Why is giving a brand name so important for technology companies?

One of the most significant findings to emerge from my study is that giving a name to a company, product or innovation is actually a strategic thinking process.Brand name is an outcome of this process. However, what is alarming is that the importance from branding point of view is often under-acknowledged.  Wouldn’t it be valuable to know that by choosing a good brand name, especially technology companies can create competitive advantage over competitors? It is unwise to think that there would be only one best way of deciding a good name for your brand. Consequently, my point is not to give objective guidelines, how to find a good brand name.

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Figure 1. Giving name is a strategic thinking process

Giving name is a combination of intuition, creativity and rationality

High tech managers seem to agree that giving a name to their company or innovation is one of the most important of the early stage decisions. The process of giving a name to a company or to a product is a combination of intuition, creativity and rationality. The respondents described the aspects of a good name from subjective viewpoints. None of the respondents had used an outsider during the naming process. The interviewees listed some requirements or ideas for a good name:

  • The name has to display what the company/product/innovation is about
  • The name has to be credible and sensible
  • The customers should remember the name quite quickly
  • The sound of the name is important. One manager described the name as something that “seemed to swing pretty well”.

This implies that managers were aware of the power of the brand name communication. They seemed to realize that the name communicates about the whole company, its values and its business idea.

Importance of the name from branding point of view

It is surprising that many managers are not quite aware of the importance of giving a name from the branding point of view. Despite the importance of the brand name, the final decision seems to be based rather on emotion than on reason.

Although the respondents appreciated the creation of a good name for their innovation, they did not see the possibility to create differentiation based on a brand name. They seemed to think that differentiation was achieved most often by technology/product features. In general terms this leads to technology/product oriented communication. Hence, the given names in the industry or in a certain technology are remarkably similar. Brand names tend to imply the industry and technology not the customer need or want the innovation is developed to solve.

Having said the above, one manager’s answer reflected a brand-orientation: “So that the company who buys us has…still has the brand. They can still market the brand.”

The manager’s background was in semiconductor industry, and according to him everything in that industry was about the brand. Through his work experience, he had gained understanding about the importance of the brand architecture decisions although he did not admit consciously to thinking about them. He pointed out that it is ideal to have an exit-plan already in place when developing an innovation. Knowing whether you should create a company-exit-plan or a brand-exit-plan is important.

Give time for the best name to evolve

The general tendency is to give time for the best name to evolve. Occasionally, several alternatives are listed through brainstorming session by a manager or with the help of a group of people. Sometimes, the process, for the most part, appears to be silent, located only in the manager’s mind until a suitable name “pops up”.

Respondents describe the decision as:

  • an inspiration that hit me one afternoon
  • “You just have to have something for people to remember you by”.

Criteria for choosing a brand

The criteria for choosing a brand name were based on subjective interpretation. None of the respondents tested or conducted a study of the name before or after the decision. Sometimes the opinions of stakeholders, such as partners and customers, were asked. However, the managers did not evaluate the effects of such opinions on their decision making.

Customers sometimes set the criteria since they want to keep the reality simple and plain. Often customers prefer only one name, which in most cases is the company name, regardless of the company’s attempts to communicate product names separately. The hands-on experience shows that customers stubbornly use only one brand name. Enlightened managers understand their behavior and learn from it.

Why giving name is so important for high technology companies

According to this study, the managers in technology companies fail to give a name from a branding viewpoint. This is a valuable finding specifically when aiming to improve the competitiveness of technology companies. Let me elaborate, why.

Typically, other brand contexts such as those in the consumer goods industries, public organizations, locations, are already cluttered with names. In addition, often the name is a given factor. For instance, if one wants to build up a national brand, one cannot change the name of the country.

However, in innovative technology companies the name represents something new which does not even exist yet. With the help of a name a company can take the ownership of a whole category.  Innovations also invent new categories and the need for a name is apparent, as one of the managers depicts:

“When did the name originally come up? We were still looking to patent the idea. So I wanted to be able to talk about it without having to (small pause) talk about it. Does that make sense?”

The brands that are the first ones to own a category are the market leaders, the most successful and the most profitable brands. This is because people use brand names to describe the category, not just the product. Think of for example whether you “google” or “search from the Internet”?

Today many high technology companies do not produce end-products but so called “ingredients”.  It is very common that new technologies, software and innovations provide quality or health attributes to traditional products. Traditional companies that own the “host brand” want to link these new, key attributes into their own brand. The “host brand” can create differentiation from competition, expand usage and extend into categories into which it would have difficulties to enter on its own. If the high tech company does not give a name to its “ingredient”, the strategy, the new name, logo, symbol and so forth are the proprietary of the owner of the “host brand”. In other words, the host brand owns the value-adding component in the minds of the customers. For example, jewellery brands use nanotechnology as a value-adding component which spreads pleasant, customized smell or showing unexpected colours when wearing the necklaces. However, the attribute based on the nanotechnology is not branded.

Everett Rogers, who is a highly esteemed researcher on innovations, recommends receiver-oriented and sensible names. A good brand name communicates more than the product features, it represents the need that the innovation is satisfying. It is also recommended that a brand name and other visual communication elements have the desired meaning for the target audience, and possible global viewpoint.

To sum up, the strategic importance of a brand name is significant, and the managers need guidelines and encouragement to move beyond giving names that are influenced by the technology, as it is often the case today. By increasing the understanding of the strategic importance of giving a name and highlighting the branding viewpoint, high tech companies can achieve sustainable competitive advantage at a relatively low cost.

Do you know any successful technology companies which have given a name to their company or innovation from branding point of view? Tell us in the comments section below.

Heidi Neuvonen, JAMK University of Applied Sciences, School of Business, heidi.neuvonen (at) jamk.fi

URN

http://urn.fi/urn:nbn:fi:jamk-issn-2341-9938-16

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