Reasons of Rebranding
Brand image considerations influence many important managerial decisions including the rebranding exercise(Blazquez, et al., 2019). Consumers' brand perception is influenced by the strength, favourability, and uniqueness of brand-related associations present in their minds (Keller, 1993). These associations are responsible for ascribing meaning to brands. According to Biel (1992), the financial equity of a brand depends on consumer brand perceptions i.e., brand image. A favourable brand image is considered key to achieving higher sales, market share, customer loyalty, consumer attachment, and perceived quality (Sung & Yang, 2008; Park, et al., 1986). Thus, managers always aspire to gain a positive and attractive brand image. For doing so, brand identity is the primary tool available to them as identity precedes image.
Rebranding decisions are generally motivated by changes in business activities, changes in the competitive position, changes in corporate strategy, consolidation of the business portfolio, and structural changes like merger/acquisition and performance (Ballouli, et al., 2016; Tsai & Chintagunta, 2015; Collange & Bonache, 2015; Kashmiri & Mahajan, 2015). Goi and Goi (2011) have classified various reasons for rebranding into external and internal causes. We argue that brand image consideration is an important underlying issue in almost all rebranding decisions. However, attending to brand image discrepancy can have proactive or reactive motivations (Kjærgaard, et al., 2011). Construed brand image discrepancy might be more consequential in the case of reactive rebranding (Ballouli, et al., 2016), than in the case of proactive rebranding. Still, we maintain that in proactive rebranding as well, the decisions are motivated by image considerations. This means that even if a rebranding decision is taken due to internal reasons, the underlying objective still is, to signal that something about the brand has changed for the better (Zhao, et al., 2018). To elaborate, despite the satisfactory brand performance, a manager might want to alter the existing brand identity to plug the emergent gap arising between the intended and actual brand image due to a strategic realignment. Also, brand identity is externally focused and is designed to get a favourable image in the consumer's mind. Hence, we can say that rebranding is always done in response to a felt image discrepancy and aims to obtain an improved brand image. Our argument is aligned with the recommendations of other scholars (Lee, 2013; Kapferer, 2008; de Chernatony, 1999) that identity-image interrelationships can explain rebranding better.
Identity –Image Dynamics
Models of brand identity either portray the concept to be atomistic or processual. The former model depicts identity as a constellation of components while the latter depicts identity as a dynamic entity that adapts itself to consumer and environmental needs (Da Silveira, et al., 2013). The work of Hatch and Schultz (2002) is considered the most prominent work in the latter domain which has also been profoundly adopted in branding literature. Hatch and Schultz (2002) have proposed a model of dynamic organization identity, according to which:
“Organization identity is not an aggregation of perceptions of an organization resting in people's heads, it is a dynamic set of processes by which an organization's self is continuously socially constructed from the interchange between the internal and external definitions of the organization offered by all organizational stakeholders who join the dance" (p. 1004).
This model has three elements: culture, identity, and image. While it is widely known that identity emanates from organizational culture and produces an external image, the novelty of this model is the feedback loop that establishes the potential of images to influence identity, which in turn would reflect on organizational culture. In this way identity and image mutually influence each other to make identity a dynamic entity. Similar observations are noted in branding literature (Da Silveira, et al., 2013; de Chernatony, 1999). Da Silveira, et al. (2013) say that consumers and other contextual factors affect the external face of a brand, that is its identity. This implies that brand managers are constantly engaged in striking a balance between brand image and identity (Gaustad, et al., 2019). Additionally, according to the self-discrepancy theory (Higgins, 1987), the construal of any brand image discrepancy motivates brand managers/leaders to reduce this discrepancy (depending on the severity of the discrepancy) by changing the existing brand identity such that the altered identity gives rise to the desired image. We propose that this revision of brand identity which is triggered by construed brand image discrepancy is rebranding, and this is done to achieve a favourable brand image.
Construed brand image and rebranding
The mentioned gap between the intended and actual brand image can be better understood using the concept of construed external image (Dutton, et al., 1994) which captures how the external image of the organization is internally perceived. Brown, et al., (2006) describes ‘construed external image' as an organization's belief of itself as perceived by external stakeholders, that is the mental associations that organization member believe others outside the organization hold about the organization. This concept of construed external image is extremely relevant for our study as it represents the force that leads to identity revisions.
