Debranding

Swoosh, the logo of Nike Inc., an example of a debranded logo

Debranding occurs when a company removes its name from its logo for a marketing campaign. One form of this is Share a Coke, which was developed by the United Kingdom division of Coca-Cola.^[1] Another form of debranding has occurred with Starbucks, where the company has removed its name from their cups, in an attempt to make them appear less corporate and more personal. Nike Inc. has been called the first company to debrand their logo, which happened in 1995.^[2]

History

In the early 1980's, American consumers began moving from so-called “name” brands in favor of more affordable generic, or “no-name,” brands. This shift came across a range of both food and non-food household products. In a short amount of time, generic brands captured 2% of supermarket sales in the US. In 1981, generic brands held, on average, 4 – 10% of the product category sales in which they are strongest - in some cases reaching as high as a 16% share of sales. What puzzled many about the big household brands is that generic brands were capturing market share without the benefits major distribution afforded to the name brands. This increase in market share of generic brands also came at a time when overall sales were slightly decreasing. With no signs of slowing, generic brands posed a major threat to the profitability of major brands.^[3]

Change in consumer taste and technology

Many large corporations assumed generics were a fad, targeted at the low-end, price conscious consumer. Research proved quite the opposite. Consumer satisfaction for generics was very high, with 93% of those who purchased generics were satisfied with the product and 86% were interested in continuing to purchase generics. Furthermore, evidence suggested consumers viewed the quality of generics to be at least as good as those of private brands.^[4] This presented a huge issue for branded products: consumers of all types, including the highly-educated and upscale, were not necessarily concerned about the price of the product, but rather the perceived value. If a product is produced by Brand X, but there is a generic available, the consumer will tend toward the generic since the perceived quality is similar, but the price is generally lower. This means consumers were no longer responding to, or willing to pay for, the extensive branding and advertising campaigns contained in the price of the branded product.

Brands with marginal or weak sales were at the highest risk of losing customers. Retailers, ever conscious of optimizing shelf space, depended on quarterly reports to review sales data and either reduce or remove weak or even marginal brands to make room for more profitable products. However, a new technology would revolutionize the way retailers collected this data: the universal product code (UPC).

The UPC symbol, also known as a barcode, introduced a great deal of automation into the retail market. With automation also came the ability for retail managers to review sales data on a daily basis instead of having to wait for quarterly reports.^[5] This meant retailers could view near real-time the trends of their consumers and which marginal or weak brands could be replaced by much more profitable products. Data at the time suggested that generics had a much greater stock turn than branded products i.e. their sales to inventory ratio. With this powerful new technology and data, retailers quickly began dumping weak and marginal brands in favor of the much more profitable and in-demand generics.

The dawn of debranding

As discussed previously, top brands were not greatly affected by the advent of generics, but weaker and more marginal brands were at risk of completely losing market share to off-brand items. However, while the demand for generics posed a real threat, it also presented an opportunity. Conventional thinking at the time was that, in order to compete with the top dogs, you had to beat them in advertising campaigns. The consumer's trend of moving away from responding to advertising and rather moving towards value made this a losing strategy for weaker brands. Enter the age of debranding.

In taking their products generic, marketers and manufacturers greatly reduced or eliminated the expensive marketing and promotional campaigns required to sustain a branded product. In turn, they would also see a decrease in manufacturing costs associated with labeling and packaging. By pulling the branding off a product, manufacturers would save money, meaning they would have to sell less of a product at a reduced price to realize similar profit margins. Thus, by going generic, many companies actually realized increases in profits.

There are many other things companies had to consider before debranding. Retailers eliminating the third or fourth ranked brands from their shelves might entice manufacturers in these categories to seriously consider going generic. Also to consider is brand loyalty: brands with a loyal customer base should not debrand while those with a customer base simply concerned about price should.

Many companies run both branded and generic lines for retailers. Some manufacturers sell branded and generic products by region depending on consumer habits. The more recent shift in consumer tastes toward private label brands i.e. brands tailor-made for a retailer, has opened the door for a new type of debranding.

Modern debranding

Back in the 1980s and 90s, consumers were concerned about value. Today’s consumer is more conscious of what they are purchasing and more cautious of large corporations, favoring local, small, independent stores. As such, the type of debranding popular in the 1980's and 90's has backfired for corporations in the 2000's.

For example, in 2013 the United Kingdom's largest retailer, Tesco, launched a line of off-brand coffee shops named Harris+Hoole. These Harris+Hoole shops resembled mom & pop coffee shops with no clear ties to the retail giant parent company. When customers discovered the connection they revolted against the shops mostly because consumers' felt like Tesco was being dishonest in its representation in order to increase profits. This shift in customer demands created a headache for Tesco, but also created the opportunities for the next wave of debranding. Modern companies choose to debrand for a variety of reasons- pushing towards private labels, which includes distancing or differentiating themselves from a parent company.

Some companies choose to distance themselves from a parent company in response to a scandal, controversy or to control branding. The Mayo Clinic chose to remove the brand from all ventures which did not contribute to the core brand's attributes. The goal was to protect the Mayo brand name from association with bad press like the HMO controversy, denying benefits and limiting care. Other companies like the Loft use debranding to focus the brand. ^[6] Loft removed the name of the parent company in an attempt to clarify its market and differentiate from the more business professional Ann Taylor stores.^[7]

In many ways Starbucks is a perfect example of modern debranding because they strive to balance their brand identity and a local identity. Starbucks removed the name and left only the siren logo on signs and merchandise to appear less corporate and appeal to modern consumers. Starbucks has also responded to the recent popularity of shopping local by acquiring trusted local businesses. The shops retained their local names and flavors rather than becoming a Starbucks coffee shop.^[8]

References

1. Fisher, Lucy (6 August 2013). "Debranding: why Coca-Cola's decision to drop its name worked". The Guardian. Retrieved 12 August 2013.
2. Handley, Lucy (5 April 2012). "Debranding: The great name-dropping gamble". Marketing Week. Retrieved 12 August 2013.
3. Parasuraman, A (Summer 1983) [1983]. ""Debranding":A Product Strategy with Profit Potential". The Journal of Business Strategy (MCB UP Ltd) 4 (1): 82-87. ISSN 0275-6668. Retrieved 2 November 2015.
4. Coyle, J.S. (February 1978). ""Why Jewel Did It, How Consumers Respond. What the Risks Are, Where It All Goes From Here"". Progressive Grocer. pp. 75–78.
5. Seideman, Tony. "Barcodes Sweep the World". Wonders of Modern Technology – via http://www.barcoding.com/information/barcode_history.shtml.
6. Davis, A.L. (2003). "Lessons in De-Branding". Marketing Health Services 23 (2): 48–51.
7. Moin, D. (2010). ""Loft Unveils New Look Store"". WWD: Women's Wear Daily (199). p. 3.
8. Jones, J. (2009). "Appealing to the locals". Design Week 24 (40). p. 9.