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Handling Name Changes And Brand Transfers/When One Should Not Switch

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When one should not switch

The internationalization of companies raises the question of the globalisation of brand portfolios. This involves changing the name of the products or services of a well-known and very popular local brand to that of a less well-known and less familiar international brand. However, before considering how a company goes about making such changes in order to effect a brand transfer, the following caveat should be borne in mind.

There are occasions when this transfer should not be made, if it presents too great a risk for the business and the brand capital. Thus, when BP bought the German Aral service stations in 2003, it decided not to change the brand name as it had done in California when it bought Arco. In the same year, Shell bought the other major German service-station group, DEA, but decided to bring it under the Shell banner. So who was right – BP or Shell?

In fact, they were both right. Aral is a very strong local brand, almost a national symbol, rather like the Continental tyres fitted on all Mercedes manufactured in Europe. So why would BP run the risk of severing this extremely rare bond that generates customer loyalty, in a sector already threatened by ‘commoditisation’? Conversely, although DEA has a good customer service record, it does not inspire the same emotional attachment and its transfer would therefore be less risky.

Customer service relations are created by the people who work for the company. So, if these people remain in situ, the continuity of satisfaction is maintained and customer loyalty guaranteed.

There are other instances when a brand transfer should not be made to the advantage of a new, global brand and when it is better to retain the local name, for example when the meaning of the name to be internationalized proves problematic in the other country. Procter & Gamble’s German competitor Henkel could not extend its product brand ‘Somat’ – designed to make glassware shine – in the UK since the word ‘matt’ is the opposite of shiny.

There is no shortage of examples where, to an outsider, the local brand seemed little more than a legacy from the past but was regarded locally as an icon. This happened in the case of many leading Eastern European brands, which the multinationals decided had to be replaced by the global – European or US – brand.

But they had not taken account of the consumers who are often extremely emotionally attached to the local brands that are part of their everyday life and past memories. The Danone Group had to reverse such a decision in the Czech Republic. After abandoning the Opavia brand in favour of the global Danone brand, it had to reintroduce Opavia – famous for its biscuits and the country’s favourite food brand – because it was a national symbol.

In this respect, the Bel group was well advised not to pursue a potential brand transfer which involved replacing the German brand Adler, famous for its processed cheese portions, with the international mega-brand, The Laughing Cow, whose prototype is also processed cheese portions.

However, the symbol of the Adler brand, familiar to all Germans, has long been the imperial eagle. It is hard to imagine the juxtaposition of two more paradoxical animal logos.

L’Oréal is pragmatic when it comes to brand transfers. In line with its expressed intention of developing mainly via its 17 global brands, the group bought Maybelline, a brand of make-up sold on the US mass market. In the space of a few years, it launched the brand in 80 countries but to do so had to effect a transfer with the local brand in the principal countries concerned.

The problem was that the local brand was often a strong brand that was popular with both distributors and customers – Jade in Germany, Colorama in Brazil, Missiland in Argentina, Gemey in France – while Maybelline means nothing in these countries.

The group has carried out a deliberate policy of double branding for five years, introducing an increasing number of US concepts and innovations but, even so, there is still no question of setting an exact date for phasing out the local brand.

Yet, as far as the financial analysts and major multinational distribution groups are concerned, l’Oréal has achieved the desired effect – by increasing the sales of co-branded products in each country, the group can say that Maybelline is the leading international brand of make-up in the mass-market sector.

 

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