What you need to know:
- Barclays Africa Group is about to spend a significant amount of money to rebrand itself to its new corporate identity, Absa. Chase Bank too will also spend millions of dollars rebranding to SBM.
- There are several risks associated with rebranding. These include forgetting that a brand is more than the logo, assuming that the rebranding will bear fruit, thinking that branding is another marketing exercise whose cost will be incurred anyway.
- Many big South African brands have failed in the Kenyan market. It is not clear whether it is the Kenyan peculiarities or other factors that make South African brands to fail locally.
- Rebranding can be an expensive affair. It is not just changing logos and marketing but it must have a credible value proposition, otherwise, as Buffet says, it’s not going to get the business.
Barclays Africa Group is about to spend a significant amount of money to rebrand itself to its new corporate identity, Absa.
Chase Bank too will also spend millions of dollars rebranding to SBM.
Time will tell but how these two banks manage their respective brand transitions will be a key determinant of their success.
The two banks therefore need an implementation strategy that could minimise damage if is there is a backlash associated with strange new names.
There are several risks associated with rebranding. These include forgetting that a brand is more than the logo, assuming that the rebranding will bear fruit, thinking that branding is another marketing exercise whose cost will be incurred anyway, and failure to understand that rebranding can go awry and serve to confuse customers.
ZAIN AND ORANGE
Kenya is replete with rebranding cases that have not gone well. Perhaps the most memorable one is the rebranding of Kencell to Zain then to Airtel within a short period.
Kencell was one of the first mobile companies in Kenya, having started in 2000, and had a head-start over its competitors. It was the dominant mobile company in the country. It wasn’t until 2006 that Safaricom caught up with the market leader as it sold and rebranded to Zain.
The sale of Zain to Airtel and subsequent rebranding confused customers, leading to further customer losses.
The losses have largely remained permanent and perhaps it will take a miracle to reverse the changes. Some customers still refer to Airtel as Kencell.
When the French telecom bought Telkom Kenya, they rebranded to Orange, against the advice of locals experts. The French believed that with their global brand and a good marketing strategy, they would overcome any challenges. They were wrong.
A significant portion of people in the country stayed away from Telkom’s new brand name as they confused it with a political party. They struggled until they sold it.
The new owners quickly rebranded to its old name Telkom and suddenly a company that was on its deathbed has become a significant competitor.
Many organisations, especially multinational ones, fail to take local culture into consideration when making key decisions.
Michael Joseph, former Safaricom chief executive officer, learnt this quickly. In one of his moments of frustration, he noted that “Kenyans were peculiar” in reference to some characteristics that went against the norms.
He was right. Many big South African brands have failed in the Kenyan market. It is not clear whether it is the Kenyan peculiarities or other factors that make South African brands to fail locally.
It will therefore be extremely important for Absa to spend time to understand the local market as they introduce the new brand to Kenya. That the bank consulted with over 130,000 people across Africa in determining the new brand is a good start. They must now back this up with continuous engagement with local stakeholders in order to keep up with the Kenyan peculiarities throughout the process.
There is a lot to learn from other South African brands that have shown the signs of succeeding locally.
These include Sanlam, DStv, Mr Price and a number of restaurant chains. Better still, the choice of their implementation strategy should be carefully studied.
The most used conversion strategies are cut off, phased, pilot and parallel implementation. Barclays Africa has said that it intends to change the brand over the next two years and that the changeover will be conducted very calculatedly.
This means that we shall not wake up one morning to find Absa brand in all current facilities of Barclays throughout the country. Rather, the process will take time and the implementation will not be rushed. This strategy works well because it gives customers and stakeholders time to adjust.
When Firestone rebranded to Yana Tyres overnight, customers were reluctant to adopt the change. They still wanted to buy from Firestone’s international market.
The fact that Barclays PLC is still a key sponsor of the locally popular English Premier League and will still be operational internationally might present an uphill task of shifting customers from their love of blue colours.
We should not forget that some local customers adoringly mispronounce Barclays as Bank-Lays Bank of Kenya. The point is that Barclays has been operating in Kenya for so long that it is burnt into our brains. The change of name cannot therefore be an international initiative. It has to be led locally.
Cut-off works well in cases where the conversion is at the corporate level and there is little change to product brands.
UAP AND OLD MUTUAL
The rebranding of East African Industries to Unilever had no impact, since the product brands were strong. In the absence of product brands they perhaps could have chosen to use a phased or pilot implementation to test customers’ adoption of the new brand before they can go all out to convert.
When Old Mutual acquired a majority stake in UAP in July 2015, they did not rebrand UAP to Old Mutual. Instead, they have used both brands in parallel as UAP Old Mutual. Similarly, the marriage between Stanbic and CFC chose a branding that used both names.
UAP and Old Mutual continue to operate similar subsidiaries in life insurance and asset management perhaps as a strategy to avoid any backlash or allowing themselves time to see customer reaction.
As one of their customers, I can attest to the fact that this strategy gives customers time to adapt to a new name. It won’t be awkward to have Barclays/Absa or Chase/SBM for some time as they transition.
Chase Bank, although a smaller bank, had a brand as the small people’s bank with a soft heart on micro, small and medium enterprises. It was the only bank that could fund start-ups in Kenya.
Many of my young mentees banked with Chase. It is a brand that SBM should not take for granted irrespective of its predicament.
THE CASE OF BP SHELL
The most confusing rebrand is BP Shell (British joint marketing venture between petroleum companies Royal Dutch Shell (Shell) and British Petroleum (BP). Although the break-up led to separate rebranding, locally, if you mention BP, most old customers will always correct you by using the old brand BP Shell.
Further, BP’s change of the logo from the simple letters BP to a different one bearing the name of the Greek sun god Helios further confused customers as satirists took advantage of its unfortunate oil spill to sarcastically redraw the logo as a dimming sun.
For these organisations to seamlessly rebrand, they need to fully understand their risk exposure while taking cultural ambiguities seriously and develop mitigation measures. It is better to assume that something will go wrong and plan for it than relying on some statistical jargon to move forward in a market that is highly competitive.
Warren Buffett, the American business magnate, investor, philanthropist and chairman and CEO of Berkshire Hathaway once said, “Your premium brand had better be delivering something special, or it’s not going to get the business.”
Rebranding can be an expensive affair. It is not just changing logos and marketing but it must have a credible value proposition, otherwise, as Buffet says, it’s not going to get the business.
A new logo does not presuppose that existing value propositions will be carried forward. Instead they must strive to better the existing value propositions.
The writer is an associate professor at the University of Nairobi’s School of Business. Twitter: @bantigito
Editor's Note: This article has been updated to remove erroneous references to Barclays's rebranding budget, to recast some paragraphs, and to clarify that the bank consulted more than 130,000 people in Africa in determining its new brand, that it intends to change the brand over the next two years, and that the changes will not happen overnight.