Independent Study Project - Essay Example

Independent Study Project Table of Content Rationale 3 Methodology 4 Investigating questions 5 Effects of rebranding in the service industry 6 Case Study 9 Role of employees in rebranding 10 The brand value that can be created through rebranding 14 Recommendations for further research 20 References 23 Rationale Branding has become a buzz word of any industry in today’s world. The pronounced effect of branding and rebranding can be felt in service industries. This is mainly due to the nature of business that is done in this sector; the company needs to be in the minds of the customer. Branding has been the cynosure of the industry for quite some time now. However, it has not been analysed under the purview of academicians. Kay feels that there has been a dip in the perceived notion of brands being used by the industry to create awareness and get associated with the customers (Kay, 2006). Experts of the like of Andriopoulos & Gotsi, feel that brands should always be dynamic and move in sync with time. This is because tastes and preferences of customers keep on changing with time. Certain experts also believe that any brand should retain their core cultural flavour and yet judiciously combine it with the current target customers (Schultz & Hatch, 2003). Rebranding is a process of changing the current image of the company or the product. This might to happen due to many reasons. The company or product might need to re-establish itself, it might have been complained against or simply it might need to focus on some new customer segment. Muzellec believes that the easiest technique of rebranding is to rename the existing the company or product (Muzellec, L., et al, 2003). Over the course of prosperity of companies all over the world, it is not difficult to find instances of companies going for rebranding their existing line of products. There have been examples of companies faltering on the strategy of rebranding. The current paper will try and focus on the implications of the effort to rebrand some companies. The main reason underlining rebranding is under achievement (Kapferer, 1997). Methodology In order to run a short yet comprehensive analysis on rebranding, three questions have been formed which forms the main basis of the analysis. The first question enquires about the effects of rebranding in the services industry. This question is complemented by the role of employees in a rebranding process. The paper will also discuss the effects of rebranding, if any, on the employees of the concerned brand. Finally, the role of a rebranding in creating or increasing brand value would be dealt with. It will identify the important parameters of branding and apply it practically Investigating questions 1. The foremost question will address what are the effects that rebranding has in the service industry. 2. The next question will identify the role that the employees play in rebranding process. 3. Lastly the report will assess the role of branding in creating a brand value of a product. Effects of rebranding in the service industry A brand is created by a company by associating intangible attributes to a product, but it has to make sure that the brand message is communicated to the people other wise the value of the brand is perceived to be zero. (Arvidsson, 2006). Branding means personifying a product, a brand being an intangible concept, gives a product its human like attributes. In the 19th century brands where created in order to helped to prevent failure of a product (Haig, 2003). Branding was fast spreading in the 1990 by drawing the attention customers in the traditional way rather than through building a relationship. This resulted in the rise of customers who were not brand loyal (Surowiecki, 2004). It is believed that in order to instil the confidence in the customers to buy a product branding has to given the prime importance. Brands are responsible in creating a bond of trust between the product and the customers which give rise to brand loyalty which helps the company to generate revenue (Butterfield, 1998). If brands are communicated in the right manner it will be able to create its mark on the focused consumer as a result of it a relationship can be developed among the customer and the brand that will enable it to sustain in the competitive environment (Rothacher, 2004). In this competitive market companies need to make sure that their products do not resemble that of their competitors. Products must have a differentiation that makes it unique to others. This uniqueness of a product helps to create its own brand value. Thus brands help an individual to identify the manufacturer of the product and its source. Seen from the company’s point of view brands help a firm to have a legal right over a product by virtue of patent which protects the copyrights of the product. Branding can be applied to virtually anything. Starting from physical goods (like Ford Mustang Automobile), services (Singapore Airlines), stores (Nordstrom department store), individual (Tom Clancy) to an organization (UNICEF). Such is the vastness of brands. The question that still remains to be address is why do companies have to go for rebranding. Individuals have their own perception as to why companies go for rebranding now a day. Companies often resort to rebranding when a particular brand fails leave its footprint in the minds of consumer, or rather when a brand is a failure. This can be due to the fact that the company lacked the innovativeness in order to make a brand successful (Kapferer ,2007). However apart from failure of a brand