In Articles, Research reports
Marketing Science Institute * Second most downloaded report of 2007
One of the firm’s most important marketing decisions is choosing a product name. While previous studies have examined criteria for selecting individual brand names, naming decisions that involve multiple product generations have received almost no attention.

In this study, authors Bertini, Gourville, and Ofek examine the effect of a firm’s naming strategy on consumer perceptions of next-generation products. In a series of experiments, participants evaluated a next-generation product (a camera or tax software) whose brand name was either a continuation of, or a deviation from, an established naming convention.

They found that consumers infer the level of product change offered by a next-generation product by the similarity of its brand name to that of its predecessors: consumers anticipate both greater risks and greater rewards with a new brand name. Further, the likelihood that a consumer will purchase a next-generation product depends upon the relative salience of these risks and rewards at the time of ­purchase.

These findings have a number of managerial implications. First, in choosing a naming strategy for a next-generation product, a firm might examine the consumer adoption process. If, for example, the process tends to magnify the potential risks of adoption—as might be the case if the consumer needs to upgrade immediately and is hence more concerned with overcoming learning and switching difficulties in a short time frame—a name change may not be optimal.

Second, firms should match branding strategy to actual product changes. If changes are incremental, a new brand name may create an unrealistic set of expectations, resulting in consumer dissatisfaction. Conversely, if the product offers substantial changes and innovation, the use of an established naming convention may not fully leverage these improvements.

Third, marketing strategies should manage consumers’ inference of greater risks and greater rewards under a brand name change. For example, product warranties and trial periods might be effective ways to manage concerns about backward compatibility or learning difficulty, while product demonstrations would leverage consumer perceptions of enhanced performance.