Photo: Jeremy Brooks/Flickr
For years, Sara Lee has drummed its brand into our brains with the slogan “Everybody doesn’t like something, but nobody doesn’t like Sara Lee” and the catchy jingle that goes with it.On top of that, they have seared that white-on- red logo into our heads with its branding iron.
How they renamed the company in 1985
Prior to 1985, the parent company was known as Consolidated Foods. It changed the corporate name to Sara Lee because it was the best known of its brands.
One might question that decision in 1985 since Sara Lee at the time was known mainly for its frozen cakes while Consolidated Foods owned businesses that went far beyond foods to include pantyhose and golf carts. Nonetheless, the company made that decision and spent billions of dollars to make buyers comfortable with the Sara Lee brand.
Why might this name change be a mistake? The market knew Sara Lee for baked goods, and the company owned a lot of other varied businesses. Associating the company brand with the best-known product brand, while not totally without merit, limits the future if you decide to get out of that business.
It also presents a problem if the baked goods line gets into trouble. The negativity can spill over to the corporate brand and the stock price. Similarly if Sara Lee Corp gets into trouble, it could seriously damage the brand image and sales of the baked goods line for which it was known.
Making the same mistake again, but now it is even worse
After making a huge investment in the Sara Lee brand, the company sold off many of its baked goods businesses over the past two years – highlighting one of the problems with naming the company after its baked goods brand in the first place.
Yesterday, it announced plans to split its businesses in two on June 28th with its North American “meat products” business to be named Hillshire Brands and its European coffee and tea business to be called D.E. Master Blenders 1753. Sean Connolly, who will be CEO of the “meat products” company, said the company chose Hillshire Brands because of the strong brand recognition of its Hillshire Farms product line.
However, the brands of new company will also include Ball Park franks, Jimmy Dean sausage, and yes, Sara Lee frozen desserts amongst others. Isn’t that the same mistake they made with naming the company after Sara Lee? Why would they switch the name of the company to coincide with one of its meat products? What if management decides to get out of that business at some future date? What about the other product brands, such as Sara Lee, which have nothing to do with meat?
As reported in the Wall Street Journal, the reason Connolly gives for naming the company Hillshire is to rejuvenate the lackluster sales of Hillshire Farms. Did I hear that right? Hillshire Farms is slumping and therefore they are naming the company after a declining brand to promote it? Yikes. This seems like an ill-fated attempt to kill the healthy chicken to make chicken soup to feed the sick chicken. So the company will be named Hillshire Brands for two seemingly contradictory, and some may even say ridiculous, reasons – (1) high brand recognition and (2) the need to promote a slumping brand by naming the company after it. Beam me up Scotty!
At least their naming mistakes are consistent
What about the European company that will be headquartered in Amsterdam named D.E. Master Blenders 1753? This name also comes from one of the coffee brands the European spin off will sell – Douwe Egberts, which began in 1753. One thing you can say about the parent company is that since 1985, their naming processes are consistent. Maybe General Motors should rename themselves Chevrolet, Apple should become the iCompany, or Procter & Gamble should name themselves Tide.
How should companies choose a name?
Selecting the name of a company should not be taken lightly. Serious thought and logic should be invested because the name is one of the three most important branding elements – the other two are typically the logo and slogan. It depends if the company is starting out or is a going concern.
Start-up: If starting out, a company should select name that will do one or more of the following:
- Be easy to pronounce, remember, and pass on to others in viral pyramids (Apple)
- Represent the main products the company will sell (Home Depot)
- Incorporate the company mission (SpaceX)
- Give benefits or good reasons to do business with the company (Best Buy or Costco)
- Be unique and not be taken by others in the same business (Xerox)
- Not be easily confused with competitors in the same business (Goodrich and Goodyear)
- Lend itself to a good stock abbreviation (IBM)
- Not have bad meanings or connotations in foreign markets in which the company is likely to operate (Mondelez)
- Represents the founding fathers or mothers (Hewlett-Packard)
Going concern: If it is a going concern, a company should select a name that will…
- Make sure the reasons for making a change outweigh the reasons for keeping the previous name
- Show a relationship to the former name (unless the image of the former company is bad or wrong for the new business)
- Take advantage of the brand equity built up in the former name
- Not confuse existing customers
- Not be a liability in the future as the business or product line may change
While it is nearly impossible to create a name that does it all, the above lists can provide a logical framework to help executives name (or rename) their organisations.
What might be the right move for Sara Lee Corp?
Since Sara Lee selected its current name in 1985 when the company was in many more divergent businesses than it is today, there does not seem to be any clear and compelling reasons to change the company name to a product brand that is faltering. On the other hand, if there is any verifiable data that proves keeping the corporate name of Sara Lee is a greater liability than an asset, the company could choose SLC Holdings or SLEnterprises, which would relate the new to the old and, in the latter case, enable the company to keep the same stock symbol as it has now (SLE).
For the North American and European split, it could be SLCA and SLCE or some variation thereof, or better yet SLC Foods and SLC Coffee & Tea. Whatever name is finally chosen, it would seem that changing the company name from Sara Lee to Hillshire Brands perpetuates the problems of the past and loses the positive brand equity and relationships the name represents to customers, stockholders, vendors, and resellers. More importantly, it avoids tying the corporate brand to a product brand that has been on the decline.
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