Published: April 23. 2012 Writer: Carmen Nobel Upgrades to bing merchandise lines make up a immense portion of corporate research and development activity. and with every ascent comes the determination of how to trade name it. Harvard Business School selling professors John T. Gourville and Elie Ofek teamed up with London Business School’s Marco Bertini to suss out the best patterns for calling next-generation merchandises. Cardinal constructs include: • Companies frequently take one of two tacks in calling a next-generation product—the consecutive appellative attack or the complete name alteration attack. • Experimental research showed that each calling attack affects client outlooks. With a name alteration. research participants expected characteristics that were clearly different or new. With a name continuance. they merely expected improved public presentation on bing characteristics. • Companies must measure hazard versus wages when branding a merchandise ascent. weighing the exhilaration generated by a new name against the danger of frightening off clients who worry that new characteristics pose the menace of new bugs and a steep acquisition curve. companies deal with the quandary of how to trade name the next- coevals of an bing merchandise. Product ascents make up the bulk of corporate research and development activity.
That’s why Harvard Business School selling professors John T. Gourville and Elie Ofek were surprised to happen a famine of academic research on the topic. “There’s a batch of research about new-product stigmatization. but every bit best as we could state. cipher had looked closely at the issue of how to trade name a consecutive coevals. ” Gourville says. To that terminal. Gourville and Ofek teamed up with London Business School professor Marco Bertini ( HBS DBA ’06 ) to suss out the best patterns for branding next-generation merchandises. “For directors. this is non a fiddling determination. ” Ofek says. “Consumers don’t needfully read eyeglasses to larn about new characteristics. but they’ll ever notice a new name. We thought we could come in and convey some guidelines and normative deductions that were good grounded in academic research. ”
Many companies choose either the consecutive naming attack ( Sony’s consecutive PlayStation. PlayStation 2. and PlayStation 3 picture game consoles. for illustration ) or the complete name alteration attack ( Nintendo’s Nintendo 64. GameCube. Wii ) . The professors conducted a series of experiments to find when and why each attack made the most sense. important alterations and betterments for each consecutive theoretical account. Even though participants had no information about the existent characteristics of the merchandises. participants predicted much greater alteration when the latest version was named MagiColor than when it was named 2700W. “With a name alteration. participants tended to anticipate characteristics that were clearly different or new. ” Ofek says. “With a name continuance. they merely expected improved public presentation on bing characteristics. ”
“The perceptual experience is that if it’s a trade name name continuance. it’ll be slightly better than the old theoretical account. but it won’t be balmy and there won’t be a learning curve. ” A follow-up experiment reversed the undertaking. Participants learned that the house Garmin had adopted a consecutive naming attack for the first five coevalss of its in-car GPS receiving system. from RoadRunner 610 to RoadRunner 650. Their undertaking was to take the more appropriate name for the 6th coevals: either RoadRunner 660 or StreetPilot. In this experiment. the research workers varied the list of characteristics for the new merchandise. When the list merely included betterments on bing characteristics. 61. 3 per centum of participants choose RoadRunner 660 as the preferable name. But when the list included several new characteristics. 65. 7 per centum chose the name StreetPilot. While these experiments focused on hi-tech equipment. the professors note that the findings hold true across many industries. “Take the films. ” Gourville says. “In the Rocky series. you expect Rocky II to play off Rocky. But with James Bond films. there’s no ground to anticipate that the latest Chemical bond film [ Quantum of Solace ] has anything to make with the old Bond film [ Casino Royale ] . So it gives you added freedom. You can alter who James Bond is—Sean Connery. Roger Moore. Timothy Dalton. Pierce Brosnan. Daniel
When Apple launched its latest iPad. experts and nonexperts likewise expected it to be dubbed “iPad 3. ” a natural follow-on to the second-generation iPad 2. Alternatively. the company called the new iPad merely that: “the new iPad. ” Observers debated whether this was lazy stigmatization or a really calculated attempt to market the iPad as a sibling to the Mac. Macs keep their names with each consecutive ascent. analysts noted. while iPhones sport consecutive Numberss and letters to bespeak betterments.
