What Kraft and Harley Teach Us: Four Tips for Avoiding the Pitfalls of the Corporate Naming Process
Soon-to-be parents often spend countless hours deliberating names for their offspring. They consult books, the ‘Net, and various lists, among other sources. They draw up their own lists of likely candidates. They weigh the pros and cons of each entry. They solicit the views of family and friends and so on. For some, the process is fairly easy… They opt to name the child after the source of family money, if that is the case, in the hopes that the youngster gets remembered in the will.
My late father-in-law had a fairly simple process for testing a name for an unborn child: If you see a group of children playing outside, open your window and call out the proposed name. If the kids stop and laugh, go back to the drawing board…
I was reminded of his approach when reading about Kraft Foods. As previously announced, Kraft Foods is dividing to create two public companies before the end of 2012: a high-growth global snacks business and a high-margin North American grocery business. The North American grocery company will become Kraft Foods Group, Inc., retaining the Kraft brand for its corporate identity and as the brand for many of its consumer products. The global snacks company will be Mondelez International, Inc. Huh?
According to the company, “
” (pronounced mohn-dah-LEEZ’) is a newly coined word that evokes the idea of “delicious world.” “Monde” derives from the Latin word for “world,” and “delez” is a fanciful expression of “delicious.” In addition, “International” captures the global nature of the business. Got it?
The folks at Kraft should have opted to follow my father-in-law’s advice for the proposed name has come in for some criticism. Is it warranted? I don’t know…
In discussing the new name, Kraft Chairman and CEO Irene Rosenfeld said, “For the new global snacks company, we wanted to find a new name that could serve as an umbrella for our iconic brands, reinforce the truly global nature of this business and build on our higher purpose – to ‘make today delicious.’ Mondelez perfectly captures the idea of a ‘delicious world’ and will serve as a solid foundation for the strong relationships we want to create with our consumers, customers, employees and shareholders.”
“It’s quite a job for a single word to capture everything about what we want the new global snacks company to stand for,” said Mary Beth West, Executive Vice President and Chief Marketing Officer. “I’m thrilled with the name Mondelez International. It’s interesting, unique and captures a big idea – just the way the snacks we make can take small moments in our lives and turn them into something bigger, brighter and more joyful.”
Naming a company or a child requires planning and lots of work…
Some companies seem to do the naming thing reasonably well. For example, YUM! Brands, Inc., (their eateries include KFC, Pizza Hut and Taco Bell) was itself spun off from PepsiCo a number of years ago. The company was formerly known by the unappetizing moniker, TRICON Global Restaurants, Inc., and changed its name to YUM! Brands, Inc. in May 2002. They got the added bonus of linking their stock symbol “YUM” to the corporate name.
Having an iconic brand as well as a single-focus business makes life easy… For example, Harley-Davidson, Inc., purveyors of the eponymous motorcycles. They, too, benefit from a link between the company and their stock symbol, “HOG.” For the uninitiated, a “hog” is slang for a Harley motorcycle. In addition, the acronym, “H.O.G.” stands for Harley Owners Group.
In naming companies, I offer some advice:
- Make it easy to spell. It will be easier to find your company in web searches, etc.
- Make it easy to pronounce. Some years back a producer for a TV show I was pitching told me: “If he can’t pronounce it, he won’t use it.” Harsh, yes… but that’s reality.
- Make it short and memorable.
- Try to make it all-encompassing. This is perhaps the most difficult aspect of all and it appears that Mondelez was chosen because of the diversity of the new company’s offerings (the other part of the company will become Kraft Foods Group as the Kraft name appears on many of its brands).
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Ed. note: My friend, Adam Epstein, who acts as a special advisor to numerous small-cap company boards and investment funds through his firm, Third Creek Advisors, has authored an article entitled, “The Constraints of Thin-Cap Company Boards,” which appears in the current issue of Directorship (go here: http://www.directorship.com/the-constraints-of-thin-cap-company-boards/). The article is a must-read for those of us in a position to advise small-cap companies as it examines the fact that governing small-cap companies is a different proposition than governing mid and large-cap companies. You can reach Adam at ae@thirdcreekadvisors.com.
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This is funny and sad at the same time.
Kraft — simple, sensible, Midwestern values.
Mondelez. (which no one will pronounce correctly — you look at it and it’s MAWN-duh-les).
But pronounced correctly, it sounds foreign, weird and uttery meaningless.
Substitute it in ________ Macaroni and Cheese. Oh dear.
I know it’s a different company, but they’re still selling to the same people.
Mondelez Ritz Bits.
Really??
Oh dear.
Hello Kathy,
Thanks for reading and commenting.
Sadly, so many corporate names are “weird and utterly meaningless.” Hip designers get paid tons of money — shareholder money, I might add, to be “weird and utterly meaningless.” In the case of Kraft., I believe the employees came up with the Mondelez name…
Mondelez Ritz Bits… so scary…
Cheers,
Gene
Sounds like a travel agency or an international charitable organization
Hello Terry,
Thank you for reading and commenting.
I was trying to figure out what the name should be on… I think your suggestions are appropos.
Cheers,
Gene
The new snacks company is essentially the combination of Nabisco and Cadbury. No one is suggesting that Mondawhatever will be a brand name or replace current brand names. But, investors will be scratching their heads for years on this.
Hello John,
Thanks for reading and commenting.
Could we have: “NabCad?” How about “Nabbury?” Corporate names do tend to grow on people after a time. Think about Accenture. The construct, I believe, was “accent on the future.” After years of brand building and advertising, it has become recognized and established.
Cheers,
Gene
Thanks, Gene.
The consulting firm Accenture is an interesting case. Formerly part of Arthur Andersen, there was friction, by all accounts, with the controlling accounting group. The consulting arm split away from the firm circa 2000, renamed themselves Accenture to distance themselves from the parent, just a short time before Anderson collapsed in the Enron debacle. It was a name change to make a break from the past and just in time.
In another name change, Philip Morris changed its name to Altria with a big explanation, new logo and all, shifting focus away from its tobacco roots, although it kept the stock symbol MO.
Kraft, Nabisco and Cadbury have all been shape-shifting parts in a number of a corporate jigsaw puzzles for many decades. The vast majority of Mondelez International holders will be institutions, who care more about results than names. Over time, they will remember the new name but never think about what it was meant to represent. Not even when they have an OREO with their kids.
Best regards,
John
Hello John,
Thank you for continuing the discussion.
You’re quite right in your assessment. The issue in naming companies becomes problematic if the parent company name is the same as one of the subsidiaries, which can happen in cases where the company makes acquisitions. At that point, you really have to think about changing the corporate name to something that creates an umbrella. One case that comes to mind involves the old IHOP company. Shortly after they bought Applebee’s, the company was renamed DineEquity to reflect the expanded scope. So then the question… How much corporate brand equity do you give up by walking away from a great name? Does it really matter? I do agree with you that institutions will care about performance regardless of the name… “A rose by any other name…”
Thanks again.
Cheers,
Gene