there is another instance when companies go for rebranding. It is during the time of mergers and acquisitions. Rebranding in service industry also has several reasons. It can be used in order to improve the existing image that the company has. It is very important that companies differentiate themselves from their competitors to create a clear value in the mind of the consumers. This can be achieved through rebranding. Many a times a specific brand fails to communicate adequately to its customers, as a result they fail to identify the brand. Sometimes rebranding can be used to send out the message that a company has progressed in the field of technology or in developed a new kind of product. Often companies face threat from a new entrant, rebranding can be used as a defence mechanism from the new entrants. A company may resort to rebranding after adding new features to its product or services, so that it improves the customer reactions. At times after a poor publicity and a distorted image perception by customer rebranding can be considered. The consumer perception of the brand should be given prime importance. Proper study and research should be carried out and their reactions continuously analysed in order to incorporate the necessary changes that is required in order to communicate the right message across to them (Webley, 2007). Often it has been seen that companies have a view about their brand that is does not match with the consumers understanding. This communication gap can lead to brands becoming a failure. It should also be kept in mind that branding and rebranding call for huge investments, so if the brand fails it means the whole investment going down the drain (Muzellec & Lambkin, 2006). It has often been notice that rebranding leads to conflicts within an organizations. Often managers may differ in opinion that rebranding is an unnecessary cost that can be avoided stakeholders (Chernatony & Cottam, 2006). Often brand extension is used by companies in order to increase the probability of success of a new product. For example with the introduction of laptop (Viao) by Sony is an example of brand extension. By doing so companies can instil the confidence and faith that consumers had while using other products of Sony and project it on its new product. Companies that do not utilize the technique of brand extension will stagnate in its growth as a result the only option left to them would be to wait until a larger company acquires it in the due course of time and rebrands it. The first investigating questions thus analyses the various issues related to rebranding and why companies take the option of rebranding. Also it discusses the effects that rebranding can bring about in a firm. In order to demonstrate the rebranding in case of merger small case study can be looked into. Case Study Merger of Glaxo Wellcome and Smith Kline Beechan can be viewed as an appropriate example of rebranding. In the recent past there has been some major consolidation in the pharmaceutical industry in Britain. Glaxo Wellcome was formed in the year 1995 in a £9 billion dollar deal between Glaxo and Burroughs Wellcome, the largest deal of that tie in Britain. On the other hand the US pharma giant Smith Kline merged with Beechan, the oldest UK drug maker in the year 1989 and formed Smith Kline Beechan. Eventually in the year 2000 the two pharma giants eventually merged to give rise to Glaxo Smith Kline, which would be the world’s largest drugs manufacturer with market share of 7 %, surpassing the leader Merck by over 3%. After the mergering of the two pharma company it was necessary to rebrand the name and create a new brand that would be known as GSK or Glaxo Smith Kline. The rebranding was necessary because otherwise it would create confusion in the consumers mind as to what existed and what was formed. Before the merger there were two brands that existed in consumers mind, thus the two companies had separate customer base, now in order to unite them rebranding was required so that they can now perceive the two brands as one single brand. This is why rebranding is necessary during merger and acquisition (Stevens, 2000). Role of employees in rebranding In the service industry the role of the employees is an important one. The industry faces a huge problem at the time of rebranding, due to its employees. The problem arises due the fact that the employees that are well versed with the existing brand cannot be downsized as it would have a further adverse effect on the failing brand (Shocked staff, 2003). According to Boyle companies going for rebranding thus need the overwhelming support of its employees (Boyle, 2002). Authors are of the view that firms are heavily depended on its employees for the success of a brand. It is up to the employees to accept the brand and reflects the company’s values. (Hankinson 2004); on the prima face they are responsible for converting a brand’s value in to daily actions (Bell, 2000). Previously the importance of the employees were not given importance to in the process of rebranding, which has changed with time and at present the employees are being given the due importance in rebranding (Mixing the old, 2008). In service marketing instead of the 4Ps there are 7Ps, out of which one of the P stands for its people or the employees, this lays the emphasis of role of employees in the service industry (Hand et al, 2007). Thus according to Girod the underlining secret to developing an effective brand is through value based interviews (Girod, 2005). Therefore according to Thompson it is for rebranding to be a success a company should make use of