Brand Self Destruction: BP’s Bean Counters Drive a Stake into the Company’s Heart.

Companies that build their business and brand on acquisitions have to justify the cost of their purchases through increased earnings per share, which seems reasonable enough. But when the acquisition target is a capital-intensive entity, and new revenues aren’t easy to find, cost cutting becomes the means to the end. It seems that BP’s number-crunchers have put the company on a collision course with public opinion, investors and possibly even legislators in Washington, D.C., risking its workers' lives and your and my pocketbook in the process.

Two major mishaps, thousands of miles away, seem related to us at Swelled Head. The widely-reported shutdown of the Prudhoe Bay section of the Trans-Alaska Pipeline last August was due to deferred maintenance. An explosion at the Texas City refinery, also was caused by cost-related deferral of maintenance and lax procedures which put its workers in harm’s way (15 were killed and many more wounded). Both facilities generate billions of dollars of profits and can support proper maintenance and safety procedures. More troubling for the company, its reputation and stock price is that both events were avoidable and caused by issues known to management in advance.

It’s this last point that is the potential brand-killer here. Callous calculation by management caused economic harm in the pipeline case and avoidable death and injury in the second. Like a cover-up, disregard for the welfare of employees, the environment or economy are very difficult to recover from. And unfortunately for BP, they’ve got all three on their hands.

This isn’t the first time BP has mangled a branding issue. If you pull into a BP gas station in the U.S., you’ll be treated to brand confusion at work. They sell Amoco gasoline here…as a result of the acquisition of Amoco in 1998. Amoco was a very strong brand, with a reputation for quality fuels that enhanced performance (not bad for a commodity category). BP’s corporate agenda is to have its anonymous brand everywhere so it tried to bury the Amoco brand – however somewhere in the company someone said, "but the Amoco brand is worth keeping." So we are left with confusing co-branding for no apparent reason to the consumer. No doubt experts at global branding consultancy Landor will have reams of data justifying the ultimate branding solution here, but you just have to wonder… If you really do wonder you can visit Landor’s Web site and see their thinking for the brand here http://www.landor.com/?do=cPortfolio.getCase&caseid=322 - there is some very cool work here (especially the Beyond Petroleum concept and campaign), but Swelled Head can’t get the lost value of the Amoco brand out of our heads.

Will all of this kill BP? No way. But the costs will be in the billions for legal settlements, regulatory penalties and the loss of market share from consumers that will avoid BP for its bad behavior. And killing off the Amoco brand (some would say subordinating the brand) won’t do major damage to sales at retail since gasoline sales are driven in large part by location. Swelled Head will keep BP on its radar and keep you informed.