Love or Hate: Study on the Role of Brand Authenticity in M&A

Abstract

Under the development concept of China’s own brand project, more and more companies are acquiring other brands to complete their brand image leapfrogging. However, in practice, many brand mergers and acquisitions have been openly opposed and even boycotted by consumers, resulting in poorer brand M&A performance. For example, on the occasion of Lenovo’s acquisition of IBM’s PC division, a large number of consumers openly expressed their dissatisfaction on the Internet and called for a boycott. This paper argues that under M&A conditions, consumers’ perceptions of the authenticity of the acquired brand determine their specific attitudes toward the brand and subsequent brand behavior. Brand authenticity, which refers to whether the acquired brand can maintain its original image, style and quality, has gradually become an important predictor of consumer purchase decisions. Through the literature review and field brand research, and in order to clarify the cognitive mechanism and behavioral responses of consumers towards post-merger brands, this paper builds a research model of brand authenticity, dual brand attitudes (brand love and brand dislike) and subsequent brand outcomes (brand trust, brand loyalty and brand switching), and incorporates the moderating role of brand memory in the model. The results of the quasi-experiment’s 202 data analysis suggest that consumers’ perceived brand authenticity affects their resulting preference for the acquired brand and further develops trust in the brand and maintains brand loyalty, and acquirer brand memory positively moderates the effect of brand authenticity on brand affection. Brand authenticity also negatively influences brand aversion and inhibits consumers’ brand switching. Moreover, brand to love mediates the relationship between brand authenticity and brand trust and brand loyalty, and brand aversion also mediates the relationship between brand authenticity and brand switching. The findings of this paper not only extend the applicable frontier of brand authenticity in M&A conditions, but also validate the importance of brand authenticity in M&A conditions. At the same time, this paper also reveals the differential impact of brand authenticity on dual brand attitudes and brand behavior under different conditions, and discusses and verifies the important boundary role of brand memory in these conditions. In practice, this paper also provides good practical insights for M&A practice. Firms can incorporate consumer cognitive mechanisms to build an appropriate M&A strategy that can help them achieve good brand M&A results.