Benefits of Rebranding to Nurture Growth - A Startup Story
Benefits of Rebranding to Nurture Growth - A Startup Story

Thomas Kuster and Andreas Kistler

Aug 12, 2021
·
10
minute read

Over the last year, Fortune 500 companies such as Pfizer, Toyota or Intel went through the biggest rebrandings in decades. But what does rebranding actually mean?


The business world is developing at breakneck speed and has gained additional momentum since the pandemic outbreak. Never before have so many new companies been founded in Switzerland as in 2020 (almost 47’000). But many existing companies struggle to be relevant to their existing customers and attractive to potential ones. This development has also manifested itself in the area of branding. Even fundamental brand assets such as logo, color and typography are being questioned and often fundamentally changed, even though in the past they were emblematic for stability and continuity. Over the last year, Fortune 500 companies such as Pfizer, Toyota or Intel went through the biggest rebrandings in decades. But what does rebranding actually mean?


If a business or organization decides to change a significant asset of the brand, then we talk about a rebranding.


Such a change could be very obvious, like a new brand name or logo, or it might be more subtle, such as a slight shift in verbal communication. However you slice it, rebranding is an investment in the further development of the brand with long-term benefits. By rebranding, these four functions of a brand are reinforced in their very basic nature:


  • Recognizability - The customer can differentiate the brand from its competitors.
  • Customer experience - The assets of the brand and its content form a coherent unity and lead to a positive customer experience.
  • Meaning charge - The brand assets are meaningful for and interpretable by the customer.
  • Acceptance - The customer can identify with the brand.



The following story is fictitious and describes the essential reasons why a rebranding could be advantageous (proactive) or even necessary (reactive). 


Product & market fit (Initial situation)


August 2021: “Fellow readers - we are Sœr - a dynamic startup founded by two sisters (so you can guess why we came up with this name)  to revolutionize the craft beer industry. Our craft beer offers full ingredient traceability by using blockchain technology: just scan the QR code on the label and receive all relevant information with one click! We believe that every person has a right to know the contents of what they consume.  

Thanks to our friends and families, we got enough funding to design a label, purchase standard bottles, and produce a small batch of craft beer. As for now, the beer is brewed by our supplier based in the heart of Switzerland. Over the next quarter, we will conduct market tests to identify the demand and gather feedback from consumers. We want to position ourselves as a local premium craft beer producer where consumers can be part of the journey from harvesting to consumption.”


Getting traction (Pre-seed - Seed stage)


February 2022: “Good news first. We were able to build up a small distribution network of local specialty shops apart from our primary sales channels (e-shop). Sales are growing among our target audience, which has been further sharpened based on the market tests’ feedback (18 - 26yo). We have exchanged the glass for a paper, PET-coated bottle and are now tackling not only traceability but also sustainability. Finally, we have registered the name Sœr in Switzerland as a trademark for beer. 


Unfortunately, there is also bad news to share. Our in-depth competitive research showed that we missed a competitor in our initial search. In our defense: there are more than 1000 microbreweries in Switzerland. Although the name does not overlap with ours, the brand positioning and visual appearance are very similar. Anyway, as our positioning changed slightly by incorporating sustainability and the much narrower target group, we will take the opportunity to do a complete rebranding. This will also help us raise money in the seed stage. Luckily our portfolio is still small, so we only have to reshoot a few product pictures and change our simple website.”


Key learnings: 

  • Product and market fit: Positioning evolves quickly in the beginning together with your product/service. Develop only fundamental brand assets such as name, logo, typeface and colors. An evolution of your brand identity over time is inevitable.
  • Competition: Analyze your direct but also indirect competitors. Rebranding should be your last (expensive) resort.
  • Legal: Ensure that the rights to your brand are vested with your company. You will need an adequate contract with the designer or branding agency covering copyright and design rights (i.e., a transfer of the property, not only a license).



Ready for take-off (Seed stage - Series A)


May 2023: “The received funding from the seed stage was used to add Cider to our portfolio with the identical concept (traceable & sustainable). Our current target group (18 - 26yo) does not show great interest in Cider, so we decided to launch a brand (Az) that is endorsed by Sœr (Z). By doing so, we stay relevant for the craft beer target group and have more freedom for the sub-brand identity. Seeing as our corporate brand Sœr tagline “Beer that matters” is not suitable anymore, we decided to ditch it altogether.”