Brand name continuance vs. name alteration
In one experiment. 78 participants considered a conjectural scenario in which a well-known house is fixing to establish a new version of its colour pressman. The participants. who were split into two groups. received a list of seven consecutive theoretical account names. For the first group. the full series of pressmans was branded in a consecutive manner. from 2300W to 2900W. For the 2nd group. the first four theoretical accounts were named sequentially—2300W to 2600W. but the last three theoretical accounts reflected a trade name name change—MagiColor. MagiColor II. and MagiColor III. Based on the names entirely. on a graduated table of 1 to 7. participants gauged the likeliness of “Consumers don’t needfully read eyeglasses to larn about new characteristics. but they’ll ever notice a new name. ” Like Apple. most consumer-centric
Craig—without destructing the franchise… Whereas with Rocky. you’re reasonably much stuck with Sylvester Stallone. ”
Risk vs. wages
Companies besides must measure hazard versus wages when branding a merchandise ascent. On the one manus. altering the trade name name may bring on exhilaration among prospective consumers who value new bells and whistlings over little betterments. On the other manus. clients may worry that new characteristics pose the hazard of new bugs and a steep acquisition curve. It’s of import for a house to foretell the likeliness of hazard antipathy in its stigmatization determination. Sometimes this is an unpredictable affair of a consumer’s single personality ; for every Cautious Carl in the universe. there’s a Hazardous Rita. But many times. it’s a affair of the state of affairs at manus. Ofek cites the illustration of Intel. which in 2001 introduced a 64-bit processor called Itanium. bespeaking that the merchandise was markedly different than Xeon. its 32-bit predecessor. These types of processors power immense computing machine waiters. which play critical functions in companies’ daily operations.
Waiters are a major outgo. and a faulty waiter can take to a crisis. “Even though Intel promised that Itanium had backward compatibility with Xeon. IT managers truly worried about it. ” Ofek says. “That created a existent hold in buying for Itanium. which truly ne’er took off. ” To exemplify this point scientifically. the professors conducted an experiment with 203 participants. who each were told to conceive of that a close friend was acquiring married shortly. and that the friend had asked them to snap the ceremonial as a favour. However. because their Ricoh camera had been stolen. they would hold to purchase a new one shortly before the event. Each participant had a pick: replace the camera with the exact same theoretical account that was stolen. or upgrade to the next-generation version that Ricoh had late introduced. All the participants received the same list of eyeglasses for both the old and the new cameras. including information on characteristics such as declaration. memory. rapid climb. and gesture detector.
But the research workers manipulated the experiment in two cardinal ways. In some instances. participants were told that they were among several people taking images at the nuptials. bespeaking a low-risk state of affairs because if one person’s exposure came out severely. another person’s exposure could pick up the slack. In other instances. they were told that they would be the wedding’s sole lensman. a much higher-risk proposition. Participants besides learned that the stolen camera theoretical account. named FS-E40. was the 4th in a line of consecutive named merchandises: the FS-E10 through FS-E30. While some participants learned that the next-generation theoretical account followed that form. the FS-E50. others were told that the new theoretical account had a new name: the Spectra. As expected. participants in the bad solo-photographer scenario were more likely to take the FS-E50 over the FS-E40 ; the consecutive naming attack indicated little. manageable alterations. Given the pick between the FS-E40 and the Spectra. nevertheless. they stuck with the FS-E40–presumably fearing the challenges of traveling to a significantly new design. Gourville says.
“In the Rocky series. you expect Rocky II to play off Rocky. ” Participants in the low-risk scenario were much more likely to travel with the new theoretical account regardless of whether it was called Spectra or FS-E50 ; given the pick of either new theoretical account. the low-risk set tended toward the Spectra. “The perceptual experience is that if it’s a trade name name continuance. it’ll be slightly better than the old theoretical account. but it won’t be balmy and there won’t be a learning curve. ” Gourville says. “With a trade name name alteration. you infer that there may be a steep acquisition curve. and it may work otherwise from your old camera. ”
more from the merchandise than they otherwise would hold. “If you’re truly merely tweaking the old coevals of your merchandise. it’s likely much better to utilize trade name name continuance than trade name name alteration. ” Gourville says. “Otherwise people will be led to believe that there are massively new characteristics in at that place. and you’ll merely take them to disappointment. ” On the other manus. a trade name sequencing attack can be tricky in a crowded market place where rivals are utilizing the same attack. No company wants to let go of Doodad 3 when its head challenger is establishing Thingamabob 4. for fright of seemingly dawdling behind. But there are ways around that. For case. Microsoft released its Xbox picture game good behind Sony’s PlayStation launch such that its second-generation Xbox competed straight against the third-generation PlayStation.
Fearful of being perceived as a dawdler. Microsoft chose the name Xbox 360—sneaking that “3” in there with the added promise of 360-degree comprehension. Gourville explains. Microsoft besides shows us that if a company switches from a consecutive naming attack to a name alteration attack. it’s absolutely All right to exchange back. With its Windows operating system platform. the company succeeded Windows 98 and Windows 2000 with Windows XP and so the oft-criticized Windows Vista. And so came Windows 7. Windows 8. due out subsequently this twelvemonth. is still in development. but Microsoft has already confirmed its name. “Windows 7 brought us back to the impression of consecutive indexs. ” Ofek says. “Microsoft learned that when you break from consecutive names. people frequently overemphasize the hazard of important alteration. ” Readers: Have you encountered branding determinations of this type? How did you manage them? Let us cognize in the remarks subdivision below.