The art of naming companies is not art. It’s strategy.

27 Aug
27 augusti, 2009

I have worked both as a client and consultant on projects (more than a score, to date) where the mission was to create a new name for a company or organization. On a handful of occasions, the job has been to create and launch completely new brands. Other times, a new company results from a merger or spin out. And, on a few occasions, a company has simply wanted to replace its existing name which, for one reason or another, had passed its ‘best before’ date.

Regardless of motive, naming projects are always difficult, not least because they are almost always considered to be creative projects, rather than strategic missions. When this happens, the ‘winning’ name becomes a matter of personal opinion and taste, of likes and dislikes.

To ‘like’ is, in itself, quite okay. But choosing a brand name solely on the basis of what feels and sounds good is rarely a satisfactory way to ensure future brand strenght.

A question of strategy and mental patterns
The choice of name is strategically important. The name a company chooses sends many signals to the outside world –about the company’s products, service level, business philosophy, attitude, size, ambitions, and more. Even the financial market valuation may be affected by the name choice. In a large U.S. survey among analysts, 54% said the company name affects the P/E ratio, and the name a company chooses is seen as valuable information in judging the company’s future potential (Karpoff & Rankine, 1994).

That a detail as seemingly trivial as a company’s name can be critical to our decision process depends, I believe, on the natural human tendency to look for and create patterns, connections and systems. We sort the world – both consciously and subconsciously – based on our previous experience, in order to better relate to it. An American study, presented by the Biotechnology and Biological Sciences Research Council in May 2009, states that these mental patterns are crucial to our ability to make complex decisions based on uncertain and confusing information. Our past experiences create connections in our brains that allow us not only to recognize visual patterns, but also identify the perceived connection.

These connections can, of course, also be found in company names. A name can signal, for example, the IT industry, a telecommunications company, a law firm or a bank. But it can also signal modern, traditional, cocky, boring, etc. Let me take you on a short odyssey (necessarily simplified and generalized) through history of naming companies, to highlight main trends.

A short and generalized naming history
For a very long time, the natural name choice was the founder’s surname. And until the mid-1800s, most companies simply used a family name – often combined with a description of what the company produced or offered. Some examples include Schweppes (founded 1783), DuPont (1802), Bonnier (1804), Colgate (1806) and Peugeot (1812).

It was only in the late 1800s and early 1900s that it became common for companies to choose an entirely unique name, such as Coca-Cola (1886), Texaco (1901) and Electrolux (1919*). However, family names remained in the majority, followed by the so-called descriptive names, e.g. Fabbrica Italiana Automobili Torino, FIAT (1899), Minnesota Mining and Manufacturing Company, 3M (1902) and International Business Machines, IBM (1924 **).

After World War II, the world was in short supply of almost everything, and mass production literally exploded. The number of businesses in each category grew rapidly, and hence competition. Moreover, demand for services and personal experiences grew once basic material demands were met. As competing products became more and more similar, and competing services relatively difficult to differentiate, the strategy grew of using the corporate or brand name as a differentiator. In the 1950s and 1960s, many start-ups chose increasingly metaphorical names, including Selecta (1957), Four Seasons (1960) and T.G.I. Friday’s (1965).

The really imaginative naming wave first broke through in the 1980s and 1990s, and became the rule rather than the exception during the dotcom boom around the turn of the century. Services had become increasingly global, but also increasingly difficult to describe, while availability of the most ‘natural’, linguistically viable and legally available names had worsened. In addition, the advent of the Internet set a new requirement: an available URL (Internet address). The name’s primary purpose was no longer to describe or resemble, but to convey attitude and uniqueness. And the new brands were increasingly names that were difficult, at least at first glance, to link to the product or offer, including Adobe (1982), Cisco (1984), Orange (1994 ***), Bluetooth (1998) and 7 for All Mankind (2000).

The name’s ability to both stick in the memory and distinguish the brand are today (if possible) even more important key factors. A different and easily memorable name makes the ‘take off’ distance shorter, while its possibility to create long-term value increases. Moreover, the degree of uniqueness is in direct proportion to the probability both that the name can be legally protected and that a ‘good’ URL can be claimed.

Things to avoid, and things to consider
Naming projects must therefore be taken very seriously. The new name is after all the hub of the company’s public image, and the name the management team or board chooses has great significance for how the company is perceived. Is this a company that fits into a mental pattern, or is it a company that stands out? If so, how? And the company’s uniqueness: is it something I can associate myself with, something that appeals to me?

Of course, the name does not do the whole job. But the choice of name can make the job either easier or harder. In principle all names (which can be registered, and which are not offensive) have a potential to become strong brands. In the end it’s still the associations linked to the name, rather than the name itself, that creates position and preference. Therefore it is important to remember that factors such as company culture, traditions and the emotions of the owners and management must all enjoy pride of place. After all, it’s they, not the branding consultant, who must live with the new name.

