losing more than a brand name
In dropping the Kinko’s name from its moniker, Fedex (formerly Fedex Kinko’s) may be losing more than 6 letters and an asterisk. The name change, announced 6 months ago, is now for all intents and purposes complete but the transition is far from settled.
BusinessWeek’s story on Fedex’s efforts reports on the struggles the company has had since Fedex bought the copy business in 2004. Apparently the corporate cultures of the merging entities was quite different. and has led to major clashes. Customer complaints and falling profits for the combined division (down from$100MM in 2004 to $45MM in 2007) give testimony the problems.
Only time will tell whether the company is able to reconcile its internal culture issues. But interesting brand questions are also raised by all of this.
First, brand elasticity. Fedex claims that dropping the Kinko’s name and calling its retail stores Fedex Office reflects the current and potential broader array of services offered by the company — and as FedEx Office CEO Brian D. Phillips explains, “Kinko’s is known as copies…FedEx is a very elastic brand.”
Not surprisingly Kinko’s founder Paul Orfalea sees it differently. “All the things they could have done with that brand [Kinko’s],” he laments. “They could be providing online photo processing. They could be the leader in printing books on demand.”
So, which is it? Is, as Phillips argues, FedEx the brand with more elasticity? Does FedEx have more “permission” from its customers to enter into new service arenas, while the Kinko’s brand would hold them too closely to low margin offerings like copies? Or, do you believe Orfalea and agree the Kinko’s brand would have provided the credibility a company with strong roots in shipping needs to enter into the burgeoning world of digital printing?
Second, and relatedly, brand equity. BusinessWeek’s piece relayed the concerns about the change of four customers who were fiercly loyal to Kinko’s — I’m sure there are thousands more out there like them. By dropping the Kinko’s moniker, does Fedex risk alienating this core fan base and losing more business from a division that’s already hurting? Or will the benefits outweigh the risk and in the long run it’s better to get it over with now? After all, there doesn’t seem to be a viable competitor in the space that these frustrated customers can flock to.
I’m curious to hear your take on these questions.