I just heard that Radio Shack plans to change its name to "The Shack" to distance itself from the old mindset connected with radios. Changing an outdated name or brand is not a bad idea. But, "The Shack"?? Is this a hamburger joint? Is it supposed to give it "street cred"? Is there a different Brand Promise in the name change?
Name changes are warranted when a company wants to recreate and reposition itself. However, the change only works well when the company also recreates and repositions its capabilities and the experience for its stakeholders. A company that clearly needs to have its name change is AIG. There has been such damage to this once proud brand that I do not see the ability of it to reposition itself with good key attributes. It always will have the association with economic disaster and poor management decisions. It may have been a joke, but I heard that they were considering changing the name to AIU. I hope this was just a joke, because if it were true, AIG's management team should be sued for complete ineptitude. If they want to change to AIU, they should save their money and instead put it into changing the internal culture of the company that created the mess in the first place. Then, they should start a major campaign apologizing for past mistakes, telling us what changes have been made, and trying to restablish themselves. Not sure if it would work, but an improved AIG would be better than a half-baked AIU. Still, a new name with a different culture would be the best course of action.
The Shack is following in the hallowed footsteps of Gatorade, which changed its name to "G". It is backfiring on PepsiCo, the owner of Gatorade, with a loss of market share. Pepsi had to back off its rebrand of Tropicana, going back to its old packaging after customers rebelled.
Why are companies listening to so-called "hip-hop" branding agencies who think that a new brand with "street cred" is the way to win the market? Perhaps they should be looking at where that youth market is relating to brands. It is on-line, not through traditional media and packaging.
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2 comments:
One big re-branding effort I've been watching is Blackwater, the private military security firm who ran into trouble in Iraq, changing their name to Xe; they also changed their logo making it less intimidating. The name change is due to the fact that "Blackwater" is too closely associated with Iraq, but I'm wondering if there's a major change in their business strategy as well.
I know this company is in a very specialized industry/market, but do you think this strategy will work? Part of the competitive landscape in this industry includes the growth of private security firms focused on "homeland security"; particularly in the maritime industry.
Hope all is well!
Regards,
James
Thanks for your question. I think that the change is an example of a company that tries to hide from its past problems with a name change. There is nothing different about Xe versus Blackwater. I know of nothing different in the company. The founder and CEO may have left, but it is still a basically para-military, security organization. They likely have a niche market given their skills as former military and security personnel and the limited resources to move high level officials around dangerous places. Have they done anything to assure that Xe would not be in front of Congress on the same issue that brought them there before? I don't know. We will see.
In another industry that could serve as an example, ValueJet changed its name to AirTran after a fatal crash in Florida involving carrying combustibles in the cargo, against regulations. After the crash, they moved their headquarters and changed some of the top management. So it was not just a name change. The airline has flown without incident since then and enjoys a high customer satisfaction rating.
So, time will tell if this was just a name change or a real change.
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