choice.”

Written alongside co-authors Girish Mallapragada (Indiana University), Raghu Bommaraju (Indian School of Business), and Alok Kumar (University of Nebraska), the article was published in the FT50-ranked Journal of Marketing Research.

High risk, high reward

What does “To Acquire or to Ally?” mean?

Say your company wants to grow: you can favour an acquisition (i.e. bringing on a new client) or alliance (i.e. forming a partnership with another entity).

How leaders make this decision is by adapting one of two different mindsets at the strategy stage: value creation or value appropriation.

In value creation, a company creates new services and products by investing in research & development, building on what they offer in the marketplace.

In value appropriation, a company takes what it already has and tries to gain a higher stake in the marketplace by reinforcing their brand through marketing and advertising efforts.

With the paper acting as a guide to decision makers in the business world, Pedada and his team show that if a company places its strategic emphasis on value creation and R&D, they are more likely to form alliances; if the company prefers value appropriation and branding, they will go the acquisition route.

However, the research shows that focusing on acquisitions (brands) is trending down.

When company analysts get involved, they tend to encourage executives that the brand will be safer if they go the alliance (R&D) route.

The growing tendency of Chief Marketing Officer (CMO) positions being ousted from the C-suite proves it. “Marketing has had an issue for several years, like, what’s the real impact of marketing at the top level, right?” Says Pedada.

For one, it has always been hard to prove the effectiveness of advertising. But especially when it comes to global brands, “transferability is more challenging.” He says. “They need more adaption. For example, the distribution channels for India are very different compared to Canada or the UK, right?”

And if someone mishandles a brand, he says, “they might misappropriate a brand, and then that could actually lead to negative consequences.”

Be genuinely interested

Pedada’s article serves as an answer to questions he had before taking his PhD.

“Before I started my PhD, I worked in corporate strategy where I was actually sort of working on acquisitions and alliances, especially in the infrastructure industry in India.” Pedada says. He wondered how they decided which route to pursue.

Pedada thinks that the article’s fusion with his personal curiosity (as well as his co-authors) is what gave it the spark that led to it being published in a prestigious journal.

“We’ll invest more time when we are really genuinely interested in something, right?” He says.

Six years and countless reviews later, it’s easy to get the sense Pedada wouldn’t have wanted it done any sooner.

“It’s very satisfying after such persistence. I think the fruit tastes better.”

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Brett Maclaren