What the X Is Going On? Why Companies Resort to Rebranding

On July 23, billionaire entrepreneur Elon Musk announced that the social networking service he’s controlled since late October would be rebranding from the well-established “Twitter” to “X.”

Kim Whitler, an expert in marketing strategy and brand management at the University of Virginia’s Darden School of Business, said there are a number of reasons why companies opt to rebrand, including to simply expand appeal.

In September 2018, Dunkin’ Donuts announced it was dropping the last word from its moniker. Nine years earlier, Burlington Coat Factory shed the last two words from its name.

“The companies wanted to be clear that they sell more than donuts and coats, and this required broadening the brand name,” Whitler said. “There is a range of reasons for rebrands, with a range of consequences. Some rebrands may simply be a new logo and advertising to modernize the brand, while other rebrands may substantially shift the positioning of the brand.”

Darden Professor Kim Whitler is an expert in marketing strategy and brand management.

Whitler’s example of a unique, but successful rebrand is PetSmart adopting its current name in 2005 after years of being PetsMart.

This move, Whitler said, was triggered by the company’s need to strengthen its position in the marketplace, as the stock had declined to less than $5 a share behind a commoditized shopping experience. There was a need to better differentiate the company from grocery chains, so they shifted the positioning by focusing on “pet parents” – those customers who cared for their pets like family.

“They essentially only changed the emphasis of different letters to communicate a completely different positioning,” she said, “This subtle shift – from PetsMart to PetSmart – enabled the company to focus on helping customers become better, more capable and smarter pet parents.

“This rebranding – moving from low-cost provider to a more premium solution for high-involvement pet parents – meant that everything had to change. Beyond just the advertising, the store design and layout, product assortment, pricing, hiring, training, and even real estate decisions needed to be reconsidered to support the positioning shift.”

The risk proved rewarding as company stock, once down as it competed head-to-head with the likes of Walmart, Target and other major grocery chains, soared under the tweaked name.

“They needed to carve out a position in the marketplace where they could win, and that required them to do something that is very difficult to do – to move up market,” Whitler said. “They were quite successful in doing so.”

In 2014, PetSmart took the firm private and sold for $8.7 billion to a group of investors. At the time, the stock was around $80 per share.

Not all rebrands can be claimed as wins, however. They call for a heavy investment of time, money and resources.

Whitler said that rebrands, when done in a sophisticated manner, “take development, time and money, in addition to significant testing, to ensure the outcome maximizes the desired impact.”

After name testing, there’s logo design and a number of other marketing experiments to “prove that the rebranding achieves its objectives,” Whitler said.

The National Football League franchise in Washington, D.C., after 82 years as the “Redskins,” spent two seasons as the “Washington Football Team” before adopting the “Commanders” in 2022. The Washington Post estimated the rebrand cost $10 million.

And now, under new ownership since July 20, the Commanders are reportedly considering another name change.

“Whether this is a preference of the new owners or there is empirical evidence of a problem with the new name, having three different names within a few years’ time is not ideal – it’s costly in terms of resources, and it is confusing for fans,” Whitler said.

In some cases, Whitler said, a rebrand is more imperative as a company might feel the need to distance itself from a controversy. In other cases, it might be more of a choice or strategic objective.

Twitter’s rebrand falls in the latter category.

“From public statements, Musk is trying to create a broader platform of products,” Whitler said, “and by rebranding, he grabs the attention of the media, consumers and other stakeholders, helping drive rapid awareness of this shift.

“Now the firm has to go and deliver the rest of the vision – the product.”

This story originally appeared in UVA Today.