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For rebranding to add value, it must be based on sound advice

Tuesday December 12 2017
Aon

Aon Minet Insurance Brokers general manager Sammy Muthui. AON Kenya, AON Tanzania and AON Uganda recently all rebranded to Minet after they were acquired by South African private equity firm CapitalWorks. PHOTO FILE | NATION

By JAMES ANYANZWA

Corporate rebranding is increasingly becoming a common practice in East Africa’s business landscape but whether it will boost the performance of companies and returns to shareholders remains a subject of debate.

While global corporate giants such as Apple, Walmart, McDonalds and Harley Davidson, which  were once on the  brink of collapse, attest to the power of rebranding, some companies in this region are struggling to keep their heads above water despite a change in their public image.

A cross-section of analysts and chief executives are of the view that though rebranding is an important aspect of turning around the fortunes of a company, its success largely depends on how it is executed and customers’ willingness to embrace the new image.

“Rebranding of a business must be a very comprehensive process. Apart from just improving the image of the company in the eyes of the public, it must also be accompanied by internal changes touching on the efficiency of business, staff morale, customer relations and the quality of goods and services and how they are delivered,” said Jared Ketenga, chief executive of the Association of Kenya Credit Providers.

“If you rebrand and fail to invest in the internal aspects of the company, then it becomes a waste of resources,” added Mr Ketenga.

Professional advice

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Albert Mugo, the former chief executive of state-owned power producer KenGen, said the decision to rebrand a business should be informed by professional advice for it to add value.

“If rebranding is properly initiated it should positively affect the performance of the business over time but if it is just a whitewash because everybody is doing it, then it is a waste of time and money. For whatever reason, you need to rebrand with expert advice so that you ensure you are not wasting money and that you are adding value,” said Mr Mugo.

Kenya’s K-Rep Bank which is owned 74  per cent by Centum Investments changed its corporate identity to Sidian Bank while Equatorial Commercial Bank which is 75 per cent owned by Mwalimu National Sacco, changed its name to Spire Bank, but the move has not really reinvigorated their fortunes.

“When we look at recent re-brandings in Kenya’s financial market, it may take some time to derive value from a rebrand as it involves a cultural change as well as personnel. A rebrand goes hand-in-hand with a strategy, and unless these companies are executing, monitoring and recalibrating their key performance indicators, then the rebrands are in vain,” said Daniel Kuyoh, a senior analyst at Alpha Africa asset managers.

KCB stands out as a successful story of corporate rebranding in the region. The change of 2002 was motivated by the need to shed the inefficiency tag and the shadow of bad debts accrued by politically connected individuals.

The bank acquired a new logo, corporate colours and initiated a new employee culture, retrained its staff and refurbished all its branches into eco-friendly spaces.

As a result, its net profit has increased to Ksh15 billion ($150 million) for the nine months to September 30, 2017 from a loss making position of Ksh3 billion ($30 million) in 2002.

“The key issue is whether your new brand will be able to identify with your products and whether your customers will identify with the new brand,” said Habil Olaka, chief executive, Kenya Bankers Association.

Mergers and acquisition

Some corporate rebranding in the region has come about as a result of mergers and acquisition.

For instance, Kenya’s Oriental Bank rebranded to M-Oriental Bank after it was acquired by Bank M Tanzania Plc, Giro Commercial Bank rebranded to I&M Bank after its acquisition by I&M Bank and Fidelity Commercial Bank changed its name to SBM after it was acquired by the State Bank of Mauritius.

In Tanzania, Letshego Bank rebranded after acquiring a 75 per cent stake in Advans Bank Tanzania.

In the insurance sector, AON Kenya, AON Tanzania and AON Uganda recently all rebranded to Minet after they were acquired by South African private equity firm CapitalWorks.

In the telecoms sector Bharti Airtel, which started operations in Kenya in 2000 as Kencell, has rebranded several times from Kencell to Celtel to Zain and finally to Airtel. 

Strong brand

According to David Haigh, the chief executive of Brand Finance, a UK-based independent business valuation consultancy firm, the main purpose of a strong brand is to make money by attracting customers, building loyalty and motivating staff yet most organisations have failed to move a step further by monitoring the performance of the brands.

“Huge investments are made in the design, launch and ongoing promotion of brands. Given their potential financial value, this makes sense. Unfortunately, most organisations fail to go beyond that, missing huge opportunities to effectively make use of what are often their most important assets,” said Haigh.

Uganda’s Crested Stocks and Securities rebranded in 2014 to Crested Capital Ltd.

“Looking back, this rebranding had more to do with improving our self-image. The rebranding helped Crested deepen overall commitment to quality service delivery,” said CEO Robert Baldwin.

“Companies rebrand for various reasons; to refresh their image or to change strategic direction to avoiding negative publicity attached to a certain brand,” he added.

According to Brand Finance’s annual report (2017), Apple has for the past five years held power as the world’s most valuable brand but the company has over-exploited the goodwill of its customers and failed to generate significant revenues from newer products such as the Apple Watch.

Its brand has lost its lustre and must now compete on an increasingly level playing field not just with traditional rival Samsung, but with other Android brands such as Huawei and One Plus in the smartphone market, Apple’s key source of profitability.

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