BrandArena: Why Do Companies Re-brand?

Monday 23 May 2011

Why Do Companies Re-brand?

There are a number of reasons companies of all sizes consider re-branding a product, offering, or the company itself. Some re-brand in order to shed a negative image, attract new customer, focus their efforts, either because they didn’t have focus in the past, or because they are trying to appeal to a sub-market.

Staying in touch with the target market requires launching and re-launching, branding and re-branding and creating an experience involving the target market, thereby stimulating word-of-mouth.

Many manufacturers re-brand their products to enter a lower end segment because they don’t want to dilute the value of their core brand or don’t want the new brand to be dragged down by the old one. For example Lexus is well known as a luxury car, but it is owned by Toyota. The key component here is making sure that the new brand doesn’t have a negative effect on the old brand or be influenced by the old brand.

Though, re-branding is a difficult thing to do correctly. It’s easy to change the name of something. It’s much harder to make it work to your advantage and in exactly the way that you intend. One of the difficulties with re-branding is striking a balance between attracting new customers, and alienating old ones.

The same is true for products or services. A balance must be struck between going too far in the re-branding effort, and not far enough. How far a company can go is dictated by the reasons for re-branding. If it is to shed a negative image, you will need to do a complete overhaul. If your intent is to attract new customers, then a mid-level change is required to strike a balance. And if you simply want to strengthen your brand with the existing customer base, then perhaps a fresh coat of paint will suffice.

In Nigeria, competitions among the leading manufacturers and distributors of a variety of products, especially detergent, toothpaste, soft drinks, beverages, noodles and other personal care items are simultaneously high. Companies invest heavily in promotion campaigns, advertising and in a long run re-brand, re-launch or reformulate their products in order to maintain or sustain loyalist, facilitate more sales by attracting new consumers to the product.

Investigation by the BI team revealed that re-branding of products such as Maltina and Malta Guinness, Coca-Cola and Pepsi, Milo and Bournvita, Omo and Ariel, Magi and Knorr, Dabur and Close Up, in order to maintain and sustain their pace of the market as well as enable them to compete with their other brands in their shelves continuously.

Coca-Cola Nigeria Plc has remained the strongest player in soft drinks in Nigeria market with the leading position in carbonates like Coke, Sprite in Fanta over the years. The driving forces behind Coca-Cola Nigeria’s continuing leadership is said to be - good distribution network, widespread brand recognition, aggressive marketing and advertising and other market innovations. Although the company’s brands remain extremely popular, it has continued to invest heavily in marketing, advertising and rebranding in the face of the unrelenting pressure from competitors.

7-Up Bottling Co Nigeria which still held the most competitive pace in soft drinks with its major brands Pepsi, 7-Up, Mirinda and Mountain Dew, all of which are manufactured under license from Pepsi Co Inc. have over the years re-branded their products in other to remain in the peak race and patronages.

For so long, the Nigerian beverage market has been dominated by Milo food drink from the stable of Nestle Nigeria Plc and Bournvita made by Cadbury Nigeria simultaneously. Not even the historic come back of Ovaltine, a former market leader, has shaken the presence of the leaders ever since. Recently, Milo re-branded her product and some times last year Bournvita did the same.

Until recently, Indomie enjoyed monopoly as the only noodles brand in the Nigerian market. O! Noodles, Golden Penny, Dangote, Chikki Chicken, Mimee among others were introduced after a long time. Ever since their introduction, the Nigerian noodles market has not remained the same.

Despite Indomie noodles topping the wish list of the noodles consumers, the company still re-brands likewise the newly branded competitor in the market.

The detergent market in Nigeria has been more of pace setting struggle between Ariel from P&G and Omo from the stable of Unilever, all armed with the necessary marketing armory, strategy-wise. Both products have continued to re-brand over the years.

While speaking with some Lagosians about the reason companies rebrand, Azeez Amusan, Managing Director, Asfem Concept stated ‘I think the reason most companies re-brand is to remain relevant in the market and also maintain their status when there is competition in the market’.

Gloria Chukunma, a marketer said the reason companies brand is to gain more patronage and also psychological charge some perception about a particular product. ‘Re-brand often take place by companies when they want to increase sales and also foster better marketing view for the product too’, she said.

‘Rebranding a company or a product is a strategic approach which helps to bring a company or her product back to life. It gives a fresh challenge for a product and also provisions an opportunity for market strength and viability.’ Stated Damilare Oyetunji

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