If you want to conduct a business, you can either create a new brand (brand creation) or acquire an established brand (brand acquisition). Both options have their complexities and benefits.
However, choosing a single option from both is difficult for those who want to start the business journey. Therefore, this article will provide in-depth information about Brand Creation vs Brand Acquisition. Moreover, what aggregators prefer both of these options?
In comparing the difference between brand creation vs brand acquisition, let’s discuss first brand creation. Brand Creation relates to the concept of developing a new brand that is new in the market. In the era in which we live, the competition between different businesses is on another level, and it’s hardly possible that the product you are launching doesn’t have any substitute in the market.
Brand creation has certain benefits which can be rewarding to entrepreneurs. Firstly, firms can understand customers’ needs and introduce effective products by avoiding cannibalization. Secondly, companies can easily manage the pace of expansion.
However, this strategy also has certain risks and complexities. Nowadays, business competition is furiously aggressive, and if you launch a new brand, the chance of failure is higher than the success rate. Moreover, building new brands is extremely difficult because of the rising advertising and distribution costs and brutal competition.
You need a huge marketing budget to launch a new brand and manage it appropriately to extract favorable results. Needing an exceptional marketing strategy is also essential to developing brand awareness.
To create a brand, you must have an effective action plan and allocated budget to start and continue your efforts. Read the case studies of successful multinational brands and analyze their strategies to create your brand creation.
The brand acquisition process illustrates the concept of acquiring an already established brand in the market. The brand elements are completely transferred from one firm to another legally, and the ownership is changed, which is recorded by US Patent and Trademark Office (USPTO).
The complexities USPTO faced in identifying acquisition is that a brand can have different trademarks, logos, shapes, and many more. After the brand sells, all the trademarks are transferred to the brand acquirers.
The significant benefit of the brand is that you already know about the brand’s growth and profits and also aware of the acquisition cost. So, you can evaluate the decision-making process effectiveness before acquisition and grow the brand’s existing revenues with your preferred strategies.
The acquirer shouldn’t expect abnormal returns of the acquired brand after acquisition. You must go through the conclusive framework of implementing strategies that have worked previously for the acquired brand and using your market knowledge to scale the existing business.
What to Choose From?
That’s a complex decision to decide which is the best idea to acquire. People having significant investments and aiming to build their brand can take the step of brand creation. However, they must navigate the problematic framework of creating a brand in a highly competitive market. The chances of failure are high if the ideas to work on are not worth it.
However, brand acquisition is the process of acquiring an already running business that is successful and demandable. You need significant market knowledge and a conclusive strategy to scale that business. You don’t have to go through the hard work of creating brands and spend a lot of money creating brand awareness and sales in the highly competitive market. In my opinion, brand acquisition is preferable to creating a new brand.
If you belong to Amazon world as a seller, you may have heard about Amazon aggregators. They are the ones who entered the market to acquire successful Amazon brands. Then, after the acquisition, they scale that business to new levels and earn maximum profits.
What Aggregators Prefer?
As discussed in comparing Brand creation vs Brand acquisition, brand creation is a complex process. It requires a lot of time and effort to create new brands on Amazon, and making them profitable is a big challenge.
Therefore, Amazon aggregators prefer acquiring already established brands in the market and scaling them to new heights. They don’t want to get through the difficulties of creating new brands and wait for a long time to make them profitable.
These aggregators are funded heavily by different investors and want quick results from their investment. Taking risks is not an option for Amazon aggregators. They are very selective in acquiring brands and go for getting those that match their expertise.
After the pandemic, different Amazon sellers wanted to sell their brands due to high valuation multiples by aggregators. They are brand specialists. If you are a successful Amazon seller and want to sell your brand, these Amazon aggregators can provide a good value for your business.
Multiple brand acquisition companies want to acquire successful e-commerce businesses and bring them to the next levels. However, due to supply chain disruptions worldwide, multiple e-commerce sellers face challenges growing their e-commerce businesses. Therefore, it’s an excellent option to sell your e-commerce store to these aggregators who have extensive connections in the market and know how to develop your brand even in the middle of serious challenges.
The factors that strengthen their ability to scale brands are huge funds and competitive teams. In addition, they have years of experience in making e-commerce brands successful.
After knowing the difference between two important terms, brand creation vs brand acquisition, what can be the best option for an entrepreneur? If you look for this answer from the perspective of Amazon Aggregators, then it’s the brand acquisition.
Creating a new brand requires significant effort and a lot of financial resources to make the brand successful. Moreover, it’s a long-term process. However, acquiring and scaling an already established brand with available funds can be a lucrative option. In addition, it can be advantageous if you have the market knowledge of that brand.
What is a brand acquisition?
Brand acquisition relates to purchasing an already established brand and its rights. The acquirer then further scales the business to the next levels after acquisition.
How do mergers and acquisitions affect brands?
The merger and acquisition can be highly promising for both companies involved in the acquisition process. It can improve the brand’s reputation and enhance your brand’s perceived value.
What is brand creation?
Brand creation involves identifying your business strategy, target customers and their demands, market competition, and brand positioning.
How do you acquire a brand?
In brand acquisition, you buy most, or all of the company shares to gain control. Obtaining high shares allows you to make decisions in the firm.
What are the four brand development strategies?
- Line Extension
- Brand Extension
- New Brand Strategy
- Flight Brand Strategy