The AIG leadership team has recently concluded that their brand is tarnished beyond repair.  Their solution – rebrand.  They are changing their name from AIG to AIU.  I’m not sure how effective this strategy will be for them.  After all, many view them as the catalyst for the global financial crisis we are now in and their posh executive retreats after receiving billions in government bail out funding didn’t help with the public’s perception of them.

However, this does shed light on an important issue for many companies – rebranding.  Small businesses can learn some valuable lessons from looking at the rebranding activities of some of the big guys.

Reasons to Rebrand

There are a number of reasons companies of all sizes consider rebranding:

1. The brand is just wrong

This reason is particularly relevant for relatively new businesses.  Brands are often established by small companies without the large marketing research budgets of corporations that allow them to test every aspect before deciding.  Small businesses, including solo-preneurs, will often just brain storm and pick branding that sounds good to them.  After getting out into the marketplace and learning more about what works for their target market, it becomes apparent that a new brand is needed.  Without much investment, it can often be the right move to make a change.

Small businesses aren’t the only ones that deal with this though.  Large corporations are suseptible when they enter new markets.  Perhaps one of the legendary branding errors of this kind was when the Nova was introduced years ago in Mexico.  As a brand, Nova works fine for a car being driven by an English speaker.  In Spanish however, Nova means “no go.”

2. The offering has outgrown the brand

Companies select brands based upon their current understanding of the market and the customers they intend to target.  With success, however, they can potentially outgrow the original intention of their brands.  IBM used to stand for International Business Machines.  After that name was no longer relevant to their expanded target market and product offering, IBM now just stands for IBM.

3.  Something bad has happened

This is the AIG scenario.  Get blamed for a global financial crisis and you now have a branding issue (although AIGs issues are broader than this.)  Sell a tainted product and your company could go out of business.

Brands are people’s expectation of future interactions with a company based upon past performance.  If not enough positive brand equity has been established, a negative experience could put an end to a brand.

Lessons for Small Businesses

There are a number of lessons small businesses can and should learn from these corporate examples.  Branding is an expensive proposition, it takes both time and money.  Rebranding is even trickier and laden with more risks.  It’s best to try to get the branding right to begin with.  Here are some things that can be done.

Ensure that you understand well your company values and that they are reflected in your brand.

While AIGs negative scenario ruined thier brand, Tylenol was able to emerge stronger from the tampering incident a few years back that resulted in a widespread recall of their products.  They had such a strong and positive brand, and acted swiftly and consistently with that brand that they were able to maintain the trust that consumers placed in them.

Make sure your brand can withstand the changes in the marketplace.

A great example of a company that did not do this well (yet still managed to survive) was Net Zero.  Their original branding revolved around the idea that no one should ever have to pay for Internet service.  The market obviously did not agree with them on that one.  I still get a chuckle every time I see a commercial now that points out they have the lowest cost internet service (low, but not free) around.  So much for the “zero” portion of their name.

Consider the possibilty of phenomenal success when selecting a brand.

If you pick a brand that is tightly aligned with a niche, you might find yourself having difficulty expanding without investing in rebranding expenses when you are successful enough to grow.  The difference between Amazon.com and BarnesandNobel.com brands are a good example.  While Amazon started out primarily as books, they are branded as an online retailer.  Barnes & Nobel, while they do have a few other items, is primarily branded as a book seller.

Small businesses would do well to learn from the branding successes and failures of large corporations.  With much smaller budgets than the industry giants, an error could be fatal.

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