The First Salesperson, Part 1

How Brand Names Shape Perception and Drive Sales

A brand name is not just a silent salesperson, it’s the first salesperson.  Before an ad, website, brochure, or a customer review says anything about a company, the name itself whispers promises, shapes customer perception, and influences purchasing decisions.  Most would agree that it transcends mere identification.  But just how much does a brand name shape perception?  Does it drive sales in a measurable way?  Does it affect other things besides sales?  Just what is scientifically proven about the so-called transcendent power of a brand name? 

Research by Nielsen highlights brand name as “one of the most valuable assets a company possesses,” impacting everything from perceived credibility to quality expectations. They also found that “companies with short, simple names attract more shareholders, generate greater amounts of stock trading, and perform better on certain financial measures than companies with hard-to-process names.”  That may explain why many of the best performing companies have one-word, short names like Apple, Lyft, Netflix, Tesla, etc. 

There is a plethora of studies that show how easily customers remember a brand and how they perceive its qualities. Meaningful names that evoke positive imagery can lead to better brand perception and potentially higher sales.  For example, suggestive and meaningful brand names help with brand positioning and recall (Keller et al, 1998), and have the potential to significantly influence brand equity, which affects pricing strategy and future revenue (Kulshreshtha et al., 2017). A well-known brand name conveys a positive brand image, which leads to competitive advantage and stimulates repeat purchase (Porter and Claycomb, 1997; Shen, 2001).

Researchers have also shed light on the effect of brand names on consumer attitude toward brands and purchase decisions. Kohli and Suri (Journal of Management Policy and Practice Vol. 23(2) 2022) showed that consumers could easily recall meaningful (descriptive and suggestive) names compared to the nonmeaningful (arbitrary and fanciful) names.  Skorinko et al.,(2006) found that fancy or impactful names resulted in significantly more favorable ratings than generic names.  In addition, Lewison and Delozier (1992) concluded that general acceptance of non-branded products is not strong.  And, in a study about meaningfulness vs. non-meaningfulness, Kohli et al., (2005) demonstrated that consumers evaluated meaningful brand names more favorably than non-meaningful brands.

Also, the age of consumers and the associated behavioral patterns have had an impact on consumer brand preference and purchase choice (Chovanová et al., 2015). For example, young consumers’ knowledge about brands often comes from social media, and such knowledge is an important source of brand equity (Jacob and Isaac, 2008; Sasmita and Suki, 2015). When evaluating brands to make purchase decisions, young consumers intensely and actively used their prior knowledge (Norazah, 2013).  Also, their emotional attachment — characterized as “brand love” — played a vital role to improve brand loyalty (Hwang and Kandampully, 2012).  As such, a good brand name that helps project and maintain a positive brand image in the minds of young consumers, especially in the digital age, is highly important for marketing efforts targeting young consumers and results in higher sales.

What’s in a Name?

Let’s look at the psychology behind brand names and explore how they significantly impact sales.  A well-crafted brand name acts as a mental shortcut for consumers. It instantly conveys brand values, product category, and emotional associations. Consider BYD, the Chinese electric car manufacturer.  BYD has replaced Tesla as the world’s best-selling electric car.  But what does BYD stand for?  It’s not an acronym for some stuffy manufacturing holding company.  It’s not the initials of the founder or founders.  It is loosely referring to their product:  electric vehicles.  BYD stands for “Build Your Dreams.”

BYD is an interesting name for a brand.  It’s modern, catchy and a huge departure from the conventional naming protocols of the 20^th century or even more recent ones.  Many brands are named after a color (Blackrock, Red Bull), fruit (Apple), animal (Jaguar) or the founder’s name (Cadillac, Johnson & Johnson).  BYD, however, is a statement; perhaps even an encouragement.  It resonates with a sense of possibility and innovation, perfectly aligning with the company’s forward-thinking electric vehicle technology.  The implied promise is that with a BYD car, you can venture into the world to build your dreams.  Build Your Dreams is memorable.  More importantly, it’s novel and has a strong association with a sentiment to which every human being can aspire.

