The Wisdom (or lack thereof) of Rebranding In Times of Crisis
October 25, 2010 ‐ 0 comments
The past few weeks have seen a firestorm of controversy surrounding the planned rebranding of Irish energy suppliers ESB and Bord Gáis, the government-established incumbents providing electricity and natural gas to the Republic. The decision to re-brand is driven by  Ireland's Commission for Energy Regulation (CER), the agency which, in a delightful naming twist, is managing the deregulation of the Irish energy  markets. As with any deregulation story, it's a convoluted one, so let's focus on the electricity side. ESB (which stands for Electricity Supply Board) has been generating and distributing energy in Ireland since 1927. The company is, for all intents and purposes, the Kleenex of electricity. Since deregulation began in the late 1990's, ESB Customer Supply (the consumer arm of the business) has been competing with Airtricity, and in 2009 Bord Gáis also began distributing electricity to residential customers. To make up for its incumbent status, ESB must charge rates 10% above market. In a testament to the power of brands (or of inertia?), ESB still commands 77% of the residential electricity market, premium pricing and all. To allow for meaningful competition and move towards full deregulation, the CER made the decisions in April of this year that:
  1. ESB must reduce its market share to 60%
  2. Both ESB and Bord Gáis must change their names
Cost estimates to execute the name/logo changes for both companies range between €30 and €80 million. We don't claim to be experts at deregulating markets, but it seems an awful shame kill two perfectly good brands; and to spend €80 million on non-recyclable signage and junk mail name-change announcements instead of energy efficiency and grid upgrades. With Ireland reporting the biggest deficit in the EU,  growth forecasts set to be revised downard next month and unemployment at 11.4%, political pundits and persons-on-the-street alike are none to pleased with those figures, given that the costs will ultimately be  passed on to consumers. The ESB has said that a name change would be "challenging, complex and required careful planning to avoid confusing customers." Maybe they learned their lesson from The Royal Mail and the Gap. People are cynical enough about name and logo changes these days - what chance do you think a new brand stands when the lynch mob is already sharpening its pitchforks? Why not lobby the CER to establish a 'Competition Fund' or something like it, with ESB and Bord Gáis as the major contributors, that subsidizes communications aimed at educating the public about all of their energy choices? Why not subsidize competitors' advertising or rates directly in order to help them grow? ESB and Bord Gáis are strong, vibrant brands. It's a pity that the CER's approach to levelling the playing field is to handicap them and force wasteful spending rather than find ways to help newer competitors build positions of strength more quickly.
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