When Apple launched its latest iPad, experts and nonexperts alike expected it to be dubbed "iPad 3," a natural follow-on to the second-generation iPad 2. Instead, the company called the new iPad just that: "the new iPad." Observers debated whether this was lazy branding or a very deliberate effort to market the iPad as a sibling to the Mac. Macs keep their names with each successive upgrade, analysts noted, while iPhones sport sequential numbers and letters to indicate improvements.
“Consumers don't necessarily read specs to learn about new features, but they'll always notice a new name.”
Like Apple, most consumer-centric companies deal with the dilemma of how to brand the next- generation of an existing product. Product upgrades make up the majority of corporate research and development activity. That's why Harvard Business School marketing professors John T. Gourville and Elie Ofek were surprised to find a dearth of academic research on the subject. "There's a lot of research about new-product branding, but as best as we could tell, nobody had looked closely at the issue of how to brand a successive generation," Gourville says.
To that end, Gourville and Ofek teamed up with London Business School professor Marco Bertini (HBS DBA '06) to suss out the best practices for branding next-generation products.
"For managers, this is not a trivial decision," Ofek says. "Consumers don't necessarily read specs to learn about new features, but they'll always notice a new name. We thought we could come in and bring some guidelines and normative implications that were well grounded in academic research."
Many companies choose either the sequential naming approach (Sony's successive PlayStation, PlayStation 2, and PlayStation 3 video game consoles, for example) or the complete name change approach (Nintendo's Nintendo 64, GameCube, Wii). The professors conducted a series of experiments to determine when and why each approach made the most sense.
Brand Name Continuation Vs. Name Change
In one experiment, 78 participants considered a hypothetical scenario in which a well-known firm is preparing to launch a new version of its color printer. The participants, who were split into two groups, received a list of seven successive model names. For the first group, the entire series of printers was branded in a sequential fashion, from 2300W to 2900W. For the second group, the first four models were named sequentially—2300W to 2600W, but the last three models reflected a brand name change—MagiColor, MagiColor II, and MagiColor III.
Based on the names alone, on a scale of 1 to 7, participants gauged the likelihood of significant changes and improvements for each successive model. Even though participants had no information about the actual features of the products, participants predicted much greater change when the latest version was named MagiColor than when it was named 2700W.
"With a name change, participants tended to expect features that were distinctly different or new," Ofek says. "With a name continuation, they just expected improved performance on existing features."
“The perception is that if it's a brand name continuation, it'll be somewhat better than the previous model, but it won't be buggy and there won't be a learning curve.”
A follow-up experiment reversed the task. Participants learned that the firm Garmin had adopted a sequential naming approach for the first five generations of its in-car GPS receiver, from RoadRunner 610 to RoadRunner 650. Their task was to choose the more appropriate name for the sixth generation: either RoadRunner 660 or StreetPilot. In this experiment, the researchers varied the list of features for the new product. When the list only included improvements on existing features, 61.3 percent of participants choose RoadRunner 660 as the preferred name. But when the list included several new features, 65.7 percent chose the name StreetPilot.
While these experiments focused on high-tech equipment, the professors note that the findings hold true across many industries. "Take the movies," Gourville says. "In the Rocky series, you expect Rocky II to play off Rocky. But with James Bond movies, there's no reason to expect that the latest Bond movie [Quantum of Solace] has anything to do with the previous Bond movie [Casino Royale]. So it gives you added freedom. You can change who James Bond is—Sean Connery, Roger Moore, Timothy Dalton, Pierce Brosnan, Daniel Craig—without destroying the franchise… Whereas with Rocky, you're pretty much stuck with Sylvester Stallone."
Risk Vs. Reward
Companies also must assess risk versus reward when branding a product upgrade. On the one hand, changing the brand name may induce excitement among prospective consumers who value new bells and whistles over small improvements. On the other hand, customers may worry that new features pose the risk of new glitches and a steep learning curve. It's important for a firm to predict the likelihood of risk aversion in its branding decision. Sometimes this is an unpredictable matter of a consumer's individual personality; for every Cautious Carl in the world, there's a Risky Rita. But many times, it's a matter of the situation at hand.
Ofek cites the example of Intel, which in 2001 introduced a 64-bit processor called Itanium, indicating that the product was markedly different than Xeon, its 32-bit predecessor. These types of processors power huge computer servers, which play vital roles in companies' day-to-day operations. Servers are a major expenditure, and a faulty server can lead to a crisis. "Even though Intel promised that Itanium had backward compatibility with Xeon, IT directors really worried about it," Ofek says. "That created a real delay in purchasing for Itanium, which really never took off."
To illustrate this point scientifically, the professors conducted an experiment with 203 participants, who each were told to imagine that a close friend was getting married soon, and that the friend had asked them to photograph the ceremony as a favor. However, because their Ricoh camera had been stolen, they would have to buy a new one shortly before the event. Each participant had a choice: replace the camera with the exact same model that was stolen, or upgrade to the next-generation version that Ricoh had recently introduced.
All the participants received the same list of specs for both the old and the new cameras, including information on features such as resolution, memory, zoom, and motion sensor. But the researchers manipulated the experiment in two key ways.
In some cases, participants were told that they were among several people taking pictures at the wedding, indicating a low-risk situation because if one person's photos came out badly, another person's photos could pick up the slack. In other cases, they were told that they would be the wedding's sole photographer, a much higher-risk proposition.
Participants also learned that the stolen camera model, named FS-E40, was the fourth in a line of sequentially named products: the FS-E10 through FS-E30. While some participants learned that the next-generation model followed that pattern, the FS-E50, others were told that the new model had a new name: the Spectra.
