Of these three, the first two are relatively safe, but the third can be lethal if not managed properly.
There a number of reasons why businesses re-brand themselves by trying to transfer their existing equity into a new name, identity policy or positioning:
Brands are valuable, and that value is a culmination of many years' investment and commitment. Re-branding is expensive and entails some risk. You have to explain to historic buyers of the old brand what you are doing and why, and try to take them with you. This may rack up a significant communications budget and may not work, although very often it does.
Few companies go to the cost and effort of re-branding unless there is a very good reason for doing so, and when they do so they mostly get it right. Customers can be very forgiving of name changes, sceptical about identity changes, and highly resistant to repositionings.
As the old saying goes, in order to get something worth having, you have to give up something worth keeping. That is the calculation.
- New business ventures
It has been quite common for established brands to develop new identities for new business ventures:
- freeserve (Dixons)
- deepcanyon + several others (HP)
- egg (Prudential)
- First Direct (originally Midland)
- Orange (Hutchison)
- Go (BA)
- Buzz (KLM)
- Smile (Co-op)
- More…(Royal & Sun Alliance)
Some have succeeded, some have failed (depending on how compelling was the proposition, and how much was invested). By creating a new brand name, businesses are usually announcing a change in the business model, or at least in the proposition. What makes this situation a little different from simply launching another brand is that, in these cases, established names that usually brand their products under their own name are launching newly branded businesses.
What has not been good brand practice is to have adopted a generic domain name, e.g. shop.com.
Interestingly, Interbrand (one of the world's leading brand consultancies) has both created a new online identity and adopted a generic domain name (brandchannel.com).
- M&As
For M&As there are classically four options:
- the purchased brand keeps its identity - after all, that is often the most valuable asset (e.g. Bentley, Haagen-Dazs, Volvo)
- the purchasing brand takes over (e.g. HSBC/Midland)
- there is joint branding (e.g. AstraZeneca, GlaxoSmithKline, Royal & Sun Alliance)
- a new name is created (e.g. Novartis)
Much will depend on the relative power, and value, of the different brand names. The trade off is between retaining brand equity and streamlining brand investment
Smart acquirers will work out in advance how they will brand the new company, and often have the new signs up the day after the acquisition. Others may take several years to reach agreement. The general rule is that decisive action is better than lengthy deliberation that confuses both customers and employees.
- De-mergers
De-mergers will usually force new brand development:
- Accenture (Andersen Consulting)
- Imation (3M)
- NCR (AT&T)
- Zeneca (ICI)
These examples seem to have been successful as the new brands/companies have been careful to carry over the equity of the original brand long enough to build up a new brand.
- International harmonisation
Packaged goods companies have sometimes changed names in certain countries to develop one global brand name:
- Lay (Frito Lay has re-badged its crisps in many countries - it is moving towards this with Walkers in the UK by gradually changing the brand identity)
- Snickers (Marathon)
- Starburst (Opal Fruits)
The most common reason for this is to streamline brand communication investments, such as advertising, literature and packaging.
- Trademark rationalisation
Many brand owners now realise that the traditional Proctor & Gamble strategy of building single product family brands is prohibitively expensive, including Proctor & Gamble, who believe that it costs $1 billion to build a global fmcg (fast moving consumer goods) brand.
An early example of this was when The Hanson Trust bought one of the big tobacco companies that had 75 cigarette brands. Hanson insisted that they should be reduced to five. The marketers protested vigorously that each brand was protecting a specific niche. However, one year after the 75 brands were reduced to 5, sales had grown and profits nearly doubled.
Companies who are driving down the number of brands they invest in include:
- 3M
- Corning
- Proctor & Gamble
- Unilever
- Repositioning
It is not uncommon for brands to change their names as a re-badging exercise, often to shorten their name and/or to avoid unfortunate/regional connotations:
- 3M (Minnesota Mining Manufacturing)
- ARCO (Asbestos & Rubber Co.)
- BA (British Airways)
- BG (British Gas)
- BMI (British Midland)
- BP (British Petroleum)
- BT (British Telecom)
- ICI (Imperial Chemicals Industries)
- Intel (Fairchild Semiconductors)
- RS Components (Radio Spares)
One version of this is "call branding" where brand owners recognise that their customers call the brand something other than its official name. An example of this is "Bud" for "Budweiser".
This type of re-badging does not usually cause many difficulties.
Changing/updating your brand identity is also common. The story usually goes that a blue chip multinational calls in top class brand identity consultants who make slight alterations to the shape of the logo, or to the color palette, and get millions of dollars for their work. Then everyone laughs and say they could have done that for a lot less.
Again, usually, changing your brand identity is not a problem as the changes are deliberately slight to ensure continuity with the past, but also to reposition the company as contemporary.
There have ,however, been some famously problematic examples - the re-coloring of the RAC from conservative blue to vivid orange is one; the abandoning by BA of the Union Jack on the tail fin in favor of a multi-cultural pattern is another - but, there again, if you mix both identities at the same time, as BA did, with one design on the body of the plane, and the other on the tail fin, you are somewhat standing in the middle of the road.
What is high risk is a total re-branding programme where a brand turns its back on its traditional customers in search of a new audience, as it could easily lose one without gaining the other. In the late 1990s, Iceland re-branded itself away from being a cheap frozen food outlet to being an anti-GM campaigner supplying direct to the home. Unfortunately, while it promoted the new positioning with clever, attractive advertisements, it forgot to change the core message in its shops of "two for the price of one".
On the other hand, a French plastic shoe company did this very successfully. Originally it sold its plastic shoes to old people with no money. This was not a positioning that boded well for the future. So the company asked itself, "Who else has no money?". The answer it came up with was teenagers, so it repositioned itself into youth fashion, and did very well out of it.
Perhaps the real lesson here is that re-branding is expensive and entails some risk, so there should be a good reason for doing it, and it has to be done, above all, wholeheartedly and consistently. People are usually very quick to spot false notes in a brand, and dishonesty is not normally viable as a long term brand essence.
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