A couple of months ago, I had written about the chaos and the difficulty of the product naming process. Today, I was reading an article in HBR about this issue and it had some interesting perspectives that I had previously not considered. Specifically, the article talks about issues faced while selecting a name for the next generation product. Let’s say that your company has an existing product named X. If you release another version of the product a couple of years later, do you maintain the same name (X) or do you come up with a new name (say Y)? What factors should influence your decision?

Customers’ Expectations: The article mentions that if customers see the same name for the newer product they expect improvements in existing features. But with a new name they expect a fundamentally different product and, surprisingly, they expect the new product to be a riskier product than the older model. This perception of risk in a newer model is the key to deciding what to name your product. It is interesting how something as simple as picking a name for the product becomes an exercise in risk management.

In this case, managing risk begins with a fundamental grasp about your customers and your competition. If, for example, your target market is techies who are comfortable with experimenting with newer technologies, a brand new name might help. On the other hand, if your target customer is a regular business user who uses your product just as an aid to get his job done, it might be safer to present a consistent name to the user. A good example of this is Microsoft Office products. Although the products have gone through plenty of changes, maintaining the same name helps customers upgrade without the perception of any risk.

If your product is the underdog in the market, it might help to boost your image by picking a new name for a new model. The example cited in the article is that of AMD. Although AMD’s Athalon processor was only a newer version of its previous K5 and K6, they changed their naming convention and chose Athalon over K7. This seems to have helped as Athalon did much better than its predecessor models.