Please keep this in mind while I list some ‘Dos’ and ‘Don’ts’ for naming projects.

You should never:

  • Implement a naming project from the inside out, without considering the feelings, opinions, attitudes and expectations of the main target group(s).
  • Initiate the naming project too late, and with too little involvement from the CEO and the board of directors.
  • Underestimate the need for a well-planned internal launch of your new name. If your own employees don’t buy in, other never will.

The following 10 ideas will help you on your way:

1. It’s about strategy, not emotion or politics. If you have never been involved in a naming project, the scope of emotion-based decisions may be difficult to understand. Believe me: The naming issue can become highly emotional and sensitive, often spiced by internal history, policy battles, and territorial thinking. Thus, you must define a clear strategy and clear objectives, with the complete agreement of the ultimate decision-makers, and then stick exactly to what you agreed.

2. Make sure that the CEO takes an active role in the project. Since the choice of name is such an emotional decision process (whether we like it or not) you will simply not succeed unless senior management actively involves itself in decisions. What kind of name do you need? Exactly what should the name convey? How is the new name to be implemented? And so on…

3. Take clear ownership of the project. The risk is otherwise imminent that someone else may steer the project down a side road – consciously or unconsciously. Decide early on who has the authority to consider, analyze, think and – most importantly – choose. Then, make it so and live with it.

4. Do not replace decisions with inquiries. Market research is certainly important to the understanding of the outside world’s perceptions and expectations of the company, and to avoid the worst pitfalls, but decisions must be made by management. No one else knows as much about the organization’s culture and positioning strategy. That’s also why internal naming contests don’t work. It’s not a popularity contest. The most popular name proposals are rarely the best for the company in the long term.

5. Take your time. Rushing a naming project is a bad idea. It’s not unusual for a starting list to include from 200 to 500 name proposals, which must be distilled down to between 10 and 15 names. Many of these semi-finalists will feel strange, but that’s a good sign (see point 9 below). This is why you will need plenty of time for reflection and analysis before you are ready to single out two to three finalists – the alternatives that are most in line with strategy and goals (and which, of course, are legally and linguistically viable).

6. Choose a name that differentiates, not describes. A good name must have the ability to signal the company’s uniqueness and potential to become a differentiated brand. A name that merely describes the company’s product or offering can rarely fulfill this potential. It’s also important that the name is flexible enough to accommodate future business expansion, and that it is not based on temporary or trendy expressions that can quickly grow ‘stale’.

7. Keep the name short. One word is best. More than one word often leads the market itself to shorten the name, which effectively creates a new name – or rather a ‘non-name’ (see the next point).

8. Avoid abbreviations. Names consisting solely of initials are generally perceived as meaningless, and have a tendency to disappear into the crowd. It is incredibly difficult to remember and relate to a ‘non-name’, unless it’s GE or IBM – both of which have huge and sustainable marketing resources. People find it much easier to relate to a metaphorical or an imaginary name.

9. If a proposed name feels ‘comfortable’, forget it, because everyone else will too. The name you are looking for must be seen and heard above the constantly growing media buzz, not something that adds to it. Many of the best names in the last few decades have been initially perceived as different or even controversial (think Apple, Google, Accenture, Bluetooth and Flickr).

10. Do not expect consensus. The new name will provoke opinions and discussions. If you have made a good choice it is very likely that many, both internally and externally, will think the name feels weird (this is actually good, because it also sticks in their minds). Trust in your choice and give it time. As people get used to the name, they will also feel more comfortable with it.

In conclusion: The Internet offers a wealth of tips and advice about what to think about, and what you definitely should not do, in choosing a new name. Take all suggestions, including mine, with a small pinch of salt. View them as a basis for discussion in your management team, not as absolute truths (there is no such thing.) But above all, talk to people who have practical experience, and choose to cooperate with the ones you trust most.

Good luck!

_
By the way: If you are curious about the background of many of the best-known brands – what they mean and how they have come into existence – click here. It is both entertaining reading, and a great inspiration for your naming project.

_

* Electrolux was founded in 1910 under the name Elektromekaniska AB, but was renamed in 1919 after merging with Lux AB.
** IBM was founded in 1896 under the name Tabulating Machine Company. Parts of the company subsequently changed name several times before uniting in 1924 under a single name.
*** Orange was created in 1994 as a mark of Hutchison Telecom, but was sold to France Télécom in 2000.
_
This post was originally published in Swedish on The Brand-Man. Some of the items above are borrowed from Rick Jacob’s presentation ”Brand Building Strategies”.
Tags: , , , , , , ,
0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Kommentera

E-postadressen publiceras inte. Obligatoriska fält är märkta *