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Introduction

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As rebranding is a decision that every company must make for itself, it is important to understand that there are standardized reasons to why a company might want to reinvent themselves through rebranding. In the following chapter, we will see a few of the most important, generalized incentives towards rebranding which vary anywhere between a needed change, new, unexpected environmental changes to financial and social motives.

Why rebranding might be necessary

“Rebranding is a big and risky operation to execute on an old and established the brand,” says Ran Segall who is a designer that helps both established as start-ups with the (re)branding of their company. According to Segall, it is more difficult to make changes to an older brand because of the already established brand awareness which customers sometimes seek. Segall also brings up the fact that a rebranding does not only mean having a new logo, it involves many other aspects such as graphic style, color pallet as well as the introduction of a new website or an application (modernization), this being from a designing point of view. Further, looking more into the business side of things, there are a couple of details we need to take a closer look at. The first question to ask before even starting on this daunting task is whether or not a rebrand is necessary or does the company simply need a ‘refreshing’ which implies a lot less work and funds to accomplish. Spending unnecessary money, as a company, is not ideal and should be avoided at any time.

Now we are going to take a look at a few reasons to why a company might want to consider rebranding.

Acquisition or merger

First, we need to start by defining acquisition and merger and to clearly distinguish them from each other. The definitions of mergers and acquisitions according to Investopedia are:

“A merger is an agreement that unites two existing companies into one new company. Mergers are commonly done to expand a company’s reach, expand into new segments, or gain market share.”

“An acquisition is a corporate action in which a company buys most, if not all, of another firm’s ownership stakes to assume control of it. An acquisition occurs when a buying company obtains more than 50% ownership in a target company.”

As stated in the Harvard Business Review “somewhere between 70%-90% of mergers and acquisitions end up in failure”, this is astonishing especially when we take a more detailed look at the reasons. A failure is most likely to occur due to failure to understand how to (re)brand the new company or a difference in companies’ cultures. According to a study executed by R. Ettenson and J. Knowles in which they surveyed all mergers and acquisitions completed between 1995 and 2005 with a value of over 250 million USD (sample size: 207 companies), there are four main categories and it is of crucial importance that marketers know in which category the new company belongs because every category meets different opportunities and challenges which is important in the communication of the new brand to all stakeholders. The four categories according to them are:

Backing the Stronger Horse (55% of those surveyed). In this scenario, the new organization takes the visual identity of the acquirer – or the target, if it has the stronger brand.

Best of Both (13%) – the new organization combines elements from both companies that will signify a merger.

Different in Kind (8%) – an entirely new corporate identity is created for the organization.

Business as Usual (24%) – the lead and target brands continue to exist independently.

It is important to know that fusion branding (which is best represented by the “best of both” explained above) outperforms market by around 3%, while the other categories underperform the market by close to 20% as shown is multiple studies done by various entities including Type 2 Consulting.

Ownership change or restructure

Further, we are going to take a look at how the rebranding will be handled if it occurs after the introduction of a new management team or the arrival of a new CEO into the company. Before we begin it is important to state that in order to make rebranding a success-story, it is of crucial importance that the staff members are on board with the changes, that they are well trained and well informed, which will further lead to the message being brought across to the end consumer in an intended way without any misunderstandings.

The importance of educating all staff members is essential but it is even more important for the top-level management, including the CEO, since they are the most trustworthy ambassadors of the brand. According to Darren Taylor and Mark Schreiber, co-authors of the book Rebranding Branding only the CEO in consultation with his senior management team can provide consistent guidance to the branding function of the company because they would have the necessary information to decide on such strategic issues.

Furthermore, the authors imply that it is up to the CEO and the senior management team to anchor and sustain the brand in a highly competitive global market.

Reinventing the brand

There are multiple reasons to why a company would want to reinvent itself. We are going to take a more in-depth look at the most frequent motives companies consider rebranding.

Involving existing customers

As times change so do customers and their needs. A company must be able to adapt to all environmental changes and prove to their customers that improvement is possible when needed without losing the elements that made them successful in the first place.

However, rebranding can be scary and can bring may questions and insecurities about it. If the rebranding is too strong, it might scare existing customers off. The risk of changing too little is also existent. If a company does need a new “life” and chooses to do that by rebranding, it should make sure that the change is visible and according to what consumers actually want to change.

Prior, during as well as after a rebranding, communication should be a top priority for each company. Consumers can be scared off by the change especially if this happens unexpected and unannounced. That can lead to consumers not recognizing the brand and even lose their confidence and trust in the brand which further leads to a reversed response and that is something worth paying attention to.

Attracting new customers

Another common reason for companies to consider rebranding might be the need to attract new customers. If after a period of time a particular company decides that they might have targeted too small of a customer segment or even the wrong segment, they might consider expanding and reaching new customers.

As noted before, the most markets nowadays are saturated and consumers are exposed to a multitude of advertisements daily, so attracting the attention of new customers that are unknown with your brand is not an easy task and requires a lot of effort from all those involved in the process.

Knowing your target audience is the first step towards reaching your goal. After you know who you would like to have as a consumer, you can start by figuring out what it is that attracts them and ideally even makes them advocates of the brands they like. Subsequently, customize your rebranding approach towards their ideal and step into a win-win situation.

New markets

Expanding into new markets such as for example moving from a B2C to a B2B market might need a new branding for the existing products in order to cater better to your new customers. However, the introduction of a new product to an existing market and product line is another reason for rebranding.

 

First, we are going to discuss why it could be necessary to rebrand your product or service depending on the market you want to enter. It is important to know that a more discrete and sober look for your company is needed when considering selling your product/service to a B2B market for obvious reasons such as the level of professionality the company will be perceived. On the other hand, when moving from a business market to a consumer market, the look of your company will need the necessary adjustments as well so that your company will have a more consumers’ friendly look and with that reason attract the customers the company strives towards.

 

Secondly, we should take into consideration the over-expansion of a brand. If the company is a large one, the introduction of a new product that is not in the same product line as existing and known products is another reason to rebrand.

 

As a perfect example for this, we can take Unilever which seems to create a new brand for every product line such as Axe for men deodorants, Lipton for refreshing beverages, Knorr for condiments, and the list can continue endlessly. This approach proves to be an effective one, one that does not confuse the end consumer as to what it is that your company does exactly.

 

However, the risk of cannibalization is high with this approach since you can create too many brands which will become direct competitors with each other. At the same time, it is helpful to mention that most companies prefer cannibalization, which leads them to having competitive advantage, above giving up that percentage to another company, which leads to complete losses.

 

Conclusion

From the above-mentioned information, we can conclude that there are multiple reasons as to why a company might want to rebrand itself even though it is widely known that this is not an easy task and it involves many risks. To make rebranding a success story, it is not enough to simply change the appearance of your logo and name, it is much more detailed than that.

As noted by Crowdspring, an online educational platform, “a brand is more than the company name and logo, but a strong brand starts with a great name and logo design.” Which boils down to the fact that in the end, the consumer is attracted by what they see and hear but not unimportant is the fact that the existing band should be maintained throughout the rebranding process in order to eliminated confusion and doubt that consumers might end up having.