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Rebranding and the Butterfly Effect: Why Rebranding Matters

Just as a caterpillar digests itself with the hope of morphing into a beautiful butterfly, U.S. based organizations engage in expensive rebranding campaigns to create a new persona. As part of their advertising spending, rebranding is expected to cost American companies as much as 44 billion dollars in 2018. As the majority of rebranding initiatives fail, organizations in the U.S. are losing market share and putting their stakeholders at risk by engaging in "expensive and time-consuming" rebranding efforts. Radio Shack, for example, spent 107 million dollars on rebranding to The Shack but ultimately filed bankruptcy in 2015 and 2017 that resulted in the closure of more than 2,500 stores. Numerous stories of rebranding failures are U.S. based organizations and are examples of specific types of rebranding failures such as merger and acquisition (M&A) disasters. U.S. based organizations continue to make rebranding decisions and invest billions of dollars, and valuable time in launching rebranding campaigns such as Taco Bell that is forecasting to spend 15 billion dollars by 2022 on an ongoing rebranding initiative. However, many companies are not effectively leveraging information gleaned from previous rebranding decisions.

As a doctoral candidate, selecting a dissertation topic is a critical step towards earning my degree. There is an expectation to find a “new” way to contribute to the research that already exists by synthesizing findings to reveal practical applications. An idea for my dissertation struck me after hearing sad but expected news.

The sad but expected news

My husband started an engineering company during the 1990s. I provided accounting support, but as the company expanded to over 70 employees, I led a staff as the Senior Cost Analyst. I enjoyed my work tremendously, but when other companies began to inquire about buying the company we decided it was time to sell and retire. While several offers were made, the one that promised autonomy of operations won us over. As we were very profitable, we naively thought that they would keep their promise and allow us to continue business as usual without interference. Boy, we were wrong.

I watched as several of my colleagues were fired as their positions in the company were consolidated at the divisional level. They called it economies of scale, but it was a bloodbath. As the other division was located in another state and was experiencing losses, the new combined overhead and G&A rates caused our pricing for customers to increase by over 30%. Our customers responded by finding other contractors. I stayed until I could not watch the cannibalization any longer and I expected that all of the employees would eventually lose their jobs. I was recently told that the last few remaining employees of the “old” company were being let go. This sad, but expected news caused me to evaluate what happened. Instead of selling the company based on a promise of autonomous operations, should we have questioned how or if retaining our organizational identity would be possible?

Tip: Don’t let a “good” deal highjack making the right decision.

Research to the Rescue

In my quest to understand why our company is a rebranding failure statistic, I will leverage evidence-based research to identify relevant practical implications for U.S. based organizations. I cannot help but wonder if we would have made a different acquisition decision had we recognized and understood the motivation for the rebranding decision. Although it is too late for our company, this research is relevant for companies that are considering rebranding. Therefore, the purpose of my study is to identify the drivers for rebranding decisions in U.S. based organizations to assist managers in developing effective brand management strategies.

Research Question: What are the primary factors that influence rebranding decisions in U.S. based organizations?

Some background information

While the concept of rebranding as a brand management strategy has gained momentum in the last few decades after the seminal article introduced the topic, the definitions of marketing and brand have changed over time. In a book by Kotler and Keller titled Marketing Management, marketing is described as a business activity that has evolved first to identify customer needs and then develop a supply strategy to meet the demand. While brand is typically defined as a “unique design, sign, symbol, words, or a combination of these, employed in creating an image that identifies a product and differentiates is from its competitors”, now it is also thought to encompass the perception of the various aspects of an organization including the behavior of employees.

Encouragement is Everything

My friends and family think it’s an excellent idea for me to share my passion for my research topic on a broader scale, but honestly, I think they may be pulling a sleight of hand trick by encouraging me to talk to someone else besides them about rebranding. However, if you’ve read this far something must be resonating with you. I encourage you to keep the conversation going by commenting on this post, sharing rebranding experiences, or asking a question. I cannot wait to share a theoretical framework model with you that will help to explain why U.S. based organizations are not making effective rebranding decisions in post #2 in this series of four posts. After reading the next post, you’ll want to continue to post #3 and post #4 to see phase one and two of the theoretical framework in action and how it helps U.S. based organizations in making rebranding decisions.

Links to all posts in the four-part series:

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