How to Choose the Right Company Name
09/23/08 - 09:33 AM EDT
Entrepreneur.com
By Peter S. Sloane and David Perla of Entrepreneur.com
Products may come and go, but company names can last forever. When starting a new company, take the time to choose a name that distinguishes your business from the competition. Otherwise, even with the best idea or invention, your customers may have a difficult time finding you and your product in an increasingly crowded marketplace. All entrepreneurs face a classic marketing dilemma: They want a company name that tells consumers exactly what they sell, but descriptively naming a new venue the Country Music Hall, Blues Center or Music Palace creates confusion with other similarly named businesses. Ironically, even companies that specialize in branding -- The Brand Consultancy, Brand Design, and Name Development -- fall victim to this misguided approach. Such descriptive names make it hard to stand out from the competition. Indeed, the U.S. Patent and Trademark Office won't even register a name that is merely descriptive unless it has acquired a reputation. The standard used by the USPTO in determining whether a name is descriptive is whether it describes an ingredient, quality, characteristic, function, feature, purpose or use of the product. Keep this simple test in mind when choosing a new company name.It's All in the Name
Successful company names are suggestive rather than descriptive. When applied to the product, they require imagination, thought or perception to determine the nature of the goods. A hypothetical example of a suggestive company name is the Sunshine Orange Juice Co. Sunshine suggests the nature of the orange juice that the company sells, without immediately describing it. Even better than suggestive terms are arbitrary names that comprise common words, but when used to identify particular products, do not suggest or describe a significant ingredient, quality or characteristic of the goods. For example, Amazon(AMZN Quote - Cramer on AMZN - Stock Picks) has no meaning other than trademark significance when applied to book selling, much like Apple (AAPL Quote - Cramer on AAPL - Stock Picks) for computers and Camel for cigarettes.
Another approach is to pick a fanciful name -- one that has been invented for the sole purpose of functioning as a trademark, such as Pepsi (PEP Quote - Cramer on PEP - Stock Picks), Kodak (EK Quote - Cramer on EK - Stock Picks) and Exxon (XOM Quote - Cramer on XOM - Stock Picks). What a company does today may not necessarily be what it does tomorrow, so choosing an arbitrary or fanciful name allows for future flexibility. Since Amazon has no significance in connection with books, Amazon.com was able to expand into selling music, electronics and most every other kind of product under the sun, using the same company name. Similarly, the name Google (GOOG Quote - Cramer on GOOG - Stock Picks) has unlimited flexibility as a brand because it isn't descriptive or suggestive of an Internet search engine.
Even if one avoids choosing a descriptive company name, there's another issue to consider: Some names are so common that they lack any real marketing strength. Think of names like Strategic Solutions or Pro Express or Business Advantage for a consulting service. They share the same shortcoming -- failing to resonate in the minds of consumers.
In today's crowded marketplace, compound marks work better than one-word marks. If one term is descriptive or common, the other term should help the overall name stand out. Indeed, the whole may be more than the sum of its parts -- DoubleClick or RazorFish.
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