their current staff effectively. This can be done by providing proper training to the existing employees and making them well versed with the new brand (Thompson et al, 1999). The training should be conducted in such a manner that they are able to accept the new brand as well as they use to when the old brand existed. It should be made sure that the employees develop a comprehensive knowledge before the rebrand is launched. They should be given sufficient time to get acclimatise with the new brand (Kaikati, 2003). Since the employees work is close association with the brand they develop an internal bond with the brand. It is necessary to have a smooth transition from the older to the newer brand because unless they are clear about the message that the brand wants to deliver, the customers would be confused. It has been found out that the success of rebranding lies in the hands of lower level managers or the worker. Thus in the process of rebranding there should be a time when the employees especially the lower and middle level management is involved It has been proved that employees who were allowed to participate in the process were motivated to adopt the new brand. It has been found out that employees often have the perception that they are vital to the rebranding process, the only thing that lacks is the proper support of the management. If they are adequately backed up by the management they can add value to the brand and in the process help create brand equity (Hand et al, 2007). Their participation is very important due to the fact that they are the ones who are close to the brand. Thus it is important to make them understand that rebranding is not a waste of money, which they often mistaken about, instead it can be beneficial for the company with their proper support (Kotter, & Schlesinger, 1979). Balmer found out that the cause of failure of rebranding aroused from the misunderstanding between the different avenues of business. It was due to miscommunication giving rise to lack of understanding within the organisation (Balmer, 2001). There are theories suggested by Chernatony & Cottam to prove that there had not been much practical application of the above discussed solution of involving the employees in the rebranding process (De Chernatony & Cottam, 2006). This resulted in rebranding is a failure. This is due to the fact that there is a lack of awareness of the brands in lower level of managements in case of an unsuccessful brand. The cause of which was reflected in the increase in the number of rebranding (Stuart, H., & Muzellec, L., 2004). Researches conducted by authors have been conclusive that companies that fail in branding and rebranding have a common problem. The employees have a confused idea about the brand and the marketing strategy. The problem can be attributed to lack of adequate training (Schultz, 2003; Blumenthal, 2001). It has also been found out that a brand lasted for four years on an average. After four years it was seen that a brand started to decline. Hand suggested that a brand should thus be rebranded every four years. The employees too had a clear idea of the message within two years but failed to reproduce it after four years. It was also found out that rebranding was resorted not only when a brand failed to create awareness but also when the middle and lower level management failed to understand the message the brand stands for as a result the message failed to reach the customers as well. The effect was felt severely in the service industry it requires a direct interaction between the employees and the customers. Another research suggested that a company in order to satisfy its customers should first try and looks after the satisfaction of the internal employees (What’s in a name, 2005). In conclusion to the above discussed issues it can be summarised that employees have a major role to play in the rebranding process and their role is all the more crucial when it comes to rebranding in service industry. This is due to the fact that the employees are the one connecting the customer to the brand. So in order to make sure that the right message is communicated to the customers they should first develop a clear idea about the rebrand. Another conclusion that can be drawn from the above discussion is that if a company going for rebranding need to recruit new employees this should be done before the process of rebranding is initiated. This will facilitate in a smooth transformation and integration from the older brand to the newer brand. The brand value that can be created through rebranding Brand value can be expressed as a quantified term that gives an approximate financial worth of a brand. However there are no specific ways of calculating brand value, it is said to be half the market capitalisation. It can be argued that why market capitalisation and why not the net worth of the company, but deviating from this controversy of calculating brand value of a product, the project focuses how much brand value can rebranding create. In order to understand the brand value one must first be well versed with the term brand equity. Brand equity of a product can be defined as the value that is reflected by the consumer’s thoughts and feeling with respect to a brand. According to Feldwick brand equity is a measure of the bondage between the brand and its customers, in other words it emphasises the beliefs and association that a customer has for a particular brand (Wood, 2000). The case study of Kingram communication shows that how the company rebranded itself in order to create a new brand value for itself. Kingram communication