The company’s name is its most important brand.

Summary : If you think you can lose a lot by misnaming your product, imagine what happens when you misname your company? Worse, it can have long term consequences. Apple rose above the crowd, when PCs were just called home computers and were for hobbyists. Its name, styled from the Beatles record company, signaled it was trendy – which is always important for consumers.

If you think you can lose a lot by misnaming your product, imagine what happens when you misname your company?  Worse, it can have long term consequences.  Apple rose above the crowd, when PCs were just called home computers and were for hobbyists.  Its name, styled from the Beatles record company, signaled it was trendy – which is always important for consumers.  But when IBM came in with its PC or Personal Computer, it changed the rules.  IBM, or International Business Machines, was the computer real pros used.  It was not for hobbyists.  The mere impact of the clash of these two names gave IBM the upper hand, simply because it carried more weight.  IBM soon won out.

When naming a company for the first time, it is important to try to have the name connect with the product.  Look at most markets and more often than not the leader has a name that relates to the product.  Intel, which stands for integrated electronics, Advantest, and Applied Materials are three familiar examples.  All three supplanted Fairchild in one way or another.  General Motors passed Ford with the same strategy.  Its name has been a key factor keeping GM at the top through almost three decades of major problems.  One has to wonder what would have happened if Toyota would have expanded outside Japan with a better name.  Having a name that relates to the product makes it far easier to make the company name become synonymous with the market and market leadership.  If you don’t do this, the marketing costs to establish a foothold in market share will be far higher.

Once named, avoid changing it.  McAfee was the hot and growing company with unquestioned leadership in virus protection.  They changed the name to Network Associates and soon Norton was able to catch up.  Customers never warmed to the name and eventually they changed it back.  The price came not only in greater marketing costs, it cost them market share.  International Plasma Corporation once dominated the plasma etch market.  They got bought by a company called Branson, which dropped the name in favor of its own.  They lost share in the confusion.  Then a company named Dionex came into the picture and changed the name again.  No one knew who they were and as the market bloomed with many start-ups, were soon forgotten.  They changed the name back to Branson IPC, which only confused the people who had gotten used to the name Dionex.  The company disappeared.  Imagine where Coke would be today had they changed the name to something else when they removed cocaine from the original formula?

Another good example comes from the entries of Eaton and General Signal into the equipment market in the eighties.  General Signal kept the name active of every company it acquired.  The only modification was in adding a tagline to tell the world it now had the backing of General Signal.  When it exited the market by spinning off the companies, it was far easier.  Many of these companies survive today.  Eaton took prominence over the names of the companies it acquired.  The only one that survived was Axcelis.  That’s largely because the name of its antecedent and hence its identity, Nova, was too strong to kill.  The others proved difficult to spin out and most were just shuttered, with Eaton bearing the full cost.  Remember, kill a name and you kill an identity, which may be killing the company.

In contrast, look at the successful merger of KLA-Tencor, who kept both names and tied them together.  It may be long and laborious today, many preferring the simpler K-T, but the action never left customers confused about what had happened or with whom they were dealing.

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