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And just like that, the trusty blue bird morphed into a black-and-white X. The company formerly known as Twitter rebranded itself as X this week, part of its transformation to an “everything app,” according to owner Elon Musk.

For companies, a name change is always a gamble, according to Donald Lichtenstein, professor of marketing and chair of the marketing division at the Leeds School of Business, and it’s especially risky when substitute products abound (or in Twitter’s case, when a formidable competitor, Threads, comes on the scene).��But plenty of big names have been successful in a brand overhaul.

Will X join the victors? ���� Today spoke with Lichtenstein about the risks and rewards of rebranding.

Donald Lichtenstein

For anyone who doesn’t know, what is rebranding?

It can mean several things. Brand includes the name and marks such as the font in the Coca-Cola script and the swoosh in the Nike logo. When a company rebrands, it might be changing any of those elements in such a way to reposition a product in consumers’ minds.

Companies want a high level of what we call brand equity. That’s the worth of the brand name that comes about by creating strong, favorable and unique associations with the brand.

Rebranding may or may not include changing the brand name—it may be just repositioning it so the consumers see the brand differently than before.

What are some reasons a company would change its name?

Changing brand names is a big deal. Sometimes it’s done because of negative associations. For example, the Washington Redskins changed to Washington Commanders. You don’t see Aunt Jemima or Uncle Ben on shelves anymore. They changed the names because of racist associations. The Dixie Chicks are now the Chicks because ‘Dixie’ brought up associations in people’s minds.

Some companies change their name to broaden their scope. National Cash Register became NCR because they were going to be more than cash registers. Dunkin’ Donuts goes by Dunkin’ now because they’re more than donuts. KFC used to be Kentucky Fried Chicken. Sometimes names get too restrictive for everything the company wants to do, but many want to keep some association with their brand name.

Is that the case with Twitter?

There’s a lot of equity in the name. But what does Twitter mean? Twitter means a tweet. However, it is restrictive in the sense of where Elon Musk wants to go. He wants to broaden the platform.

Well, he’s already got Space X and Tesla Model X, and X is where he wants to go. It’s not restrictive in any sense like the name Twitter is. Now he’s paying a heavy price for it because Twitter has a lot of favorable associations, although recently it’s had some less favorable associations. This is not a move without controversy.

How much does brand equity mean to consumers?

There are so many ways to conceptualize and measure it, but one indication is top-of-mind awareness. Name the first toothpaste brand that comes to mind:��Colgate. That’s one indication of brand equity, which is positively correlated to market sales.

Another measure of brand equity is the premium over and above an equivalent product that you’ll pay for the one with the brand name. A perfect illustration of brand equity is Ironman, which is known for triathlons. People want to say they did an Ironman. Well, another company can come in and set up the exact same course. But then you can’t say you completed an Ironman. What’s the premium you’re willing to pay for an entry in this race? You know you’re going to have to pay more because that brand name commands it.

Many think of Twitter as the place to get real-time information when there’s something going on. Isn’t it a huge risk to change the name?

Yes, especially at a time when Threads is coming out as a competitor. Consumers are governed by inertia. I’ve always gone to Twitter. I’m not going to move away from Twitter unless something happens to disrupt my routine. This is something that goes into the calculus of a name change.

I’m sure X is going to take every precaution in making the transition to their new platform. They’re still going to have similar Twitter functions but they’re going to try to make it seamless because, you know, inevitably they’re going to lose some people.

There’s a cost to doing this, to changing your name. Especially in this turbulent environment when there are substitutes around. And I haven’t gotten on Threads myself. I use Twitter to follow sports a lot. But I don’t know how seamless it’s going to be.

For me, it’s still Twitter. And when I’m talking to friends, I’m not saying, ‘Yeah, I'm scrolling through X.’

No matter what they call it, you’re going to be calling it Twitter and tweets, even if it’s on the X platform and it’s changed its name. Some people will do that, but over time, there’ll be less and less. There’s going to be a transition.

What they’re trying to do is hold onto as many of their current customers and also expand their base. Because if you can go into this new environment and everything is right there in one app, you know, posting videos, audio, messaging, banking, shopping, instant paying...that’s where X is trying to go.

Different entities make different decisions about what the cost and benefits are of rebranding, because you’re giving up the equity in a name with the idea of getting future returns to something better. With X, they're giving up equity in the Twitter name. They’re saying, ‘We’ll take a hit now, but the platform we’re going to have will allow us to create a more strong, unique and favorable association with X than Twitter, with where we’re going.’