How to Brand Next Generation Product - a Study by Hbs Marketing Faculty

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How to Brand a Next-Generation Product
Published: April 23, 2012 Author: Carmen Nobel Upgrades to existing product lines make up a huge part of corporate research and development activity, and with every upgrade comes the decision of how to brand it. Harvard Business School marketing professors John T. Gourville and Elie Ofek teamed up with London Business School's Marco Bertini to suss out the best practices for naming next-generation products. Key concepts include: • Companies often take one of two tacks in naming a next-generation product—the sequential naming approach or the complete name change approach. • Experimental research showed that each naming approach affects customer expectations. With a name change, research participants expected features that were distinctly different or new. With a name continuation, they just expected improved performance on existing features. • Companies must assess risk versus reward when branding a product upgrade, weighing the excitement generated by a new name against the danger of scaring away customers who worry that new features pose the threat of new glitches and a steep learning curve. 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. 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...
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