This year has been a newsworthy one in the world of mergers and acquisitions – from Facebook’s $19 billion acquisition of messaging service WhatsApp to the first changes resulting from the 2013 merger of U.S. Airways and American Airlines. While these stories flood major news publications and business blogs, they don’t always generate the praise and support the involved parties would like. According to researchers at Georgetown University, a key to generating positive consumer reactions is to focus on how the companies involved are framed.
The Institute for Consumer Research at Georgetown University recently published findings from a study in which they investigated consumers’ reactions to the merger of two hypothetical airlines. The research team, led by Associate Professor Kurt Carlson, manipulated two factors that were expected to influence consumers’ perceptions – size and financial performance.
In the study, consumers were given information on the size of the hypothetical airlines and the financial status of whether an airline was doing well or struggling. They were then asked to predict price and quality for the next year for each airline and then asked to predict the same thing if the two airlines were to be merged, thus four possible scenarios.
Researchers found that, “consumers seem to respond negatively to any merger that is seen as helping a large, struggling firm, but positively to any merger that appears to be motivated by helping a small, struggling firm.”
Read more in the research brief To Merge or Not to Merge? Why Some Mergers Generate Positive Consumer Reactions and Others Do Not, published by the Institute for Consumer Research, sponsored by KPMG.