‘A highly consequential choice’: What to consider when naming your new product

When an established consumer packaged goods (CPG) company introduces a new product, it faces a potentially make-or-break decision: how to brand it. Tying it to an existing brand (as was the case for Cherry Coke and Del Monte Tomato Sauce) is tempting. Customers are more likely to try a new product with a familiar association, and companies have to expend fewer marketing resources to launch it.

But the strategy has risks, too: weak or failed brand extensions can harm the parent brand. When the maker of Coors beer introduced a nonalcoholic beverage, Coors Rocky Mountain Sparkling Water, customers were confused, with some wondering about its alcohol content. Sales of Coors water and Coors beer suffered, and the new product was ultimately discontinued.

A new study can help companies make the right branding decision — and shows that those who do will be rewarded with higher returns. “A strong existing brand is a strategic resource for managers wishing to introduce a new product,” says Boston College’s Larisa Kovalenko, one of the authors of the study. “But they must be careful not to kill the golden goose.”

The researchers examined nearly 20,000 products introduced by US CPG firms from 2000 to 2012. They determined which of three branding strategies had been used: new brand (an entirely original name, as when Coca-Cola launched Dasani bottled water), direct extension (an existing brand name plus a descriptive word or phrase: Tide Washing Machine Cleaner), or sub-brand (an existing brand name plus a nondictionary or nonspecific word or phrase: Olay ProX, Arm & Hammer Complete Care). By analyzing the new products’ performance and their companies’ financial returns, the researchers identified five product and firm characteristics that guided the most successful branding choices.