which is a 25 year old, UK based company specialising initially in commercial photography. During their period of business the company had developed a strong corporate client base. As with any technological industry which faces the problem of continuous innovation of ideas, the time had arrived for Kingram to look further ahead in terms of rebranding their company in order to help them grow. Companies that are using technology have to continuously keep inventing newer ideas and adopt them as older technology becomes redundant with time. The company decided to expand its business into graphic design, web and multimedia, digital printing, scanning, mounting and finishing, outdoor vinyl poster and event management. Eventually the company rebranded itself in the January of 2002, and launched its two new business units, k1 digital and k2 creative. The two units looked after the new ideas that had been incorporated in the business. The company believed in innovation and reinvestment if technology in order to stay ahead of it competitor (Enterprise Ireland, n.d.). By rebranding itself the company not only projected a new image of it to the customers but also created an enhanced brand value for itself. Seen from Calderon from of view brand value represents a complex mixture of loyalty, awareness and perceived quality by the customers (Calderon et al (1997). Creating a brand value is easier said than done. The term brand value till today remains a debatable issue as to how companies evaluate and perceive it to be. Its intangible nature makes it difficult to quantify and evaluate the effect it has on profits (Financial factbook, 2000). Kingram recognised the fact that over the years its brand was slowly declining and in order to survive the competition in the market it had to come up with a new idea of expanding its business. The strategy of rebranding itself was not a vague idea but a well thought process as it identified the new avenues that could be explored by the business in order to address its expansion issue. Kingram was the first company in Ireland to enter the digital based service sector and are proud of their achievements that they have made in this sector. The design business continuously needs to rethink and rebrand itself in order to stay ahead. It had recognised the need of rebranding. It has been found out that a company that constantly rebrands itself often outperforms the UK market. According to a recent survey conducted it has been concluded that companies that are considered to heavily brand or in other words constantly undergo rebranding outperformed others in the FTSE 350 by nearly 15 to 20% (Current practice in brand valuation, 2000). It is amazing that what rebranding can help a company achieve. The rebranding strategy that was adopted by Kingram was a successful one as currently it serves a huge number of high profile corporate in the private as well as in the public sector. With a number of years in graphic designing and services and the business further expanded into multimedia and web designing. The brand value that it had created from rebranding itself is the underlining secret behind its current success. The company had identified the mileage that it could gain through rebranding; as a result it was able to rebrand itself appropriately and convey the correct message to their consumer. The message that the rebranding focussed on is their arrival in the technological field of digital services. This was arrived to by conducting a brief survey on the opinion of the customers as to what they expected from the company. At the same time the views and opinion of the employees were taken and they were involved in the process of rebranding. The rebranding strategy was carefully planned out. The employees were first made aware of the message that the rebrand would aim at communicating to the customer. It then launched its two new units which would provide various customised services that would not only cater to its existent customer but also serve a new segment. In this context it can be said that according to Nadeau customers now a day demand more personalised services. Thus the demand for personalised services is steadily on the rise (Nadeau, 2007). Conclusion The focus of the study revolves around the three investigating questions that have been selected for the study. The first question throws light into the fact that why companies resort to rebranding and what are the implications of rebranding. While discussing this issue it had been find out that many believed that rebranding was due to specific reasons that the company wanted to improve on, for example in order to modernise a existing brand or to differentiate it from its competitors. He believed that the rebranding is not the effect of one particular reason but can be a combination of a few reason. Rebranding also takes place at the time of mergers and acquisition. As studied in the case study of Glaxo Smith Kline, it had been seen that rebranding is necessary for the companies that merge or acquire other companies. This is because of the fact that when a new company is formed the message should be communicated to its customers. In order to do so the rebranding is necessary, other wise it will give rise to the confusion among customers and the company might loose its potential customer. The sudden increase in rebranding during the period of 1990 was attributed to the idea of brand expansion by few whereas some like Kapferer believe that rebranding is a result of failure of its existing brand. He also believed that in order to rebrand the company must pay adequate attention to