Tuesday, February 7, 2012

What Bankruptcy Means for Corporations and Brands

In today’s economy it is no shock that more and more American companies are announcing their plans to declare bankruptcy. In the past few months alone, corporate giants such as American Airlines, Kodak and Hostess have all managed to make headlines with their financial struggles. However, what does that mean for the brands that those companies have worked so hard to construct?

To this day, people are still buying cars from Chrysler, stores are continuing to stock their shelves with Sharper Image electronics, and many travelers are arriving at their destinations on American Airline planes. Although all of those companies have at one point filed for bankruptcy, their brands have remained synonymous with trusted American products and for some reason they continue to sell even after their parent company gone through a financial crisis.

Perhaps it is because Americans want to see other Americans succeed or maybe it is to keep jobs stateside, but either way consumer culture seems to do whatever it can to keep popular brands alive. Thanks to the massive consumer followings that many brands have developed, many times when a company files for bankruptcy, even if the company is dissolved, it can have a very minimal effect on product sales.

One way that popular culture keeps brands alive after their parents companies file for bankruptcy is simply through their name. Sometimes after a company has filed for bankruptcy a consortium of buyers will purchase the rights to the popular brand’s name and use them to market its own products. For example, in 2009 a group of buyers bought the rights to the Polaroid name for $88 million.

This tactic is becoming increasingly popular in developing world markets as well due to the boom in online shopping. Companies that buy the legal rights to a brand name can market that brand wherever they please, which allows consumers worldwide a chance to own an iconic American product, even if it is being sold by a no-name retailer.

These days it is important to remember that bankruptcy is more about restructuring a company than defaming it. Even companies involved in the biggest bankruptcy cases have found ways to bounce back, but when they don’t, Americans will make sure their brands continue to live on.

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