Rebranding

Corporations often rebrand in order to respond to external and/or internal issues. Firms commonly have rebranding cycles in order to stay current with the times or set themselves ahead of the competition. Companies also utilize rebranding as an effective marketing tool to hide malpractices of the past, thereby shedding negative connotations that could potentially affect profitability.

Corporations such as Citigroup, AOL, American Express, and Goldman Sachs all utilize third-party vendors that specialize in brand strategy and the development of corporate identity. Companies invest valuable resources into rebranding and third-party vendors because it is a way to protect them from being blackballed by customers in a very competitive market. Dr. Roger Sinclair, a leading expert on brand valuation and brand equity practice worldwide stated, “A brand is a resource acquired by an enterprise that generates future economic benefits.”[4] Once a brand has negative connotations associated with it, it can only lead to decreased profitability and possibly complete corporate failure.

Companies differentiate themselves from competitors by incorporating practices from changing their logo to going green. Differentiation from competitors is important in order to attract more customers and an effective way to draw in more desirable employees. The need to differentiate is especially prevalent in saturated markets such as the financial services industry.

Organisations may rebrand intentionally to shed negative images of the past. Research suggests that "concern over external perceptions of the organisation and its activities" can function as a major driver in rebranding exercises.[5]

In a corporate context, managers can utilize rebranding as an effective marketing strategy to hide malpractices and avoid or shed negative connotations and decreased profitability. Corporations such as Philip Morris USA, Blackwater and AIG rebranded in order to shed negative images. Philip Morris USA rebranded its name and logo to Altria on January 27, 2003 due to the negative connotations associated with tobacco products that could have had potential to affect the profitability of other Philip Morris brands such as Kraft Foods.[6]

In 2008, AIG's image became damaged due to its need for a Federal bailout during the financial crisis. AIG was bailed out because the United States Treasury stated that AIG was too big to fail due to its size and complex relationships with financial counterparties.[6] AIG itself is a huge international firm; however, the AIG Retirement and AIG Financial subsidiaries were left with negative connotations due to the bailout. As a result, AIG Financial Advisors and AIG Retirement respectively rebranded into Sagepoint Financial and VALIC (Variable Annuity Life Insurance Company) to shed the negative image associated with AIG.[7]

Brands often rebrand in reaction to losing market share. In these cases, the brands have become less meaningful to target audiences and, therefore, lost share to competitors.

In some cases, companies try to build on any perceived equity they believe still exists in their brand. Radio Shack, for example, rebranded itself as "the Shack" in 2008 but the rebranding never realized into an increase of market share in the retail industry.[8] By 2017, Radio Shack had significantly reduced its physical retail presence, closing over 1,000 stores and shifted to a primarily online retail business model.[9]

Rebranding may also occur unintentionally from emergent situations such as “Chapter 11 corporate restructuring,” or “bankruptcy.” Chapter 11 is rehabilitation or reorganization used primarily by business debtors. It’s more commonly known as corporate bankruptcy, which is a form of corporate financial reorganization that allows companies to function while they pay off their debt.[10] Companies such as Lehman Brothers Holdings Inc, Washington Mutual and General Motors have all filed for Chapter 11 bankruptcy.

On July 1, 2009 General Motors filed for bankruptcy, which was fulfilled on July 10, 2009. General Motors decided to rebrand its entire structure by investing more in Chevrolet, Buick, GMC, and Cadillac automobiles. Furthermore, it decided to sell Saab Automobile and discontinue the Hummer, Pontiac, and Saturn brands. General Motors rebranded by stating they are reinventing and rebirthing the company as “The New GM” with “Fewer, stronger brands. Fewer, stronger models. Greater efficiencies, better fuel economy, and new technologies” as stated in their reinvention commercial. General Motors' reinvention commercial also stated that eliminating brands “isn’t about going out of business, but getting down to business.”

Companies like Dunkin' Donuts, Joann Fabrics, and Weight Watchers, have removed or abbreviated parts of their company names to suggest a larger product line offering than what their names solely imply. It is also used to cater to different demographics who may be interested in different products of the same industry. In a 2018 marketing stunt, pancake restaurant chain IHOP announced a rebranding to "IHOb" to promote a line of hamburgers, but did not follow through with the rebranding.[11]

Companies can also choose to rebrand to remain relevant to its (new) customers and stakeholders. This could occur when a company's business has changed, for example its strategic direction and industry focus, or its brand no longer fits its (new) customer base. For example, a company might rebrand so that its name works in new market it enters, for reasons of culture or language, such as to make it easier to pronounce.

Rebranding is also a way to refresh an image to ensure its appeal to contemporary customers and stakeholders. What once looked fresh and relevant may no longer do so years later.