Branding: How Crisis Impacts Your Brand

August 13th, 2010 by Rob Berman Leave a reply »

Brand Identity and Brand Equity are important for the future of a company.  To use a sports analogy –Would you rather be the New York Yankees or the Kansas City Royals?

Let’s take a look at what happened to some brands that have endured a crisis.

BRITISH PETROLEUM (BP)

British Petroleum re-branded itself as BP as it spread throughout the world.  They played off the initials by saying “BP” stood for “Beyond Petroleum.”  After, the debacle in the Gulf of Mexico the stock lost almost 50% of its value.

Expected Response: Best estimate is they may re-brand back to Amoco, which they bought in the US and rebranded to BP.

AMERICAN INTERNATIONAL GROUP, INC. (AIG)

AIG is portrayed as one of the key actors in the financial crisis.  Whether you believe it to be true or not, the stock became almost worthless.  Today, the Federal Government owns much of the company.  Many of the underlying insurance companies were sound but faced poor prospects because of the parent corporation’s troubles.

Response: They re-branded as Chartis to get away from the negative publicity.

WORLDCOM

Worldcom’s leaders were indicted for their misbehavior and that of their company.  Like AIG their core units were successful but were tarred by the corporate company’s challenges.

Response: Worldcom bought MCI as it bulked up.  MCI was re-branded as Worldcom along the way.  The brand equity was still high with the name MCI.  Therefore, Worldcom re-branded as MCI. Ultimately, Verizon bought the company.

The Takeaway

Your brand is essential to the health of your company.  How your prospective customers view you is encapsulated in how they view your brand.

Those are my ideas.  What do you think?  Please comment below.

  1. Do you have someone who is your brand steward?
  2. Have you modified your brand in the last few years?
  3. Do you feel that brands are more important, less important or the same level of importance as they were five years ago?

If you would like to contact me, you may do so by visiting my LinkedIn page or e-mailing me at rcberman2@yahoo.com.

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21 comments

  1. Rob Berman says:

    Gregory:

    I believe it is your browser. The site is showing the entire post. I will e-mail you the text.

    Rob

  2. Terez says:

    I think branding is just as important now as ever. When you think about a company’s name, it automatically conjures up something – good or bad – about it.

    As a small business owner, I have to choose what I want to be known for and live up to my name.

  3. Paul Novak says:

    Brands are so important, because they provide the public with a way to easily identify you. Obvious yes. As your examples show, the downside is that when you have problems, they’ll identify you with those as well.

    It’s hard enough to establish a brand. Rebranding although the obvious solution to a serious stain on the brand, is possibly even harder than establishing a brand unless you are a massive conglomerate like these companies. You don’t want the new name associated with an attempt to avoid controversy or responsibility.

    And that represents an opportunity really. If you handle the problems well without rebranding, you’ve just strengthened your brand manyfold.

    • Rob Berman says:

      Paul:

      You are correct about the cost of re-branding versus addressing the challenge and strengthening the brand. J&J comes to mind with the Tylenol scare in the 1980s. It is a classic case. Irony of ironies J&J forgot their own lesson with recent manufacturing challenges that forced recalling products like Tylenol. They survived last time. Will they survive this time?

      Rob

  4. Laura Sheman says:

    I have a mom and pop business and we’re working on branding. It’s not easy! I figure though that the more we put our name out there, the better we’ll do.

    I think branding is vital and I’ll continue to work to get our name out there!

    • Rob Berman says:

      Laura:

      Getting your name out there is key. However, there should be some message each time you get the name out. Think of it as your tagline. Let me know if I can help you.

      Rob

  5. Hi Rob, thought provoking article!

    I feel that now more than ever brands are essential for business development. Brand recognition provides a sense of security and comfort for the customer and they are most likely to purchase.

    At the same time, doing things to positively promote one’s brand is also more essential now than ever.

    People feel secure when they know they are doing business with a company who is honorable, has high integrity and delivers more value than expected.

    • Rob Berman says:

      Dvorah:

      Good to hear from you. Positive branding is important. As I mentioned in my comment to Laura, it is great to have a tagline to go along with the mentions of your name.

      Rob

  6. Susan Oakes says:

    Hi Rob,

    I agree about the important of your brand. It is built up over time and in larger companes one of the aspects they measure is its health.

    You can make adjustments to your brand over time which I have done in repositioning brands to ensure they remain relevant in the minds of consumers.

    • Rob Berman says:

      Susan:

      You are so correct about repositioning the brand over time. Think about Proctor & Gamble. Many of their brands have moved to premium status in a bid to obtain premium pricing and profits.

      Rob

  7. I know what a brand and a steward are, but what is a brand steward?

    I modified my brand to a degree about 4 years ago. Then I’ve noticed in the last 18 months more and more focus on introverts. I’ve claimed and kept, America’s #1 Business Coach for Introverts but it may be time to rebrand because of all the newcomers on the scene. Your thoughts?

    Because of the internet I believe it is more important. There’s more reach and more of it so everything is in our face more. Branding then becomes more important because of the quantity of information in front of us.

    Thanks Rob.

    • Rob Berman says:

      Pat:

      A brand steward is someone who is charged with maintaining the positioning of a brand. For your company you are the brand steward. As such you are actively considering a movement in your branding. That is what a steward does. Pat send me a DM and we can talk about the branding for Introverts.

      Rob

  8. Branding is critical to success. Companies like BP are fortunate to have a brand like Amoco to fall back to. Without a lot of money, it’s a real challenge to build awareness and recognition of your brand. Fortunately, these days the Internet makes it a lot more affordable to promote your business than back in the days when we relied on traditional media.

    I think branding is more important today as it was 5 years ago. No matter where you turn online, someone’s brand seems to be in your face. As for my brand stewards, I always admire companies where all I need to hear is their tagline (like “good-to-the-last-drop” and “the quicker-picker-up”). Now that’s branding.

    • Rob Berman says:

      Sherryl:

      Your comment about the brand steward are on point and answer a question raised in one of the other comments. Same goes for the tagline comment.

      Rob

  9. Interesting question Rob. From a consumer standpoint I do believe brand identity is important, but only from a quality standpoint. In other words, I’m not the type to pay the price for Armani designer jeans just because of the brand name when I can get the same denim at Levis or Lee. I would however go shopping for those jeans at a store where the customer service is excellent even if I had to spend slightly more.

    I am the steward of my own business and I build my brand by offering the best possible customer service as possible. The only modification I make is to strive for improvement.

    Looking forward to other reader comments.

    • Rob Berman says:

      Keyuri:

      Denim is such a great example. I have not tried $500 jeans but would be interested to see the margins for the manufacturer and retailer. No matter how good the customer service I would not buy those jeans. Of course, I can get jeans for close to $10 at Wal-Mart with no help what so ever.

      Rob

  10. Branding is more essential than ever because the competition is greater than ever. The internet has the ability to destroy a brand overnight as bad news flies around the world. On the other hand, the internet has helped to build brands that leveraged social media such as Zappos. The internet has to figure prominently in anyone’s plans to build and burnish their brand.

    • Rob Berman says:

      Jeannette:

      The internet has changed the ability to impact a brand in the matter of days. Zappos is built on customer service. Imagine free shipping for purchases and returns.

      Rob

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