Shift in two-brand strategy for ANZ means one may go
Eight years after the acquisition of The National Bank in New Zealand, ANZ may be coming to the view that the "competing" two-brand strategy can't work in the longer term. It may be time to give up one of New Zealand's strongest brands. When ANZ bought National Bank from Lloyds Bank in 2003, it acquired the licence for the use of the horse and green branding - the symbol of the "thoroughbred" - for 10 years. Last year the licence was renewed for another five years. Now ANZ acknowledges the brand may not last forever. An ANZ New Zealand spokesperson wrote in an email: "That's not an issue for today. We are thinking through the issues around how the brands work together and we'll take as much time as necessary to do that."  "Work together" is a key phrase here. At the time of acquisition ANZ was very clear that the two-brand strategy was about competition. "We are committed to maintaining both ANZ and The National Bank as competing brands in the market over the long term," ANZ said then. The rationale at that time was that the dual-brand strategy would minimise customer attrition. Maintaining two brands would give a 40 per cent market share, if the total market is deemed to comprise of the three other Australian banks (ASB, Westpac and the BNZ) was ANZ's reasoning back then. ANZ chose to use a single-brand model for its rural business, because National Bank was a clear leader in that market then, and used the two-brand model for its retail and other businesses. But by 2006 ANZ New Zealand realised it was not gaining any market share after the initial spike and profit growth had fallen short of group target. While it reiterated its commitment to the two brands, that commitment seems to have slowly dwindled over the years. The mantra has now changed to the two brands working together. But, without the benefit of growth in market share, the increased cost of running two brands, with duplicated time, means it's now unclear if ANZ will still see the rationale of having two brands targeting the same market. Last year, ANZ took the first major step in its move to eliminate "a large amount of duplicated time and wasted effort" when it announced it will shift to a single core banking platform by the end of 2011. ANZ now has to decide whether it still makes economic sense to have an ANZ and National Bank branch located next to each other, and their ATMs installed side-by-side, when they are no longer competing with each other.