its internal members like the managers and try to make them accustomed with the new brand. The message that the new brand wants to communicate to the consumers should be first be clearly understood by the employees themselves as they work in close association of the brand and the customers, especially in the service industry. This issue bring the report to its second question about the role of the employees in rebranding. Employee or its people constitute an important P out of the 7Ps of service industry. This can be seen in the discussion that the role of the employee in the rebranding of a service industry is ever gaining significance. The employees are the one on which the success of rebrands pivots. Their satisfaction level has been compared to the success of the brand. A company is a lot dependent on its employees for rebranding. The fact of the matter lies that employees should be given proper training before rebranding as they often get confused with the message that the new brands stands for. They should themselves experience the brand in order to communicate its message to the consumers. The inclusion of the employees in the rebranding process also proved that it helped them to be motivated and committed in achieving the goal of the rebrand. The report also suggested that however the theory was proved effective one but still many companies did not practically apply it. Often employees think that rebranding is a costly affair that the company can avoid as its cost is more than its benefits. This perception can be done away with by including them in the process so that they understand the importance of branding. The question thus bring to the forefront the role that the employees in rebranding process which needs to be addressed by companies that go for rebranding. Companies should also keep in mind to hire, in case it needs to, before the rebranding process is initiated in order to facilitate a smooth translation to a new brand. The final question evaluates the creation of brand value through rebranding, in other words what rebranding helps a company to achieve. The question investigates what brand value and brand equity are and their connection with rebranding. It also answers that how a company gain advantage over its competitors through rebranding. The case study of the Kingram communication shows that how well the company had successfully used rebranding to its advantage. The case study shows that Kingram was able to identify the need to rebranding at the correct time and implemented it. After rebranding and launching the two new companies Kingram leapfrogged in its digital services and started to serve a larger base of customers. The fact that it started to serve a larger customer base provides evidence that the customer were able to perceive the new message that the company intended to convey to its customers. Through rebranding the company enhanced its brand equity by creating an image of technologically superior service provider in the mind of the consumers. This image increased the brand value of the company as a result of which the company could bear its fruit of success by means of increased revenue. The interesting thing about rebranding is that it is a double edged sword. If it is used appropriately it can bring about improvement in the business, at the same time it is equally dangerous for a business and can being about its downfall, due to the huge investments required in the process. Recommendations for further research Through out the undertaken project however mainly three questions have been focused on, the implication of the rebranding, role of the employees in rebranding and lastly the role of rebranding in creating brand value. In the process of evaluating the three questions a few other questions have cropped up which can be incorporated in the recommendation section and suggested for future research. While dealing with the first question it was evident that why companies rebrand and what are the issues related to it, at the same time it is not very evident that how companies should approach the rebranding process in order to make sure that rebranding is a success. This is an important question that can be recommended for future research. Research can also be conducted on the fact that how companies can rebrand themselves when they change the demography of their segment for instance targeting a different age group of customers. In order to undertake such a research the focus of the study should be on evaluating the effects caused by a rebranding done on a larger scale and comparing it to the effects caused due a small rebranding. Furthermore researches can be carried out in order to study the advantages and disadvantages of brand extension. The study must throw light on the pro and cons that are related in extending a brand. The question that should be investigated is whether companies should focus on projecting their brands by introducing new product or search for new customer for the existing product. The study would thus help companies to take a decision regarding when to extend their brand and when they should look for new customer base. It is important for companies to recognise the correct time when they should go for brand extension because the lifecycle of a product or services do come to an end, and before it so happens appropriate steps should be taken in order to introduce a brand extension or a search has to be initiated in order to find new target customer. Lastly an important recommendation would be to study how employees can be made more accustomed with the rebrand. Employees are important in creating an