DLP Capital is similarly interesting.  DLP Capital builds and manages real estate funds for accredited investors.  The name is an acronym that stands for “Dream. Live. Prosper”.   It instantly communicates the aspirational lifestyle their real estate investments offer.  And their affiliated company, Community State Bank, was renamed DLP Bank.  The bank’s vibrant rebrand reflects a commitment to delivering a banking experience that helps customers dream bigger, live better, and prosper more.  Could anyone ask more from their bank?

While quantifying the exact impact of a brand name on sales is challenging, brand recognition undeniably plays a significant role. Studies suggest that familiar brands can command a price premium, with consumers willing to pay more for products they trust. Spoon Me Frozen Yogurt, for instance, with its playful name, makes the product sound fun and inviting, potentially influencing purchasing decisions.  After all, it’s easy to see why consumers might be more drawn to Spoon Me Frozen Yogurt than a generic brand such as Stoneyfield Yogurt (an actual generic brand). 

Also, brands that evoke emotions can create a deeper connection with consumers, which translates to sales. Patagonia, the outdoor apparel giant, conjures images of rugged landscapes and adventurous experiences, perfectly aligning with their target audience’s aspirations. Plenty, the vertical farming company, uses a name that implies abundance and growth, subtly conveying the benefits of their sustainable farming practices. 

These names are successful because they are:

• Memorable – Short, easy to pronounce, and often with a bit of wordplay (Lyft, Dunkin’, Pinterest).
• Evocative – They create positive associations (Whole Foods, Foot Locker, Play Station).
• Relevant: They connect with the brand’s values and offerings (National Geographic, Federal Express, The Home Depot).

How A Brand Name Affects More Than Sales

Companies can significantly impact customer perception and drive sales by choosing the right name. The name may not be a direct sales pitch, but it sets the stage for a positive brand experience, ultimately influencing purchasing decisions.  But a strong brand name can also:

• Reduce Marketing Costs – A memorable and evocative name requires less explanation, making marketing campaigns more efficient, such as with Barbie.
• Build Brand Loyalty – When a brand name resonates with customers, they’re more likely to become loyal brand advocates, such as is the case with Hobby Lobby.
• Attract Top Talent – Brand ROI is often associated with customer acquisition, but branding has just as much impact on employee recruitment. A well-regarded employer brand attracts talented individuals who admire a company’s mission, values, and culture.  Branding also helps foster a sense of pride and belonging among current employees. When employees feel good about what their brand represents, they’re more likely to stay and contribute to its success. This leads to increased productivity along with a reduction in employee turnover (and all of the associated costs related to recruiting and onboarding replacement employees). 
• Extended Lifespan – A strong, well-positioned brand name extends the life of the organization indefinitely by providing independence from a particular product category, increasing flexibility for future growth (through extension), and therefore, increasing the ability to expand into new product and service categories and alter the product and service mix to keep up with marketplace demands. Without a strong brand, the organization’s life span is tied to the life span of the products it manufactures or services it provides.  For example, Coca-Cola’s strong brand name allowed it to expand into other drink categories as Millennials turned toward energy drinks, teas and other beverages.  Blackberry cell phones, however, did not have the brand strength to overcome their product obsolescence.

The Case for a Well-Chosen Name

Consider two companies selling similar athletic shoes. One has a generic name like “Stride Runner,” while the other has a catchy, aspirational name like “Limitless.”  Which brand are customers more likely to remember?  Which one inspires them to push to their limits?  The answer is clear.  A well-chosen name sets the tone for the brand experience and subtly influences purchasing decisions at every stage of the ‘customer journey’.

Next week, we’ll explore the often-debated, and sometimes contentious, topic of brand name changes. We’ll delve into the stories of giants like Nike and Amazon and examine when a name change can be a strategic move for growth.  Stay tuned.

Quote of the Week
“When people use your brand name as a verb, that is remarkable.”
Meg Whitman

© 2024, Keren Peters-Atkinson. All rights reserved.

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