November 3, 2005
Why Companies Change Their Name
The November issue of Business 2.0 takes a good look at when and how an established company must change its most valuable asset.
Corporate name changes are up 12% over last year. Times change and business names change with them, whether it's Kodak dropping Ofoto in favor of Kodak EasyShare or beleaguered WorldCom returning to plain old MCI. We're also now seeing the post-bust demise of the ".com" company name. However, the article points out that the "leading trigger" for corporate name changes is mergers and acquisitions, which are way up nowadays (9,000 last year, up 50% from 2003).
When one company takes over another, you either have to settle on one of the old names, combine the two, or think up a new name. The key is to evaluate each M & A partner's brand. When I was asked by the writer of the article how this is accomplished, I said: "You do substantial quantitative research" using rigorous but subjective surveys. I suggested that the companies ask themselves "Can the brand be described as a leader or a follower? Does it feel young or old?"
Many times it is best to find a compromise, such as when Sprint acquired Nextel. Sprint's adoption of Nextel's yellow and black color scheme, along with the tagline, display what I felt is "the perfect example of co-branding" (see our September 6 post on the subject).
Some companies start with a fresh name, such as the name Novartis that grew from the merger of Swiss pharmaceutical giants Ciba-Geigy and Sandoz Laboratories. Sometimes, however, the new name is simply an awkward amalgamation of the two partners: think ConocoPhillips, DaimlerChrysler, ExxonMobil and, lamely, Konica Minolta.
Other companies either seem to rename themselves after their top product. Xerox was once boring Haloid; Relational Software is now called Oracle after its best selling database product; Motorola started as the name of a car radio produced by Galvin manufacturing in the 1930s.
Renaming a company usually involves hiring branding agency, which can do the hardcore research involved in finding new names and how they will appeal to customers. We often provide "demos" of how the new name will look on letterheads, corporate reports, the website and even on business cards. Then comes introducing the new name to workers, and finally, to the world.
Even the best laid plans can go awry thanks to mismanagement and corporate bungling that can make any new name go sour (think how hard it is to associate positive meanings with the name that resulted from the merger of Houston Natural Gas and Internorth: Enron). But change can bring growth. Since Kodak dropped the Ofoto name, the online service has grown from 18 million to 25 million users...good news for a well-known and loved brand name that's facing an uncertain future.
Posted by William Lozito at November 3, 2005 3:29 PM
Posted to Automotive | Brand Naming | Branding | Company Naming | Consumer Electronics | Household Goods | Marketing | Naming | Pharmaceutical | Product Naming | Telecommunications
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