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Factors of successful brand transfers


Factors of successful brand transfers

Although the cases looked at and their particular situations vary a lot, it is still possible to draw an overall lesson from the principal experiences in this domain. For fastmoving consumer goods a good summary is by Philippe Villemus, former marketing director of Mars, who remarks: Above all, this kind of operation requires a combined effort from all the company departments: production, logistics, sales force, marketing and general management. All will be concerned and any false note will be a source of problems.

Second, it is vital that this event be considered an opportunity and not a constraint. The transfer must be an occasion for reappraisal, when the strengths and weakness of the brand can be rethought, and an occasion to gain new market shares by profiting from the extra attention that the new brand will have for a while. In this respect the transfer has to be seen positively by the personnel, the distributors and the consumers, so the benefits that the new brand will bring for each of them must be specified.

A brand transfer cannot be improvised, it must be well prepared. The retailers, prescribers, opinion leaders and the personnel must all be warned well in advance.

The time factor is crucial: one must wait until all the customers are aware of the change, and if the operation has to be carried out quickly, one must have, at one’s disposal, the communications means necessary to be able to let them know. You cannot force a brand change on retailers. Not only should they be informed but everything possible should be done to facilitate their work. That means no double stock. The same product codes should be maintained.

This approach not only reduces demands for listing allowances, it makes the rotation of the new brand easier. In the case where a new code is introduced, the chances are that the optical check-outs will not be able to read them because the new reference has not been registered at a central level nor in the shop’s computer system.

Even when the transfer is to take place in transitional phases, like a double brand phase before the actual inversion, one should still opt for the quickest time frame. It is true that the average purchase frequency should be taken into account; the frequency of paint purchases compared to that of ultra-fresh produce leads to very different minimal transitional periods.

To linger too long only results in being bogged down and losing one’s way. This was the case of the Pal to Pedigree transition which took several years. Retrospectively, the process would have benefited if it had been shorter, or even, as in the Raider/Twix case, instantaneous and accompanied by a strong advertising campaign.

Nothing is more shocking to the customer than the strategy of ‘fait accompli’, imposed without warning, information or explanations. The loyalty to the brand is dented by this sudden disaffection and lack of consideration. Lessons have been drawn from the Treets/M&Ms mishap. (Villemus, 1996)

A typical ‘fait accompli’ is the sudden change from Coke to New Coke on 8 May 1985. That event was called the marketing blunder of the century. In fact the brand change nearly created a revolution in the United States that forced the return of the classic Coca-Cola to the shelves and the disappearance of New Coke.

After having advertised during more than a century that Coke was the real thing, it was odd to force consumers to change without any warning. Consumers need to be respected: they want to understand how a change will create value for them. A brand transfer is always an act of violence, unlike mere extensions which preserve the consumers’ freedom of choice. A brand is much more than a name, it is an emotional link (Fournier, 2000). One does not lose a friend without harm and pain, even resentment.

Today, most brand transfers are explained to clients or consumers. They are forewarned and reassured. They learn how the new brand intends to provide more value to them. Also, in order to not lose consumers at the point of purchase, the former brand recognition signs are maintained for a while. Finally, a tag line can be added on the packages, after the shift, reminding that ‘this the new name of …’.

Last, but not least, to achieve successful brand transfers it is important to know what characteristics the customer identifies with the brand and where its equity lies. The Shell Helix case is revealing in this respect. Having decided to replace all its local lubricant brands with one European brand, Shell left the coordination of the transition to its subsidiaries.

France was a particular problem in view of the share of the automobile oils market enjoyed by the self-service supermarkets (more than 50 per cent). The strategy that was adopted consisted of the launch in September 1992 of a top-of-the-range oil called Shell Helix Ultra. It was added to the local Puissance range of products, keeping its characteristic can with a practical spout, but in a different colour, grey. Shell Helix Ultra was launched in the automobile press and sold only in Shell service stations.

The print advertising campaign slogan, aiming at making Helix the market reference, was: ‘One day all oils will be like Helix.’ In the meantime the name Helix Plus was added in small letters to Puissance 7 and Helix Standard to Puissance 5. In October 1993, in order to follow the European transition, all the ‘Puissance’ brands were replaced by Helix. A small mention of Puissance under Helix survived for a few months.