image of a new brand (Ind and Bell, 2000). At the same time they are very closely associated with the brand and play a vital role in the success of a brand. The passion with which the employees relate themselves with brand should be sustained at the time of rebranding so that the new brand is able to create the desired value which would be profitable for the companies. Limitations of the project The project has been undertaken with due seriousness, but it has been limited due to certain unavoidable factors. Time constraint is an important factor that has limited the projects research work. However sufficient time has been devoted to research of various journal and articles to make the project extensive, more articles and reports could have been incorporated. Time being a limiting factor has limited the research. Also the research is totally based on secondary research carried out by others, so it does not provide any quantitative or qualitative data. References Andriopoulos, C & Gotsi, M., 2007. Understanding the pitfalls in the corporate rebranding process. Corporate Communications: An Internal Journal. Arvidsson, A., 2006. Brands: Meaning and value in media culture. Routledge, London. Boyle, E., 2002. The failure of business format franchising in British forecourt retailing: a case study of the re-branding of Shell Retail’s forecourts. International Journal of Retail and Distribution Management. Butterfield, L., Haigh, D., 1998. Understanding the financial value of brands. Bitner, J., Zeithaml, V., & Gremler, D., 2005. Services Marketing. 4th Ed. McGraw-Hill Higher Education. Blumenthal, D., 2004. For the end of brand balderdash – and the beginning of a real future. Journal of Brand Management. De Chernatony, L., & Cottam, S., 2006. Internal brand factors driving successful financial services brands. European Journal of Marketing. Calderon, H., Cervera, A & Molla, A., 1997. Brand assessment: A key element of marketing strategy. Journal of Product & Brand Management. Enterprise Ireland., No Date. SME eBusiness Case Studies. Kingram Communications.[Online] Available at: www.enterprise-ireland.com/ebusinesssite/case_studies/kingram/kingram.pdf  [Accessed on 18 July]. Free, C., 1999. The internal brand. Journal of Brand Management. Girod, S., 2005. The human resource management practice of retail branding: an ethnography within Oxfam Trading Division. International Journal of Retail & Distribution Management. Haig, M., 2003. Brand Failures. Kogan Page, London. Hankinson, P., 2004. The internal brand in leading UK charities. Journal of product & brand management. Hankinson, P., Lomax, W., & Hand, C., 2007. The time factor in rebranding organisations: its effects on staff knowledge, attitudes and behavior in UK charities. Journal of product & brand management. Hart, S. & Murphy, J., 1998. Brands The New Wealth Creators. MacMillan Business. Hand, C., Hankinson, P. & Lomax, W., 2007. The time factor in rebranding organisations: its effect on staff knowledge, attitudes and behaviour in UK charities. Journal of Product and Brand management. Kay, M.J., 2006, Strong brands and corporate brands. European Journal of Marketing. Kotter, J., & Schlesinger, L., 1979. Choosing strategies for change. Harvard Business Review. Kapferer, J., 1997. Strategic brand management: Creating and sustaining brand equity long term. Kogan Page, London. Kapferer, J., 2001. Reinventing the brand. Can top brands survive the new market realities? Kogan Page. Kaikati, J., 2003. Lessons from Accenture’s 3Rs: rebranding, restructuring and repositioning. Journal of product and brand management. Kaikati, J., & Kaikati, A. (2003). A rose by any other name: rebranding campaigns that work. Journal of Business Strategy. Manchestereveningnews., 2003. Shocked staff sacked by text. [Online] Available at: http://www.manchestereveningnews.co.uk/news/s/59/59669_shocked_staff_sacked_by_text.html [Accessed on 15 July]. Mixing the old and new,. 2008. How to succeed with corporate rebranding. Strategic Direction. Muzellec, L., Doogan, M., Lambkin, M., 2003. Corporate rebranding – an exploratory review. Irish Marketing Review. Muzellec, L & Stuart, H. (2004). Corporate Makeovers: Can a hyena be rebranded? Journal of Brand Management. Muzellec, L., & Lambkin, M., 2008. Rebranding in the banking industry following mergers and acquisitions. International Journal of Bank Marketing. Nadeau, R. A., 2007. Living Brands: Collaboration + innovation = customer fascination. McGraw-Hill. London. Rothacher, A., 2004. Corporate cultures and global brands. World Scientific, London. Schultz, M., & Hatch, M., 2003. The cycles of corporate branding. California. Schultz, D.E., & Kitchen, P.J., 2003. So you want to be a branding guru. Marketing Management. Surowiecki, J., 2004. The decline of brands. [Online] Available at: http://www.wired.com/wired/archive/12.11/brands.html [Accessed on 15 July]. Stevens, R., 2000. Glaxo Wellcome-SmithKline Beecham merger creates worlds largest drug company. [Online] Available at: http://www.wsws.org/articles/2000/jan2000/glax-j22.shtml [Accessed on 15 July]. Thompson, K., de Chernatony, L., Arganbright, L., Khan, S. (1999). The buy-in benchmark: how staff understanding and commitment impact brand and business performance. Journal of Marketing Management. Webley, T., 2007. Reasons to rebrand. [Online] Available at: http://www.creation.uk.com/news/2007/10/18/reasons-to-rebrand/ [Accessed on 15 July]. What’s in a name., 2005. Branding: What it means to you and your customer. Strategic Direction. Wood, L., 2000. Brands and brand equity: definition and management. Management Decision. Read More