Is Rebranding A Waste?

Evidence Mounts That Traditional Rebranding Is Ineffective and Irrelevant

There is a growing body of evidence that spending money on “rebranding” as a separate business activity is ineffective at increasing revenue and profit. While it is true that a brand can help sell products and services, a organization’s brand is simply a reflection of how people think and feel about the organization and its products or services. In other words:

Any amount of “re-branding” won’t be able to compensate for a lousy product or service. “Rebranding” can’t save a company that behaves in ways contrary to it’s stated values or that breaks the promises it’s made to its customers. And, a fantastic product or service will continue to sell even when hampered by lousy “branding.”

What Is a Brand?

The trap that many business people fall into is in thinking that their brand is something created by marketing or branding consultants or advertising agencies. Quite simply, it is not.

When many people think about brands, they think about a standard definition such as this one from Wikipedia:

A brand is a “name, term, design, symbol, or any other feature that identified one seller’s product distinct from those of other sellers.”

However, many now think about brands in terms of how an entity is perceived and valued by those it interacts with. In this sense, a brand is incredibly powerful and very important.

Something Strange In Brand Land

Even as companies ramped up their rebranding efforts and spending, US consumers have grown less loyal. Wired magazine reports that “A study by retail-industry tracking firm NPD Group found that nearly half of those who described themselves as highly loyal to a brand were no longer loyal a year later.” In the same article Wired mentions another study that found that “just 4 percent of consumers would be willing to stick with a brand if its competitors offered better value for the same price.”

The Evidence

There is a growing body of evidence that investing in traditional approaches to rebranding is not effective. There are numerous anecdotal examples of this, and recent research has proved this with analysis of the data.

Most of us remember when Apple introduced the iPad. However, many of us have forgotten by now how much the name was initially disliked. Consider these examples:

However, the initial negative reactions to the iPad name were quickly overcome once consumers had a chance to interact with the product and discovered the quality of the hardware, software and overall experience. The iPad went on to have the fastest adoption rate of electronics products ever. And, the rest, as they say, is history. A wonderful new product quickly overcoming the limitations of a sub-optimal brand.

In terms of a more scientific assessment of the effectiveness of traditional rebranding, Augustine Fou and Melisa Lopez conducted a study analyzing rebranding impact on awareness, interest and financial results *. Their methodology analyzed search volume to detect awareness and interest in the rebranding. And, they used actual corporate financials from the two quarters after a rebrand to determine if there was any impact.

Here is what they found:

* “Rebranding is a Waste” presentation by Dr. Augustine Fou and Melisa Lopez, Marketing Science Consulting Group, Inc.: April 17, 2012

What Does This Mean For Rebranding?

At the end of his research, Dr. Fou sums up his key takeaway nicely:

“Instead of investing money on cosmetic changes like rebranding the logo, the colors, or the packaging, spend money on true innovation, improving product, service and quality. These will lead to longer lasting lifts in revenue.”

Boosting a company’s brand by investing in product and service quality makes a lot of sense. And, marketing dollars are much better spent on providing value to customers and deepening customer relationships than they are on rebranding efforts. One thing is clear: the era of traditional rebranding is over.