The Name Game

The names of U.S. utility companies used to tell you where they were located and what they did--Cincinnati Gas & Electric, for example, or Atlantic City Electric. With deregulation in the 1990s, however, these names disappeared. As companies merged, names such as Cinergy and Conectiv were thought to better convey the concept of open power grids. Major consulting firms and telecommunications companies, prompted by shake-ups in their industries, followed suit in metamorphoses that spawned the likes of Accenture and Cingular Wireless.

A similar conversion is taking place in the chemical sector, where, in recent months, well-known companies such as Bayer, Borden, Sigma-Aldrich, and Crompton chose the names Lanxess, Hexion Specialty Chemicals, SAFC, and Chemtura, respectively, for significant business units if not for their entire operations.

The general reaction to this trend might best be summed up in a recent article in the Chicago Tribune under the headline "BP Formulates Futuristic Name for New Chemical Unit." Covering the launch of Innovene, reporter Ameet Sachdev writes that "another company has looked outside of Webster's dictionary for a new identity."

Indeed, identity has become a kind of obsession for the chemical industry in recent years. Following decades of pressure from regulators and a seemingly unshakable negative public reputation, chemical companies and the industry collectively are turning to a business strategy that they have largely ignored over the years: branding.

While there is nothing as dramatic as deregulation forcing chemical companies to take new names, Larry Ackerman, a partner with branding consultant Siegel & Gale, says the industry is facing several other forces of change. "I think there is consciousness-raising going on in the chemical industry," he says. "Competition from Asia is putting pressure on, and companies have to think differently. Also, there is the rise of the societal brand--the branding of typically larger, successful companies that are clearly hardwired into the economic success and failure of society."

Major chemical companies, such as DuPont and BASF, fall into this category, Ackerman says. And the Internet, which he characterizes as the "single most powerful branding tool," is spurring branding activity in the sector.

SOME LEADERS in the chemical industry say they see branding as a means of making a break from the past. Moreover, they say the technique of inventing a word to use as a name affords a company an opportunity to define the word and, by doing so, redefine itself.

"This is a program to position ourselves the way we want to be perceived versus how people would position us if they were left to their own devices," says Robert L. Wood, chief executive officer of Crompton, in describing the process currently under way to change his company's name to Chemtura.

Wood, who previously worked on branding strategies for Dow Chemical's consumer products division, sees the selection of a new name as a mechanism for merging Crompton and Great Lakes Chemical, which Crompton is in the process of acquiring. More important, he sees it as part of a move by the company to take charge of its image--a move that the industry as a whole is undertaking with a new advertising campaign to be run by the American Chemistry Council (ACC).

And the move, Wood says, is long overdue. He believes that the industry in general has not taken branding seriously, primarily because chemical companies sell mostly to industrial customers, including other chemical companies, rather than to the individual consumers who constitute the key market in branding for most other industries.

Wood says, however, that branding is a business strategy that goes far beyond customers to influence the thinking of the general public as well as legislators--key constituencies whose perspectives on the industry have a huge impact.

The power of branding, Wood says, is illustrated by the handful of mostly large chemical companies that have pursued it aggressively for decades--companies like DuPont and BASF. BASF is near the top of the list of most admired chemical companies in public surveys, Wood says. "And it's mostly because of the amount of effort they put into building their identity, defining who they are and what they do."

These companies, however, are far outnumbered by firms of all sizes that ignore branding, Wood argues. This lack of interest, he says, is reflected in ACC's long-standing effort to improve the image of chemical manufacturers, most recently with its ad campaign called Essential² (E²).

"I don't think the chemical industry has progressed nearly far enough or fast enough with its recognition of what branding and positioning can do. Evidence of this is the amount of time it's taken to get the E² program up at ACC," he says. The campaign, a twist on the plastics industry's ads in the 1990s, highlights the critical role chemicals play in health, safety, and other vital day-to-day concerns.

It has been discussed and debated for two-and-a-half years, Wood says. "It's a function of some people believing it's not money well spent and other people having a different perspective, recognizing that work done in the plastics industry and at individual companies has paid dividends and has moved the needle in terms of perception of those companies and those materials."

