Why timing is everything
By David Haig
In competitive markets, with functionally identical products, branding creates emotional differentiation. Lexus makes similar cars to Mercedes, but it does not command fierce brand loyalty.
Brand preference drives higher prices, higher volumes, cross sales and longevity of demand. This applies equally in professional services, as McKinsey’s clearly demonstrates.
The most obvious time to rebrand is when these beneficial effects disappear.
Ratners had little choice but to change name to Cygnet after its chief executive proudly admitted its products were ‘crap’.
Sometimes change is forced, as when Andersen Consulting refused to pay for the name and had only 100 days to become Accenture; was this luck or foresight?
Corporate rebranding can also be a spontaneous signal that strategy has changed. Grand Met rebranded to DiaGeo when it became a global provider of premium brands. British Gas became Centrica when it privatised and diversified.
But if the new strategy is not well articulated, rebranding can be a disaster, as Invensys, Chorus and Consignia have all demonstrated.
Globalisation can be a valid reason to rebrand. HSBC signalled its global banking ambitions by rebranding all its operating companies. AXA and Vodafone have done the same in the insurance and mobile markets.
However, if brand loyalty is too high, change can be a disaster. When Price Waterhouse merged with Coopers & Lybrand, it took a year and £1m of research to arrive at the conclusion that both names had significant brand equity. Both are now locked into the new brand – PwC.
One assumes that similar research has shown that Touche has lost its brand equity and that dropping it will not affect partners, staff or clients.
One assumes Deloitte has learnt from its failed attempt to rebrand its consulting arm as Braxton. Without robust brand evaluation techniques in advance of a change, major gaffs can be made that destroy value. I hope Deloitte has done its homework this time.
- David Haigh is chief executive of Brand Finance
Check that it’s value-for-money
By Lucian Camp
Ladies and gentlemen of the jury, to decide whether rebranding is or is not a waste of money, you will need to consider two issues: what it costs and what the benefits are.
To take these in turn: what does it cost? This, unfortunately, is a tricky question to answer. At the minimum, it costs nothing, or next to nothing: many rebrandings are what we might call ‘rolling rebrandings’, in which the new branding is incorporated into stationery, signage, marketing material and so on, as and when these things are due for replacement.
The only ones that are really expensive are ‘Big Bang’ rebrandings, where everything is changed at once.
So what are the benefits? They can be enormous and obvious: ask anyone at Accenture, for example, how much it was worth to rebrand away from Arthur Andersen just when they did.
They can be less obvious, but no less necessary: after mergers, acquisitions or changes of ownership a new branding is likely to be essential.
They can be optional, but nevertheless very powerful: sometimes a new brand identity provides a powerful and effective signal of a management team’s determination to change the way a business is perceived.
Occasionally, of course, they may be utterly pointless extravagances, undertaken by management teams who have fallen under the hypnotic spells of consultants like me, who have no purpose other than to deprive their clients of large amounts of money and make them a laughing-stock in the business community. But such cases are rare.
So is rebranding a waste of money? Well yes and no. I would like to close with a general and hopefully useful rule. Just remember that any rebranding that you are personally involved in commissioning is a sound, value-for-money strategic imperative, whereas any which you are not personally involved in commissioning is an embarrassing and pointless waste of money.
With a clear, simple and consistent point of view like this, you won’t go too far wrong.
- Lucian Camp is chairman of marketing and branding communications agency CCHM .
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