Friday, 8 June 2012

Common Reasons for Re-Branding and the Risks It Entails

What is Re-Branding? 
The marketing term “re-branding” involves a radical makeover of an existing brand, product etc., especially one which has failed to meet the marketing results desired by the business. In the re-branding process, the existing product or brand is essentially reinvented as a majority of its features and characteristics are comprehensively redesigned such as its name, image, term, symbol, design etc. After the product has been successfully reinvented, it is reintroduced into the market with the aim of encouraging renewed favorable sentiment for the product among customers and stakeholders. Therefore, re-branding essentially entails reinvention, redesign and reintroduction of an existing brand to increase its profitability and marketability.

In 2003, Lego axed all its sub-brands by extensively re-branding its entire product range with the introduction of a new slogan to reiterate what the brand represents. When do companies adopt a re-branding strategy and why? If a company already owns a successful brand that is established well in the market and is also highly profitable, why would it possibly want to re-brand it? There are several reasons why the thought may appeal to a business but the most common is related to the product’s life cycle. Theoretically, all brands have a certain life-cycle and gradual aging causes them to lose their appeal and originality in the market. As a result, businesses attempt to reinvent and redesign a successful brand in a bid to retain the market share that the aged brand secured.

Other common reasons for adopting a re-branding strategy are:
 * Fixing the company’s damaged reputation 
* Increasing brand recognition in the market 
* Reflecting New Management 
* Forced post-bankruptcy re-branding 

Does Re-Branding entail inherent risks? 
To give the answer in one word - yes. Re-branding is not always a profitable venture to embark upon and many businesses have learned this lesson the hard way. Re-branding demands meticulous research and thorough planning along with tremendous amount of monetary funding. And yet, a positive outcome is not always guaranteed since it depends on just too many external factors. This makes re-branding a highly risky endeavor as financing it can cause a business to go bankrupt. Therefore, it should be attempted only by businesses that have a diversified portfolio of successful products and services to be able to sustain possible failure. Even with meticulous planning and thorough research, re-branding has a propensity to cause as much damage to a business as it promises success. Customers identify a brand by its prominent features and characteristics. In such cases, re-branding can cause a horde of brand recognition problems for an already established and popular brand. This is because existing customers could infer that the business has shut down operations, has gone bankrupt or changed their product line.

Author Bio: Tim has been working as a branding consulting specializing in promotional metal pens and merchandise. Over the last 3 years, Tim has also been an active blogger in the field of marketing and small business promotion.
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Sunkanmi Afolabi

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