Studies have shown that construed external image is a powerful force governing the identity transformation process (Gioia, et al., 2000). Construed external image impacts a manager's self-definition since identity is self-referential (Fuller, et al., 2006). Hence, we argue that to achieve organizational and personal goals, an attractive brand image is always desirable for managers. This attractiveness of brand image is perceived in the form of construed brand image internally. For this study, we have defined construed brand image as an organization's belief of its actual brand image prevalent among its consumers. The construed brand image serves as a manager's window to the outside consumer world that includes business analysts, media, NGO, regulatory bodies, and other such groups that all can strongly influence brand image (De Roeck, et al., 2013).
PROPOSITIONS
Rebranding and construed brand image discrepancy
Based on the self-discrepancy theory (Higgins, 1987), we argue that brand managers would always desire the convergence of the actual and intended brand image. In situations where these two images converge, the existing brand identity would be reinforced. On the other hand, when these two images remain dissociated, managers would get motivated to reduce this gap by changing the current brand identity. According to Gioia et al. (2000), after having encountered brand image discrepancy, managers either choose to rectify or maintain the status quo. Managers would maintain the status quo if they believed that discrepancy is acceptable in comparison to the efforts and resources required to reconcile it. On the other hand, consequential and pronounced discrepancy presses the need to re-evaluate and change relevant aspects of identity, so that consumers’ perceived brand image becomes more favourable. Dutton & Dukerich (1991) in their influential work have shown that any damage to construed external image hurts organizational members personally. As a result, members get strongly motivated and committed to taking actions that can restore the external image (Albert & Whetten, 1985; Roy & Banerjee, 2014). Thus, we posit that:
P1
Profound and consequential construed brand image discrepancy triggers the process of rebranding by the management. The resulting change in existing brand identity is done in the hope to restore a favourable brand image.
Rebranded identity and construed brand image discrepancy
Many empirical studies investigate the effects of rebranding but few provide promising evidence of its utility in resurrecting ailing brands. For instance, Tsai & Chintagunta (2015) have found a positive effect of hotel rebranding on occupancy rate and revenue per room. Similarly, Zhao, et al., (2018) have found that rebranding announcements are in general related to positive stock returns, but the effect is more pronounced when investors find rebranding announcements aligned with the brand's strategy and competitive position. The results of Zhao et al. (2018) also affirm the finding of other event studies done on rebranding announcements (see Kashmiri & Mahajan, 2015).
Unfortunately, despite a few encouraging results, no conclusive inference can be drawn regarding rebranding outcomes because of two reasons. First, there is not much evidence to reach a generalised understanding as rebranding is a complex process to capture and its effects are difficult to isolate. Second, the results of a few available studies cannot be assimilated because of the divergent characterization of rebranding employed in them (Kashmiri & Mahajan, 2015). For instance, Roy & Sarkar (2015) have found a negative effect of rebranding on consumer-based brand equity (CBBE) for leader brands while they have found that rebranding enhances CBBE for follower brands. In another study, rebranding has been found to have a positive effect on both consumers and employees, in terms of improved identity and image (Bolhuis, et al., 2018). Unfortunately, the results of these studies cannot be aggregated as the former two studies have conceptualised rebranding as a change in visual brand identity while the other studies (like, Zhao, et al., 2018; Tsai & Chintagunta, 2015) have operationalized rebranding as a multi-dimensional construct.
Despite this, it can be safely concluded that rebranding in general has a positive effect on both internal and external brand stakeholders, by improving the external brand image (Bolhuis, et al., 2018). Internally, employees get motivated to align their behaviour with the improved construed brand image (Gioia, et al., 2000) and externally, brand image improvement would have financial and behavioural consequences. We conclude that rebranding is done to get closer to the desired brand image which will ultimately improve the brand performance. Thus, rebranding is responsible for aligning the actual brand image with the intended brand image. We are using the term 'construed brand image alignment' to refer to the perceived alignment between intended and external brand image brought about by rebranding. Hence, we posit:
P2
During rebranding, change in existing brand identity is done to align the intended and actual brand image i.e., to achieve construed brand image alignment.
Rebranding implementation: Enabling conditions
Brand Leaders/brand managers
To reduce brand image discrepancy and plan a remedial action, getting employee buy-in, and committing resources are needed, and for that, a brand manager leader is involved in any rebranding decision from beginning to end. Miller et al. (2014) have identified strong leadership as a major enabler of any successful rebranding. Brand managers do not just influence the internal processes, but they are also actively involved in getting investor support in case of rebranding (Kashmiri & Mahajan, 2015). They are expected to act as brand champions to effectively assimilate and reverberate the effects of rebranding in their organization (Miller & Merrilees, 2013).
