What's in a Name?
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A rose, said Shakespeare, by any other name would smell as sweet. But while the Bard may know his flowers, he clearly was no expert on branding Apples.
Rodrigo Duterte, the Filipino president, would like to change his country’s moniker “because the Philippines is named after King Phillip”. He appears to be eager to distance his nation from its colonial past, the said monarch being a 16th century ruler of Spain.
President Duterte may have been taking a leaf out of the private sector’s books.
Companies rebrand from time to time. It may be as minor as a shift in messaging, or as significant as a revamped logo or even a new trading name. And the reasons for doing so are myriad.
A brief study of the company famous for its Macintosh computers and iPhone handsets yields a couple of illuminating examples.
Since 1977, Apple Computer, Inc. marked every product that left its factory with an iconic logo: the namesake fruit with a bite taken out. In 1998, it eschewed the trademark’s multi-coloured stripes for a modern translucent and monochrome treatment. In 2007, it dropped the word “Computer”, to be henceforth known succinctly as “Apple, Inc.”.
Both were subtle changes that quietly underscored what were, in fact, seismic changes within the company.
The first was undertaken during the pivotal years after co-founder Steve Jobs returned to the helm, having been ousted earlier in a boardroom coup. He tore up Apple’s bloated and confusing catalogue. This consisted of everything but the kitchen sink, from printers and scanners to an unwieldy computer range, whose model numbers sometimes differed only to reflect the various channels in which the machines were sold.
He put in its place a streamlined strategy. Gone were the low-margin peripherals; what remained were two core products: the candy-coloured iMac for consumers and a subdued graphite-hued Power Mac for professionals and creatives. The move to instil product line discipline, together with the subsequent introduction of innovative products such as the iPod and the iPhone, was widely credited for saving Apple from bankruptcy.
The second reflected Apple’s new line of consumer electronics. Established in a Silicon Valley garage, for its initial three decades the company was primarily a manufacturer of desktops and laptops. By 2007, though, its emphasis had shifted. Of the four main products – Mac, iPod, Apple TV and iPhone – only one was a computer.
On the back of the runaway success of the iPhone, at its peak last year Apple was a trillion-dollar company. Its brand alone, Forbes reckons, is now worth US$205.5 billion (S$290 billion) – marking the first time any firm had topped US$200 billion.
The cost of rebranding
Besides product strategy shifts or new business lines, companies sometimes rebrand due to a merger, as Bell Atlantic and GTE did when they combined, creating a new entity, Verizon. At other times, as in Duterte’s case, a rebranding helps companies distance themselves from someone or something undesirable. That was the case when the Lance Armstrong Foundation changed its name to Livestrong Foundation, disassociating itself from the disgraced cycling champ, who was embroiled in a doping scandal.
Whatever the motive, these can be expensive exercises. Holiday Inn’s 2007 rebranding, one of the biggest in corporate history, cost its parent group Intercontinental and franchisees US$1 billion, much of the money going into updated signage, better bedding and an improved customer experience.
Even with such eye-popping numbers, the real cost may stretch beyond the dollars and cents involved in design, marketing and other expenses, when you include the intangible “goodwill” associated with the company that can be lost or diluted in a rebranding exercise.
What is goodwill?
In the oft-cited definition of goodwill in the words of British judge Lord MacNaghten, it is the attractive force that brings in custom. It is the benefit and advantage of the good name, reputation and connection of a business. While goodwill attaches to the business and not to any particular name or mark, the brand name is usually the most important indication of a good’s origin. The brand name is thus a significant factor of the business’s goodwill.
What this means is that, for a business that has existed for a long time and has enjoyed a good reputation, its goodwill may be worth several times more than its annual revenue or its tangible assets. Sadly, the history of corporate rebranding features far too many instances where such valuable goodwill had been squandered.
When Hedi Slimane took over as creative director of Céline in 2018, he was tasked to triple the revenue of the then-73-year-old French pret-a-porter brand over the next five years. He quickly dropped the accent over the first instance of the letter “e” and wiped out the firm’s Instagram account, signalling a new direction.
Market watchers widely expected that his strategy will include replacing former design chief’s Phoebe Philo’s luxurious, minimalist look with an edgier style he was known for when he was at rival Saint Laurent. Reviews of Slimane’s debut designs for Celine were savage. Philophiles – the fans of Phoebe Philo – were appalled. They snapped up designs carrying the old name, unimpressed by the unwelcome change in aesthetics, driving second hand prices up 30 per cent. That missing accent was not just a missing stroke.
While the short term reactions were clearly negative, whether in the long term Slimane’s changes will result in a more profitable Celine is still uncertain (its owner LVMH does not break down individual brand figures).
Change for change’s sake
A rebranding is inherently a highly challenging and risky move. Academic studies are few, but one that examined the corporate rebranding of a leading telecommunications firm showed that common pitfalls included brands disconnecting with its core; stakeholders not seeing the bigger picture; too much emphasis placed on the label and not the meaning; and the difficulty in managing multiple identities in larger businesses.
Thus, change should be strategic and not be for its own sake. Twinings Tea has retained its current logo for 232 years and remained in the same operating location on London’s Strand since its founding in 1706. Chanel, one of the most desirable fashion brands in the world, has not changed its double C logo since its creation in 1925. Chupa Chups, whose logo was designed in 1969 by the one and only Salvador Dali, has also kept the arrestingly bright daisy-shaped emblem atop the lollipop for generations.
When a rebranding is absolutely necessary, one way to retain the goodwill associated with the old name is to retain part of the original name. Like Apple, Inc., Dunkin’ Donuts was renamed Dunkin’ to signal its focus on coffee and other offerings instead of purely donuts. Another solution is to incorporate a new holding company, leaving the original name intact as the name of a subsidiary, like what Google did with Alphabet.
But don’t be like Royal Mail, which learnt the hard way that badly thought-out name changes can confuse and infuriate customers. It had spent £2.5 million (S$4.2 million) to conjure up “Consignia” to replace “British Royal Mail”, only to be forced to backtrack a year later at a cost of another £1 million.
Meanwhile, President Duterte has proposed “Maharlika” as his favoured substitution for the Philippines. The ancient Tagalog word is thought to mean “nobility”. That might not be a good idea due to its tainted connotations: Maharlika was also the choice of Ferdinand Marcos, the late murderous dictator whose wife, Imelda, has been forever immortalised as the first lady with the shoe fetish.
Plus, some historians have traced the origins of the term further back to Sanskrit, where it means “man of ability”. To which a handful had translated, perhaps facetiously, to “big phallus”.
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