Can a great brand name make a company successful by itself? Of course not, but can a poor name contribute to the slow and gradual death of a once formidable business… yes. And case in point is yesterday’s announcement of the closing of CompUSA stores. In this one name we can see two basic business naming mistakes…
1. Being product specific (computers)
2. Being geographically specific (the United States)
This type of company name can work if your core product never changes and your market never grows. But in the case of CompUSA, competition increased in computer sales while prices continually dropped. Ironically, one of the companies that bit into their business was Best Buy. Best Buy’s name, however, is based on a key attribute, delivering low priced merchandise. So their core products can change and evolve over time, as long as they remain competitively priced. CompUSA has the same problem as Books-A-Million. You are pretty much stuck with what you start with. Imagine forty years ago naming a company TypewritersAmerica or 8 Track Nation. As silly as that sounds, that’s what so many companies are doing when they chose literal, product specific names.
The geography issue is another stumbling block. I don’t know if CompUSA ever had plans to go into Canada or Mexico, but the name would seem to indicate otherwise. What makes it even more interesting, is that as a privately held company, CompUSA is controlled by a Mexican financier. So having both product and geographic identifiers in the name can prove very limiting.
Granted, some companies survive so long, that they overcome this potential company killing mistake. One example would be Radio Shack. Obviously the name has come to mean more than radios, and though not flattering, the word “Shack” has been tolerated by their faithful. But these are the exceptions and not the rule. Business has enough challenges without self created impediments. When choosing a business name, choose wisely. Select a name that can serve you ten to fifteen years down the road.
Meanwhile, avoid the urge to start a business named MP3USA.
Hi, It’s reassuring to hear this. I sell kitchen appliances and was told that I must have the word KITCHEN in my name. I felt that it would limit my opportunities and stood out for a name that emphasized DEALS. I can now add any product line I like to my Internet store. I also truncated the web site address to make it more snappy so customers can get to it either by the full name - http://www.GreatDealsDirect.co.nz or just: http://www.gdd.co.nz
I can promote it either way.
Comment by Tom McKernan — December 20, 2007 @ 7:06 pm
I too, am very reassured. I am still in the process of starting my small business but things are moving along. I love to paint, animals especially so I decided to start painting portraits for people. A friend told me in the beginning that it was important to have a company logo, and after days of grueling research, someone posted a comment on one of my blogs suggesting a site called http://pixellogo.com. I chose my logo, and then it was time to choose a name. My friends and family insisted that because I wanted to specialize in animal portraits that the name would have to be something like “wagging tails photography.” Or something like that. I chose not to do so, because I thought customers might think that because of the name that I only did animal portraits. So I’m very glad that I ran across this article. Now I know that my gut instinct was right. Thanks for the information!!
Comment by Ivanna — April 15, 2008 @ 3:23 pm