Brand managers can facilitate any change process in two ways. One, some leaders are blessed with such dispositional characteristics that allow them to pull out any change efficiently and effortlessly. Second, leaders can exhibit change-specific leadership quality by articulating a vision that would be achieved through a specific change. This is done to increase employee involvement and motivation towards the change process so that they can take ownership of the initiative (Herold, et al., 2008). The 'change-specific leadership' is more relevant for rebranding. We found the study of Miller et.al (2014) extremely helpful in characterizing the role of rebranding specific change leadership for the proposed framework. In their qualitative review of 61 rebranding cases, they observed that strong leadership impacts each phase of the rebranding process.
Leaders are responsible for noticing the eroding brand image and taking suitable remedial action (Seah, et al., 2014). Brand leaders also have the responsibility to gather inter- and intra-department support for the rebranding program in terms of resource commitment, and changes required in policy or procedures (Vallaster & De Chernatony, 2006). Most importantly, brand leaders will be responsible for convincing employees to 'live the transformed brand' (Gotsi & Wilson, 2001) and to turn them into future brand champions (Morhart, et al., 2009). Thus, the leadership style of brand managers plays an enabling role in any rebranding process such that change-specific leadership will strongly influence the construal of brand image discrepancy and the resulting change in the existing brand identity. Hence, it is posited that:
P3
Leaders, by exhibiting change-specific leadership, will enable the process of rebranding to reduce brand image discrepancy, by choosing the brand identity elements that need transformation and by facilitating the identity transformation process.
Quality of change communication and employee participation
The biggest barrier to successful rebranding is the employees’ resistance to change (Miller, et al., 2014). Employees play a vital role in realizing the brand promise (Chad, 2015). Despite this, extant research on rebranding does not pay enough attention to employees in ensuring successful rebranding (Lee, 2013). Often this has resulted in creating new brand meanings during rebranding but without translating them for staff (Gotsi & Constantine, 2007). Since identity is self-referential and immersed in organizational culture, any ensuing change in it is bound to face a lot of resistance. To successfully rebrand, branding gurus generally prescribe an early involvement of the internal stakeholders in the process using internal marketing. Rebranding decisions will create uncertainty for employees. Thus, quality of change communication that can make them aware of the reasons behind this decision and its likely implications on their job roles, can help in alleviating their concerns. This way they would be more receptive and responsive to rebranding
(Bouckenooghe, et al., 2009). Thus, both employee participation and quality of change communication play an important enabling role in our rebranding model. Participation refers to the extent to which employees are involved and informed about the change process i.e., the inclusiveness of any change program. Quality of change communication refers to the effectiveness of communication from the top management to the employees to get their buy-in in the process of rebranding. Frequency, clarity, and openness determine the effectiveness of communication (Miller, et al., 1994). Based on this we posit:
P4
During rebranding, employee participation will enable the efficient and effective transformation of the existing brand identity.
P5
During rebranding, the quality of change communication will enable the efficient and effective transformation of the existing brand identity.
Brand Age
As organizations age their adaptive capabilities reduces. According to structural inertia theory (Hannan & Freeman, 1984) the structure and procedures set in as the organizations grow older, making them rigid. On this basis, we expect that rebranding would be difficult for older organizations. Not only initiating rebranding but also implementing and harnessing the desired benefits from the rebranding exercise would be difficult for older organizations in comparison to their younger counterparts. This is because, over the period, older organizations develop assumptions that are internalised by employees which govern the way these organizations function. Similarly, consumers also develop strong mental images and strong self-congruence with established brands, as a result, drastic changes in brand identity would be threatening both internally and externally. Thus, we expect that rebranding will stir the set notions of both consumers and employees because both employee identification and customer identification are based on the existing brand identity (Gaustad, et al., 2019). More so, this brand identification will be much stronger for established brands and hence the higher resistance to rebranding. This makes implementing a rebranding strategy much easier for younger organizations. Hence, we propose that:
P6
During rebranding, transforming the existing brand identity and achieving the desired brand image alignment would be more difficult for older brands, than their younger counterparts.
We present our conceptual model of rebranding in Fig. 3.
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