Key learnings:

  • By extending the product or service portfolio, certain brand assets can become restrictive. Such assets can be verbal (name, tagline) or visual (logo). Be ready for new growth and opportunities.
  • Stay relevant in the mind of your customers. Listen to your customers and put them at the center of what you do. Especially if you address a new target group, think about your positioning and brand architecture so that you do not endanger your brand space.



Maintaining speed (Series A - Series B)


November 2024: “We took the first steps outside the Swiss market and launched our product portfolio in Europe. The 35 Mio. CHF raised in the Series A round were partly used to move production from our external supplier in-house, helping us to yield better margins in the long term. 


We also wanted to strengthen our brand with a media campaign, but applied for an EU trademark before. When we finally received an answer from the EU Intellectual Property Office, we were shocked: Our application was denied, because, apparently, “Sör” means beer in Hungarian, and trademarks cannot be describing the goods or services they are registered for. Our legal counsel explained that the EUIPO rejects any trademark that is descriptive in any official language of the EU, and our chances of registering Sœr in the EU are therefore pretty limited. We decided not to appeal the decision, briefly considered not registering the trademark at all and simply continue with Sœr, but then came to the conclusion that for proper protection, we need to register our brand as a trademark. To trademark our brand name, we needed to rebrand - plus, we didn’t even want to sell our beer in Hungary…


During the renaming process, we encountered several issues. First, the linguistic research of the potential new names revealed that our favorite name has a bad connotation in Spanish. Then our legal department rejected another suggestion because there was an identical registered trademark in Belgium, for a chain of pubs. Since our products are often sold in similar locations, the risk of customer confusion regarding the origin of our product was too high, and legal issues were likely.


Luckily, the third try was successful, and we now have a new name that will be presented with a big international campaign. To prepare for this, we already purchased a .com domain and registered the name globally. For more information, check our blogpost on naming and branding from both a legal and a business perspective. If you are in the process of creating a name for your company or product, check the 10 tips on our blog.” 


Key learnings:

  • Consider the .com domain in the naming process and secure it immediately (there are more than 150 Mio. .com domains registered). Your local domain is never enough; count that your business will grow.
  • Conduct thorough trademark research in the beginning so you can build up intangible business assets.
  • There are limitations to trademarks: you cannot register descriptive or misleading brands, or something contrary to public order, etc.
  • Internationalization: When searching for a brand name, consider not only the meaning in your local languages but also other markets to which you might expand in the future. Even global companies are not immune to putting their foot in their mouth, e.g. FuzeTea. 


Expand reach (Series B - Corporate)


July 2027: “After six years on the market, we are now entering the United States by acquiring a local brewery. Initially, we planned to continue the US brand independently and profit from its local reputation. However, within the scope of an unscheduled audit, it was determined that the quality assurance was partly inadequate, and therefore a batch had to be recalled from the market. The brand reputation suffered immediately and we decided to incorporate the US brewery into our brand identity. With the planned rebranding of the new acquisition and our established brand name in Europe, this will be a fresh start for all parties involved.”


Key learnings:

  • Mergers and Acquisition: The aim of rebrandings after mergers or acquisition is not only to make the change visible, but also to comply with regulatory and contractual requirements. 
  • Reputation: After company scandals or negative press about founders, it is crucial to limit the damage to the company’s reputation through good crisis management. In the long-term, however, it may make sense to carry out a complete rebranding, as it is unlikely that the initial reputation can be fully recovered. The changes must be rolled out not only externally but also internally.


Take-aways


The motivation behind a rebranding can be proactive, with the goal of boosting your business, or inevitable/reactive, to protect your brand. In summary, the most common reasons for rebranding are:


  • Merger & acquisitions
  • Repositioning due to product or service extension
  • Differentiation from competition
  • Change in the market - staying relevant for your target customers
  • Internationalization - local success does not mean international success
  • Reputation - Negative publicity due to scandals of founder or company practices
  • Legal reasons, such as trademark disputes with the owners of established trademarks, or the risk of misleading consumers regarding certain characteristics of the product
  • Modernization or new CEO


Authors:

  • Thomas Kuster - Head of IP at LEXR 
  • Andreas Kistler - Business Manager at GoBigname


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