The Puissance 7 blue can became the Shell Helix Plus blue can, but the Puissance 5 brown can became the Shell Helix Standard yellow can. The advertisement campaign put the old Puissance 7 can and the new Helix Plus can side by side under the slogan: ‘It may have changed its name but the spout remains.’ The problem was that the advertisement agency focused on the name change while the clientele paid more attention to the colour of the can.

Yet nowhere in the advertising campaign did the yellow can appear. The customers looking for their brown can could not find it: instead they could only find a yellow can the name of which they had never heard of. In reality, despite the brand awareness scores of the name Puissance, the strength of the brand was in fact associated not with its name but with its colour! The customers should have been informed of a transition from brown to yellow rather than soley a name change from Puissance to Helix.

In durable goods sectors and in service sectors, in fact in all sectors with high perceived risk, it is important to stress the role of internal communications. Brands are not abstractions, they are literally carried by people who identify with them. To changing the brand is to change their identification. They need to adhere. This is of paramount importance for corporate brand changes.

Changing the corporate brand

On 1 January 1991, CGE became Alcatel ‘to have a brand with a higher profile’. It had up till then been handicapped by the confusion that was occurring due to its similarity with General Electric. In 2000 CGEA became Connex because its name, unpronounceable in international markets hindered expansion and the effectiveness of all communication. To the precautions to take when changing a brand name a few more can be added when dealing with company names. These are based on the fact that there is always a strong internal public and a multitude of external micro-publics.

The first problem that should be avoided is that of rumours, which will always portray a different picture of the change than the reality. The internal public is quick to interpret any change in terms of a crisis, serious problems or shareholder pressure, especially when new majority shareholders have arrived.

A big effort is therefore needed to explain the situation. As regards the external public, they generally under-evaluate internal problems. The name change does not bring them any specific advantages so there is no reason for them to pay too much attention. But if they did understand they might go along with the decision, so the name change must be made relevant to them. Finally, each micro-public demands a specific action.

In this way, with regard to the transfer to Connex, the first problem that had to be resolved was that of the stock market traders. The company was quoted in about 10 markets around the world, so they had to be certain that right from day one all financiers would be looking for the letter A and not C in the finance sections of their newspapers.

In July 1999 a small energy company, Total, took over the large Elf company, thus creating the fourth largest energy company in the world, and the only one that was not Anglo- Saxon in origin. Reducing it to a name change would be looking through a tunnel. However, names do play a role in such mergers. In this case the names were not changed immediately to increase the chances of success of the whole operation.

According to the general management of TotalFinaElf, the merger was a success because of the following factors :

It was well prepared by the company taking over. For instance, they had already analysed all the personnel of the target company. Just one month after the takeover, a new organisation chart was issued, so all the employees in the former Elf company learned quickly where they would now stand.The company taking over had the courage of respecting a 50:50 equilibrium in all assignments, teams and staffs and did not act as a victor.Hundreds of committees were created to discuss all types of topics, so that yesterday’s enemies became less hostile, learnt to know each other and eventually became friends.After the takeover the group took as its name TotalFinaElf and kept it for three years. This name was chosen for internal purposes. It indicated that no one was defeated. Keeping the name of the companies that had been taken over was a sign of respect. Externally it was a sign of power.Only in 2003 was the group name changed to Total, after an intense probe of the internal climate. However, the Total logo did change at this occasion.

The new Total is not the same as the former Total: the new logo conveyed the new values of this leading European fuel company. A merger is a unique opportunity to create a leap forward. Why come back to a former name, and not start with a clean slate as Novartis (formerly Ciba Sandoz) or Aventis (formerly Hoechst Rhone Poulenc) have done? These laboratories have brands as assets, their medical and pharmaceutical product brands.

The assets of an energy company are found in its petrol reserves. They depend heavily on the reputation the company has built up under its name in all oil-producing countries over 50 years of activity. Total was a key asset: it meant trust all around the world. In addition, the international financial community expect the Total financial management team to continue in place, and the continuity was intended as a way of reassuring them.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests