Tuesday, February 15, 2011

A good name is better than riches. Don Quixote

                                        The Datsun –Becomes –Nissan Story

In 1918 a Japanese automobile firm soon to become Nissan produced a two –Seat automobile they called Datson ---“the son of Dat”. In part an acronym, this name reflected the initials of a car’s three main financial backers: Den, Aoyama, and Takeuchi. The name was later changed to Datsun, in part to avoid confusion with a similar word which in Japanese meant “to lose money”

When the firm returned to making cars after World War II , they chose to market them in Japan under the name Nissan .However, in 1961 the U.S car market was entered under the old Datsun name –perhaps in part to minimize the Japanese relationship . By 1981 the name Datsun  was used not only in the U.S. but in many other countries, even though the firm was marketing it’s cars , trucks , and other products  under the name  Nissan in Japan . In fact, the awareness level of Nissan in the U.S .was only 2% as compared to 85% for Datsun  name. The decision to change the name from Datsun to Nissan in the U.S was announced in the fall of 1981. The rationale was that the name change would help the pursuit of a global strategy. A single name worldwide would  increase  the possibility that advertising  campaigns , brochures , and promotional materials  could be used  across countries  and simplify  product design and manufacturing .Furthur potential  buyers would  be exposed  to the name and product  when travelling to the other countries .

During the year 1982 -1984 the change was implemented. The products were changed gradually. On 1982  model  the Nissan  name appeared  on the cars Front Grill  while the rear carried the Datsun  name on the left  and the Nissan  name on the right . Other Datsun models   simply had “by Nissan” tagline. A lot of cars were thus sold with both names on them. 1983   some models were switched over completely. For example with the 1983 model of Datsun 510 was replaced by the Nissan Stanza. It wasn’t until 1984 line that the entire transition was completed

Advertising was of course the corner stone  of the name –change  effort. The successful “Datsun :We Are Driven “ which  was initiated  in 1977 and had a $60million budget  in 1981 , was dropped . In its place appeared a “Come Alive , Come and Drive: Major motion  from Nissan “ and “Major Motion :The Name Is Nissan “ set of campaigns supported  by a budget which grew $120million  in 1983 to $180million in 1987 . Around $240 million was estimated spent on advertising implementing the “The Name Is Nissan”campaign . The enlarged advertising budget was undoubtedly in part due to the added mission :to register the new name. It seems very likely that “the Name Nissan “campaign with its name registration mission was considerably less effective than the successful Datsun campaign it replaced.
The most incredible aspect of this story is the resilience of the Datsun  name. In the spring of 1988, a national survey found that the recognition and esteemed of Datsun  name was essentially the same as that of the Nissan name, despitr the irtual  absence of the Datsun name from the  commercial scene for Five years , and money effort placed behind the Nissan name.
The greatest potential cost of the name change was the bottom-line effect upon sales . Nissan saw its sharp drop from 5.9%  in 1982 to 5.5% in 1983  and 4.5% in 1984 –a loss of 1:4  share points as compared to the 0.9% share points that Toyota lost during the same period . However during the time period there also were import restrictions, some quality problem with the Nissan Line and growth in the Honda Line . Thus it is impossible to determine precisely to what extent the sharp drop was caused by confusion of the name change ---yet that surely was a contributory factor of some notable degree.
The cost to change the name could have easily have exceeded half a billion dollar and probably was much more . First it is known that the operational cost, including changing signs at the 1, 100 dealership, cost  around $30million . Second one may assume that $200 million was spent in advertising between 1982—1984 because of the name change, and that $50million was wasted because the “Datsun We Are Drive” campaign was prematurely stopped. Finally, assume even that .3% market share was lost for three years period because of the buyer confusion. That loss alone would represent many hundreds of millions of dollars in marginal profit. And the cost would  go much higher  if the reasonable assumption were made that the name change  has had effects that lingered into the nineties



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