Behind the new wave of corporate rebranding

A handful of wireless phone companies are now called Cingular. Arthur Andersen now goes by Accenture. Bell Atlantic has become Verizon.

The question is: Why now?

The name-change phenomenon is snowballing. Last year, a record 2,976 US companies changed their names. In the past 10 years, experts say, the number of name changes has risen 120 percent.

About a third of US rebranding last year resulted from mergers and acquisitions, the number of which nearly doubled between 1990 and 2000, to more than 7,000 last year, according to Thomson Financial Securities Data.

An explosion of dotcom divisions - many now being pared back - also contributed to the rise. And a "well-organized effort ... toward better brand management" also developed during this period, says Anupam Jalu, a doctoral candidate in marketing at the University of Georgia.

In a crowded marketplace, he says, many firms are looking to present an image the public can embrace.

"Consumers buy products for what they mean, and not only for what they do," Mr. Jalu says, "which meant a need for marketers to better manage brands."

Sometimes a merger presents brand-name complications. Three-and-a-half years after the joining of investment bank Morgan Stanley and retail brokerage Dean Witter, the combined entity announced last month it would drop Dean Witter from its name as of April 2. Morgan Stanley's renaming reflects the firm's plan to keep expanding in Europe and Asia, where Dean Witter is simply less well known, says a spokesperson.

Observers suggest there may be a bit more to the story.

"Morgan Stanley has a long-term potential, a great brand image. And Dean Witter was ... diminishing the prestige of the bank. In addition, the name was too long for people to remember," says Srivinas Reddy, marketing professor at the University of Georgia.

Rebranding also occurs after splits or crises within a company. That was the case after an arbitrator separated the two branches of Arthur Andersen last year. The professional-services group is about to rebrand itself as "Andersen."

The consultancy branch chose the name Accenture, "a coined word that connotes putting an accent or emphasis on the future," according to the company, which spent around $175 million in advertising to make the new brand known.

Made-up names have become very trendy of late, marketing experts say. Companies that want to look global choose brand names that appeal to a concept or to something unique. And firms that specialize in renaming may need to present as many as 5,000 options before a name is accepted, experts say.

"Accenture is an unusual name because it combines several things. People needed to signal that they were innovative, unique, and willing to transform themselves," says Sheri Bridges, marketing professor at Wake Forest University, in Winston-Salem, N.C. "They wanted to let customers know that they're making something fresh about the company. But they also had to reassure them: 'You can still count on us.' "

Newly named companies spend $20 to $100 million in advertising to send the right kind of signal to the marketplace.

Among them: Cingular Wireless. The joint venture between BellSouth and SBC Communications affected 20 million customers.

"In this kind of situation, you don't want people to be nervous," recalls Virginia Vann, chief marketing officer for Cingular.

The company took a systematic approach to rebranding that included consumer research, focus groups, international trademark checks, and careful efforts to make sure the new name translates.

The advertising campaign started three months after the announcement of the joint venture. Communication began with in-store signs, messages printed on bills, newsletters, and the company's website.

BBDO, one of the leading US advertising agencies, helped create a visual icon. "They did a remarkable job, creating a logo - a dotted "X" transformed into an orange animated character - playing with it, and with ads very cleverly done," says Professor Reddy.

(c) Copyright 2001. The Christian Science Monitor

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