Wood and others agree that the pro-branding camp is filling up fast, however. This can be seen in the steady influx of everything from splashy new advertising campaigns to spin-offs and name conversions. Much of this is happening in specialty and fine chemicals markets, though the launch of Innovene from BP shows that at least one purely commodity player is committed to what Wood prefers to call "repositioning."

Perhaps the clearest touchstone for best branding practices in the chemical industry is DuPont, which has launched brands such as Teflon--introduced in 1945--that are in English-language dictionaries along with Jell-O and Band-Aid. DuPont, moreover, has also worked to establish the company itself as a brand, according to Michael E. Kullman, the firm's director of corporate marketing.

Beginning with what some see as a branding faux pas in handing over the name Nylon to the industrial public domain in the 1930s, DuPont went on to create a parade of well-known product brands such as Teflon, Kevlar, Corian, and Tyvek. While some of these, such as Teflon and Corian, reach the consumer as end products, others are sold in manufacturing, service, and construction industry markets.

By promoting industrial brands in consumer markets, DuPont hopes to associate the company's name in the public consciousness with advances in chemistry, science, and materials, Kullman says. He quips, for example, that the housing boom has provided DuPont with what amounts to thousands of billboards for Tyvek, an insulation material that festoons houses under construction with a prominent logo.

In fact, all product branding at DuPont is done in support of the corporate brand, Kullman says. "One of the things we are trying to do is have all the product brands accrue to DuPont as an innovative science company making a better, safer, healthier life." This strategy, he says, is an extension of the company's famous motto from the 1950s--"Better Living Through Chemistry." Having gone through several permutations, the motto now reads "The Miracles of Science," which Kullman says better reflects the entirety of DuPont's activities.

A key facet to corporate branding is corporate citizenship, or what Ackerman of Sigel & Gale calls the "societal brand"--the effort to associate a company's brand with broad societal imperatives such as homeland security and environmental management. DuPont, for example, has hooked into security with its Kevlar material for bulletproof vests. GE recently launched a major advertising campaign to promote its commitment to environmental management--a risky move for a company coming out of a protracted fight with environmental activists over remediation of the Hudson River.

Industry managers agree, however, that a relatively high level of risk is central to any aggressive foray into branding.

Jay Kouba, senior vice president of strategy at Innovene, describes an approach similar to Crompton's and DuPont's in the creation of a brand for the former olefins and derivatives unit of BP.

AFTER COMBING through hundreds of possible new names for the group, management settled on an old one. Innovene, a word designed to evoke the idea of innovation linked to chemicals that end in "ene," is a brand name for polyethylene and polypropylene processes at BP.

"We went through a deliberate process of learning what we want to be--what we are focused on, what we aspire to be--in order to create something that actually represents that aspiration of the company," Kouba says. It boils down to a conscious effort to take control of shaping the company's image, he says. "Every company has a brand. It is a question of whether they recognize it, name it, and symbolize it as an overt representation of what the company is trying to do."

The next step, Kouba says, is to sort through product branding. The company has a jumble of product brands, some acquired from companies including Solvay and Amoco. The risk of changing product brand names, he says, is that customers are familiar with them.

Of course, disassociating from the BP brand name is an enormous risk, but it is an even greater opportunity, Kouba maintains. He says it made sense to drop the main association that most people make to BP--its consumer product, gasoline. It is also a chance to rally employees at the new company.

France's large state-owned explosives and chemicals firm, SNPE, also tapped an existing brand name--Isochem--to launch its reorganized chemicals unit in 2002. According to David Simmonet, head of Isochem's pharmaceutical chemicals business, the name Isochem dates back to the 1970s when the company, best known for fuels and explosives, began to manufacture chemicals for pharmaceuticals. "Iso" he says, was intended to evoke quality by referring to the initials of the International Organization for Standardization, a quality assurance agency.

Simmonet says branding fine chemicals was also calculated to help the company rebound from a 2001 explosion at a fertilizer plant adjacent to its Toulouse facility that led to a local ban on production of phosgene, the company's key product. At this point, the name SNPE has all but disappeared at fine chemicals trade shows where Isochem exhibits.

In fact, recent trade shows in the fine chemicals sector, most notably the Conference on Pharmaceutical Ingredients (CPhI) and Informex exhibitions, have been a showcase for new brands and a launchpad for newly named businesses such as Lanxess, which displays a towering red X at its exhibit stand. Another company making a big red splash at trade shows and in advertising is SAFC, the fine chemicals business formed by Sigma-Aldrich.

Branding is being used by SAFC to solve what has been a nagging problem for the company--dissociating a well-established fine chemicals and contract manufacturing activity from the catalog chemicals business that is evoked by the parent company's name.

"We needed to show our customers in a strong way that we are committed to this area, and that we understand that their needs are different than those of our research customers," says Edward O. Roullard, director of SAFC's European operations.

Behind the launch of SAFC--which Roullard insists does not stand for Sigma-Aldrich Fine Chemicals, "it's just SAFC"--is an advertising campaign employing images of intrepid researchers decked out in futuristic white lab gear and outr goggles, crouching or standing ready for action against a background as red as the Lanxess X.

"It is a futuristic look," says Amanda Halford, SAFC's marketing manager and a leader in the branding initiative. "We are all about innovation and creation." Halford notes that SAFC's motto is "Inspiring Science." "Our objective is to attract the attention of our customers and potential customers and say, 'Look, here we are! We have a new name, a new image, but we have been here for 40 to 50 years.'"

Roullard quips that the name change has nearly paid for itself in time saved now that SAFC sales staff doesn't have to explain that the firm is not a catalog sales operation. He notes that SAFC had been considering making a move on branding for more than two years. With the recent acquisitions of Tetrionics and Ultrafine, "the timing was right."

Branding has long been a specialty niche in business consulting, and most chemical companies use consultants. Crompton hired Siegel & Gale in its launch of Chemtura. The E2 campaign was created by Ogilvy & Mathers. In the fine chemicals arena, a consulting boutique called That's Nice has become a fixture at trade shows with its own aggressive brand, including a bright orange logo and its quirky name. Guy Tiene, a partner at That's Nice, says the market is picking up. Companies like Albemarle, Borregaard Synthesis, and FMC Lithium--all That's Nice clients--are concerned with "the life of the brand" and the need to nurture their image, Tiene says.

The push into branding has its critics. There is the inevitable snickering at what is seen as a goofiness to the invented names and to some of the advertising images. Some industry watchers question whether it makes sense to drop a well-recognized brand, such as Borden, Crompton, or Bayer, given what they see as a sameness to the alternatives that have emerged. Others see beneath branding's surface a move away from the use of the word "chemical" to divert the attention of potential industry foes.

Crompton's Wood dismisses these criticisms, however. He says an assessment of the market recognition of Crompton revealed that the company's name is not as well-known as was assumed even in the chemical industry. Crompton, he notes, is not playing down its chemical business--"chem" in Chemtura stands for chemical.

Wood says he sees no commonality in the new names, and he isn't bothered by any snickering. "I wonder how people reacted when Caterpillar introduced its name," he says. "There were most likely guffaws, but now that name represents a class of heavy equipment. It is well-known and not laughed at any more. The important thing in my view is not what the name of the company is but how you position it and what you want it to mean over time."

Wood and others emphasize that brands have to evolve. Picking a newly minted name like Chemtura helps, he says. "The only alternative is a name such as the Connecticut Plastics & Rubber Co. That would describe what we do, but what we do is subject to dramatic change over time."

The adaptability of branding is well-illustrated by BASF, whose corporate image reflects an evolution of thinking about a company's relationship to its stakeholders. BASF advertises: "We don't make a lot of the products you buy. We make a lot of the products you buy better." It also recently adopted the motto "BASF, the Chemical Company," presaging a reverse in the retreat from the word chemical.

As branding heats up in chemicals, however, it may be worth noting another about-face. The power company Conectiv recently announced it is changing its name again--to its original names of Atlantic City Electric in southern New Jersey and Delmarva Power on the Delmarva peninsula.