@Wazua:
The following piece appeared in
Business Daily in
October 2007. It sheds some light on choosing and / or changing business names.
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Diamond Trust Bank recently announced a change of its corporate identity, unveiling a new colour scheme and logo. The new emblem has the letters "DTB" printed prominently. Judging from the accompanying series of adverts and Press releases, it is clear that the bank would now like to be known in the public domain as DTB instead of the previous "Diamond Trust."
This was an interesting move, considering that only a few years ago, another financial institution went in the reverse direction: Housing Finance Company of Kenya changed its identity from the popular "HFCK" to "Housing Finance".
These two cases bring out a bigger question: Why would one company prefer to be known as a series of letters while another one chooses a few words? Diamond Trust Bank – sorry, DTB – is not the first company to take that route. A few months ago, the National Industrial Credit Bank officially changed its name to NIC Bank. CFC Bank (previously, Credit Finance Corporation) made a similar move in the mid 1990s.
The use of initials is not just the preserve of banks and financial institutions: there are also CMC Holdings (previously Cooper Motors Corporation, which owns CMC Motors, CMC Engineering, CMC Aviation, amongst others), AAR (Africa Air Rescue), BP (British Petroleum), to name a few.
This style of using initials is an American tradition (remember, they coined "ATM" as opposed to the British, "Cash Machine" when these gadgets became popular in the early 1980s). Europeans and Asians prefer full words (Toyota, Barclays, Vodafone, Sumitomo, Siemens etc) while in Africa and the Middle East anything goes – not quite decided yet.
However, opinion is still divided as to which is a more powerful style from a business (marketing) point of view. Some professionals argue that the human brain finds it easier to remember words because they have meaning (for example, "Housing Finance" means exactly that - a place where you go to get finance for a house - while "HFCK" is just a random selection of letters!)
Others contend that initials are more memorable because they are easier to utter and recognise than words. For example, 3M is certainly easier than "Minnesota Mining and Manufacturing Corporation". It makes you wonder, "why not 2M, or 4M?" By the way, it was first abbreviated as MMM, and then people shortened that further to 3Ms, before finally officially adopting 3M.
Nevertheless, what factors would make a company change its name to initials - either officially or in branding? Three reasons come to mind: First, is when the original name is too long and the public are already using the initials. A good example is IBM (originally, International Business Machines) – by the time it became a household name in America, nobody was using the full name.
In Kenya, we also have NIC Bank - when it was given a commercial banking licence, it added the word "Bank" at the end of its (already long) original name to become "National Industrial Credit Bank". But within its core industry (motor vehicle financing), it was already well known as, simply, NIC.
Indeed even the registrar of motor vehicles would write the initials on log books to read something like "John Otieno & NIC". It is actually surprising that it took several decades for this company to realise that the public had changed its name!
The second reason that a company might find it necessary to change its name to initials is when its scope of business expands outside that initially envisaged by the original name. AAR started out as an air rescue and evacuation service provider, but, later, the business grew to become a fully-fledged health management and insurance operation.
The name "Africa Air Rescue" had to go because it was misleading. Thus, AAR Health Services was "born" and, today, there is also AAR Financial Services which finances health insurance premiums. Interestingly, some companies may take too long to realise this.
There is one that started out as a manufacturer of knitting wool - a process known as "spinning" - hence its name is Spin Knit. This company expanded to the milk processing business (Tuzo Brand) about a decade ago but it still hasn't changed its name.
The third reason is when the company name includes its country of origin and now it expands to a "hostile" nation. In some countries (and some products), national pride is so great that people will not buy from a foreigner.
Kenyans, for example might be more comfortable keeping their money in the Bank of Baroda than in the Bank of India - even though the two originate from the same country! Kenya Commercial Bank has realised this and it is now portraying itself as KCB as it expands across the boarders.
The name "KCB" may sound neutral to a Sudanese, for example, while "Kenya Commercial Bank" can be seen as the place where the "Kenyan expatriates in OUR COUNTRY keep their money - awaiting repatriation!" However, it's not very obvious why KCB re-branded its mortgage finance subsidiary, Savings & Loans, to S&L.
In view of the forgoing, East African Breweries should probably start pushing the name "EABL" forward. This company is no longer just in brewing beer, it also distils spirits and makes glasses. In addition, with time, the company may start operations outside the East African Community in a big way.
All in all, it appears as if the very large companies prefer to use initials – IMB, GMC, NCR, AT&T, BP etc. For this reason, many small companies also turn to this style hoping that it will make them look big. More often than not, however, the trick doesn't work and they end up becoming just another nondescript.
This is inverted logic. It is similar arguing that since rich people buy expensive things, then if you copy that practice you become rich! Big companies adopt initials AFTER they become successful and famous. They don't get success from the use of initials. The most powerful corporate identities in the world include Coca-Cola, Vodafone, McDonald's (which claims to be more popular than the Christian cross!), Virgin, and Toyota. All of them full names.
Another name that is also on this list is that of the company that makes "Windows". Curiously, it was founded by a guy called Gates! I bet that Bill, the founder wishes he had called it Gates Software instead of Microsoft…especially when he looks at the fame (and success) of Dell Computers.
Based on the above, will "DTB" become as fashionable as Diamond Trust? Only time will tell, but I predict it will be a difficult and expensive task. Those letters are not as easy to say as "ABC" (which, incidentally, is the corporate identity of the African Banking Corporation Ltd).
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.