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Stretch the Brand, Don't Lose the Equity

Louis Grumet

It was a disaster from the beginning. In April 1985, the Coca-Cola Company launched a new variation of its signature soft drink, “New Coke,” with incredible hype. The new product was proclaimed to be smoother, rounder, yet bolder. The general public could not have disagreed more.

Consumer reaction to the new venture was overwhelmingly negative. The backlash was so strong that consumers actually hoarded cases of the original Coke, and it was reportedly sold on the black market for $30 a case. Three months later, in July, Coca-Cola yanked New Coke from the shelves. The company claimed it did not understand the deep emotion consumers had for Coca-Cola. The lesson learned? Do not dilute a brand that has built an affinity with the public based on trust.

In September 2000, the AICPA proposed and promoted a global professional credential, the “Cognitor.” The new credential was designed for an international world. Outcries from some of our members prompted the New York State Society of CPAs to survey our membership to gauge their leanings on this landscape-changing issue. We wanted to be sure we were representing the interests of the profession as viewed through the eyes of New Yorkers.

Such a designation could end up diluting the much-respected CPA credential.

Our membership firmly rejected the notion of a global credential, and we led the opposition to the proposal. As a professional society, we spoke up, often alone, to show that our members saw it as a competing credential that might denigrate the prestige of the CPA license. Other states knew of our concerns and of the many reasons we saw to oppose the credential. Ultimately, the idea of an AICPA-sponsored global credential was rejected in a national referendum almost two to one, with 63% of AICPA members opposed and 37% in favor.

Unfortunately, the Cognitor may return, with a twist. Recently, the AICPA introduced a proposal designed to offer the CPA exam to international candidates, along with a nonaudit CPA designation. International candidates would receive an acknowledgment for passing the exam.

The theory is that the new designation will position the CPA credential as a viable one in a global marketplace. Unlike the original Cognitor, this proposal's aim is to extend the CPA “brand,” using some variation of the CPA title. In reality, however, such a designation could end up diluting the much-respected CPA credential.

A CPA is an accounting professional who has satisfied the education, experience, and examination requirements of his or her jurisdiction. These rigorous prerequisites give the CPA a credential that attests to, among other things, a knowledge base in financial reporting, accounting, auditing, tax, finance, and business law. The CPA is one of the most respected credentials a professional can earn.

The Coca-Cola Company learned from its failure with New Coke, realizing the original brand had an immeasurable amount of loyalty from consumers based on a formula that delivered expected quality. The AICPA should take a cue from this marketplace blunder and refortify its classic and trusted brand. Other avenues can be used to address the AICPA's concern about maintaining the prominence of the CPA designation in a global world, including creating real mobility.

Coca-Cola's marketing misstep showed that brand extension can work against you when your product is trusted, valued, and enjoys prominence in its marketplace. For a “brand” like the CPA credential, is it worth the risk?

Louis Grumet. Publisher. The CPA Journal, Executive Director, NYSSCPA, lgrumet@nysscpa.org.

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