Consolidation in the U.S. economy, which has particularly affected financial services, has relegated brand names such as Chemical, Manufacturers Hanover, Boatmen's, Barnett, and perhaps now Salomon to the dustbin of history.

The decision on which name to adopt is often obvious-the buyer's-and gets little thought. The dropping of Chemical in favor of Chase Manhattan was an exception. Chemical Bank clearly had the controlling interest but chose the stronger brand.

Surely there must be an approach more disciplined than relying on the capriciousness of buyers. It may be described by reviewing four key criteria in the branding decision:

Corporate vision and values.

Assessment of the brand in light of business strategy.

Objective measurement of brand equity.

Basic branding principles borrowed from other industries.

The more congruent the visions and values of the merged organizations, the more a single brand name is appropriate. This is even more the case when business lines and customers overlap. One name was imperative when Chemical and Chase merged; it was not when Mellon Bank acquired Dreyfus Corp.

Mellon might have been able to comfortably fit Dreyfus within its corporate mission, but Dreyfus operated for years with a more focused vision, and its constituents perceived that it stood for something apart from what Mellon represented. Changing the Dreyfus name would have squandered brand equity and endangered Dreyfus employees' sense of values that were grounded in the mutual fund industry: responsiveness, a sales- oriented culture, and quick decision-making. Banks' values are more contemplative, deliberative, and reactive to customers.

Just as there is a link between branding and vision/values, so must there be alignment between what is promised-the brand concept-and what the business strategy is. This entails questions such as: Who are the target customers? Who are the likely competitors? What point of difference that is relevant to these customers can be owned as a brand?

To the extent that two merging organizations' answers differ, they should use different brand names.

When Chase and Chemical merged, it was fairly obvious one name would emerge. But what if the acquired entity had been far away? That was the case years earlier when Chase acquired Lincoln First Bank in upstate New York, and when Chemical acquired Texas Commerce Bank in Texas.

In both cases, the local names were allowed to persist for a considerable period. This seems to make sense when the local brand has greater value than that of the parent and there is no strategic imperative to someday have a national brand with accompanying economies of scale in marketing and advertising.

Local autonomy on branding seems an easy short-term decision but it may only put off the inevitable. In an integrated global economy, even a company like HSBC Holdings that has different names in Asia (Hongkong and Shanghai Bank), the United States (Marine Midland), and the United Kingdom (Midland Bank) needs to rethink its use of different brands.

When two organizations become one and their customer segments and needs filled are similar, it makes sense to choose the name that is perceived as distinctive, more relevant to targets' needs, held in higher esteem, and generally more familiar. These are the components that drive brand equity, according to ad agency Young & Rubicam. The Chase name aced out Chemical on these points, particularly familiarity.

Brand equity tends to be more fragile for service companies, particularly after a merger, than for companies with tangible products like Jell-o or Maxwell House. When a Kraft acquires a General Foods, the customer experiences no brand or end-product difference.

The challenge in a bank merger is to retain favorable images of both brands and end up with a perception that will further the business strategy. Sometimes the solution will be in dual branding, as in NationsBanc Montgomery Securities.

Here are four very broad guidelines that follow from these examples:

The brand name and what it seeks to stand for should be aligned with vision, value, strategy, and performance measures.

A merger presents an opportunity to redefine the brand to stand for something different and relevant.

The goal should be brand uniformity, under one name, unless the segments or needs served warrant something different.

Crafting a new brand image is easy compared with the ongoing task of delivering on the promise in ways that are different and relevant. Advertising is important, but it takes an integrated business approach to reinforce the brand and bring the promise to life.

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