As expected, participants in the high-risk solo-photographer scenario were more likely to choose the FS-E50 over the FS-E40; the sequential naming approach indicated small, manageable changes. Given the choice between the FS-E40 and the Spectra, however, they stuck with the FS-E40--presumably fearing the challenges of moving 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 go with the new model regardless of whether it was called Spectra or FS-E50; given the choice of either new model, the low-risk set tended toward the Spectra.
"The perception is that if it's a brand name continuation, it'll be somewhat better than the previous model, but it won't be buggy and there won't be a learning curve," Gourville says. "With a brand name change, you infer that there may be a steep learning curve, and it may work differently from your previous camera."
Creative Sequences
A brand name change also comes with the risk of disappointing consumers who expect more from the product than they otherwise would have.
"If you're really just tweaking the previous generation of your product, it's probably much better to use brand name continuation than brand name change," Gourville says. "Otherwise people will be led to believe that there are massively new features in there, and you'll just lead them to disappointment."
On the other hand, a brand sequencing approach can be tricky in a crowded marketplace where competitors are using the same approach. No company wants to release Doodad 3 when its chief rival is launching Thingamabob 4, for fear of apparently lagging behind.
But there are ways around that.
For instance, Microsoft released its Xbox video game well behind Sony's PlayStation launch such that its second-generation Xbox competed directly against the third-generation PlayStation. Fearful of being perceived as a laggard, Microsoft chose the name Xbox 360—sneaking that "3" in there with the added promise of 360-degree comprehension, Gourville explains.
Microsoft also shows us that if a company switches from a sequential naming approach to a name change approach, it's perfectly OK to switch back. With its Windows operating system platform, the company succeeded Windows 98 and Windows 2000 with Windows XP and then the oft-criticized Windows Vista. And then came Windows 7. Windows 8, due out later this year, is still in development, but Microsoft has already confirmed its name.
"Windows 7 brought us back to the notion of sequential indicators," Ofek says. "Microsoft learned that when you break from sequential names, people often overemphasize the risk of significant change."
Readers: Have you encountered branding decisions of this type? How did you handle them? Let us know in the comments section below.
Lot of marketing research including exploring psyche and mental approach of the end users of the product is needed. In general, subsequent versions of a product with small improvements could be given sequential numbers but where the features change, a new name- almost similar to the earlier- may be a better choice.
The example of movies - Don 1, Don2; Housefull 1 and then 2, etc. can be quoted from India.
No producer would,however, venture, to change the basic name of standard products such as Lux but may say that the new one is New Lux or likewise.
Each case is a ticklish problem needing indepth thought to ensure nomenclature does not disturb the marketing cycle and spurt in sales is ensured.
In fact I realized that by only changing name, without a major technology change in the product, really increases the pressure on the marketing team.
Personally on the product buy, I always preferred Canon IXUS series sequel when we bought four cameras in a span of Two years. Then the back of the mind decision was based on "the learning curve" , so I afraid to even go for another series of Canon or Nikon camera.
Thank you
"New Spam".
My question, Do you think we should reconsider the last product's name on this product? Walt Pendleton
wkp@Nside10.com / www.Nside10.com
You could also look into the car industry, especially in europe where they use a lot of numbering for different/new models vs. names for models.
Lambros
One also expects (but may not always get!) backwards compatibility for version number changes but only hopes for such with a name shift.
A problem with renaming versions instead of sequential numbering is that, not surprisingly, you lose any knowledge of sequence.
If I have a software package that runs requires a particular OS or "above" (newer) I can tell that Windows 8 is newer than Windows 7. But what about my Mac - is Leopard "above" Lion? or Snow Leopard? or Mountain Lion?
For a telecom company - the product was branded as "ABC", due to a change in the underlying platform, hosting the product, certain small features had to be changed, but nothing of significant value to the subscriber, buying it.
The challenge was whether to:
1. continue with the same brand name, OR
2. a slight change such as ABC+, OR
3. change it completely as XYZ.
Attached to it, was the issue, how to do market communication, in all these cases:
1. #1 could be confusing for subscribers
2. #2 seems the best option
3. #3 could be confusing for subscribers, as it did not offer them anything of value
Please comment ...
When we see new products with the same name but which is 2, 3, 4, etc.. The client expects to see further improvements, but when the name changes completely client interprets it as something different. For example we see with the Nintendo Wii U, control is a tablet, Nintendo does not have tablets and phones like the brands mentioned, so I had to create a unique command. The name remains only add the U meaning "We and your".
In the first place choosing the brand of your product depends on, which market are you in and what is your situation in the market compare to your competitors.
The reason that Apple didn't change the ipad and iphone name is because the feature of their products stills same (iPad 2 and New iPad, iPhone 4 and iPhone 4S) and they did just some minor changes, and since they are coming up with a new product almost twice a year, it's not recommended to go base on the sequential naming as we would have iPhone 12 within the next couple of years which doesn't sounds a proper name! But, if you compare the iphone 3 and iphone 4 you can see the features have been changed and no matter apple goes base on sequential naming or totally change the name but still consumers will check all the new futures for the new model whereas for the printer or ink or other products which have a smaller market share consumers may not go and check the new features of the product if it goes base on sequential naming. Moreover, if Apple changes the name of the product compare to sequential naming, consumers may have concern about the risk involvement of buying the pr
oduct with a new name as it is totally changed and consumer prefers to purchase after receiving feedback from market.
If you are not a market leader in your industry, to me it is better not to go for sequential naming as you do not have a substantial market share to follow your products daily ,and you should try to attract the customers by choosing an attractive name for your products all the time to pull the potential customers by the name in a way that customers give a try and check the features of the products.
Thank you.
Behshad Rais
can the same approach be used in FMCG product, where you are bringing out a new and better product in the market, or may be a product extension.