What’s in a Name

It is often the first or last thing you think of when setting up a business, but how much does a name matter? In an ideal world, a company with an original product, great service and operations in a high-growth area should be enough to generate a healthy profit. However, in today’s increasingly fast-paced world, a catchy name that strikes the right tone immediately with consumers is more vital than ever.

Don’t be misled however, a lot of time and effort doesn’t always have to go into a brand name, sometimes ideas literally grow on trees. On returning from a trip to a local apple farm, it dawned on a young Steve Jobs that the word apple itself sounded “fun, spirited and not intimidating.” Some company names simply don’t mean anything. For example, the Danish ice cream company, Haagen-Dazs, had its name strategically chosen by its founders to sound Scandinavian and to “convey an aura of old-world tradition and craftsmanship”, but in reality, the words actually have no meaning whatsoever in Danish.

Back in the good old days however, the premise was simple: just name the company after yourself. The UK high street is littered with companies named after their founders; from Richard Block and David Quayle’s hardware shop to Thomas Cook’s travel agent, Wallace Waite and Arthur Rose’s upmarket food store to William Henry Smith’s newsagent, the examples seem endless.

Naming a company after yourself does have its positives, although exhibiting more than a bit of an ego in the process. It does show that the owner plans to be part of the business for the long term, whilst also cementing a legacy within their company. Take Tesco’s new discount endeavour, Jack’s, a venture aiming to throw down the gauntlet to German discounters Lidl and Aldi. Tesco’s name partly comes from its founder, Jack Cohen, and partly from a shipment of tea he bought from Thomas Edward Stockwell. He made his new labels using the initials of his supplier (TES) and the first two letters of his surname (CO), forming the now well-known name. Testament to his legacy, the two businesses, opened nearly a century apart, now utilise both Sir Jack’s first name and his initials.

Tesco does have a flair for naming the companies it owns, also delving into that other great provider of company names, classic literature. When branching out into the coffee business, Tesco’s branding would be impossible to align with a trendy, artisan coffee house and so the name “Harris + Hoole” formulated for its new chain. The name bares absolutely no reference to its founders or any of its manufactured history; instead namechecking the two coffee obsessed characters in Samuel Pepys’s diaries.

In Covent Garden to-night, going to fetch home my wife, I stopped at the great Coffee-house there, where I never was before; where Dryden the poet (I knew at Cambridge) and all the wits of the town, and Harris the player, and Mr. Hoole of our college.

Coffee and reading share a strong relationship it seems, with there being little surprise that it was an English teacher and a writer who, in 1971, established a particularly well-known coffee chain. The pair chose to name their business after the obscure chief mate to Captain Ahab in Herman Melville’s 1851 classic Moby Dick, the young Starbuck.

With an abundance of entrepreneurs taking inspiration from the library rather than a business consultancy, it is fitting that perhaps the greatest raconteur of them all understood the importance of how we do business, inventing a new corporate lexicon in the process. Being one of the first to use the word “marketing” in a formalised way, Shakespeare first introduced it during his play As You Like It:

Rosalind. With his mouth full of news.

Celia. Which he will put on us as pigeons feed their young.

Rosalind. Then shall we be news-cramm’d.

Celia. All the better; we shall be the more marketable!

Maybe Shakespeare was on to something. Scientific research shows that humans can make snap judgements in less than three to four seconds of meeting someone, barely enough time can pass in saying hello before our brain has subconsciously made a friend or enemy. The same is true of words, with the University of Michigan finding that unpronounceable names provide an unfamiliar and therefore instinctively dangerous sensation. In layman’s terms, we fear and feel uncomfortable with what we don’t understand.

Studies back this up with stocks which roll off the tongue tending to outperform their counterparts with less pronounceable names. Looking at around 700 stocks between 1990 and 2004, researchers noted that on the US stock markets, those with snappier names or tickers, tended to outperform those with more difficult appellations by 33%.

It is with some irony that in Shakespeare’s most famous work Romeo and Juliet it is the star-crossed lovers last names that is their damnation. What’s in a name? That which we call a rose. By any other name would smell as sweet? Demands Juliet, mid-way through Act II of the bard’s tragedy. In business, it could well be one of the most important decisions you ever make.

 

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This article is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. The mention of any specific shares or bonds should not be taken as a recommendation to deal. Any opinions expressed in the Investment newsletter are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

 

Tags: Analysis, Other, Economy, Investment, Market, Newsletter

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