The Branding of NextGeneration Products

1
The Branding of Next-Generation Products
Playstation, Playstation 2, Playstation 3
Playstation 4?
2
A Continuum of Generational Branding
Strategies
Complete Change
New Sequencing (suffix, prefix, descriptor)
Sequential Indicator (suffix, prefix, descriptor)
No Change
3
Sequential/Continuous Indicator Change
Pentium, Pentium2, Pentium3, Pentium4 Microsoft
Internet Explorer 1, 2, 3, 4, 5, 5.5, 6 Palm,
PalmIII, PalmV, PalmVII Atari2600, Atari5200,
Atari7800 Playstation 1, Playstation 2,
Playstation 3 Taylor Made 300series,
500series Windows95, Windows98,
Windows2000 Big Bertha, Great Big Bertha,
Biggest Big Bertha

• Ordered Numerals
• Explicit Use of Dates
• Superlatives

4
Break From Previous

• New Sequencing
• New Name

Windows 3, 3.1
Windows 95..98..2000
Windows XP
Windows Vista
Intel Pentium 1, 2, 3, 4
Core
AMD K5, K6
Athlon
(Athlon XP)
Sega Master
Genesis
Saturn
Dreamcast
Nintendo N64
Gamecube
Wii
5
Is This on Mangers Agenda?

• Latest version of Microsoft console named Xbox
  360
• Were worried that Xbox 2 vis-à-vis Playstation 3
  would make the machine be perceived inferior
• Considered Xbox HD, Xbox 247, Xbox E, Xbox 2,
  Xbox NE
• Hired market research firm to conduct survey to
  help them choose one that resonated best
• Taylor Made Golf Clubs decided go from 300
  series to 500 series (skipping the 400 series)
  to signal greater change (Zack Kramer PR
  Director)

6
A Continuum of Generational Branding Strategies
Radical Name Change
New Sequencing (suffix, prefix, descriptor)
Sequential Indicator (suffix, prefix, descriptor)
No Change
7
Motivation/Goal

• Equity is potentially carrying over from one
  generation to the next generation what is the
  role of the brand name?
• Are the inferences consumers make about what has
  changed in the product/benefit/experience of the
  next-gen product affected by the naming strategy?
• Can the same next-gen naming strategy have a
  positive effect on adoption in some contexts and
  a negative effect in other contexts?
• How is next-gen naming strategy related to themes
  and theories in the context of innovation and
  adoption of new technology?
• When to Break from Past and when to Continue with
  Sequence?

8
Basic Premise

• When a consumer evaluates a next-gen product,
  s/he
• draws upon knowledge of previous generations
• We posit that the brand name--relative to
  predecessors--
• serves as a cue from which consumers draw
  inferences
• In particular consumers expect greater change
• from one generation to the next when entirely
  new name
• chosen rather than continuation of sequence

9
Pilot Study
2700W
2800W
2900W
10
Pilot Study

• In your opinion, how much product change did the
  firm introduce when it replaced model with
  model ?
• (1 very little change 7 a lot of change)

11
What Next?

• Exactly what kind of change(s) are consumers
  perceiving? In the product? To their expected
  experience?
• If a new brand name can cause different types of
  inference about change under what circumstances
  does it cause consumers to focus on each type?
• What is the impact on product adoption?

12
Next-Gen Products and the Types of Inference from
New Brand Name

• Next-GenInnovation consumers perceive
  innovations to be superior to the existing
  products they succeed in terms of performance and
  benefits (Rogers 1995 positivity bias, Okada
  2006)
• Next-GenInnovation consumers perceive new
  products to be associated with greater
  uncertainty and costs relative to existing
  products (Moreau et al. 2001, Hoffler 2003)
  greater apprehension (Mick and Fournier 1998)
  Rogers 1995 (compatibility, complexity,
  observability)
• We postulate that a new brand name (name change
  relative to previous generations) will cause
  consumers to infer the innovation is more radical
  or drastic

H1a Consumers will perceive greater risks/costs
when the name of a next-generation product
deviates from an established naming sequence than
when it does not H1b Consumers will perceive
greater rewards when the name of a
next-generation product deviates from an
established naming sequence than when it does not
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So When Will Name Change Lead to Greater/Lower
Adoption? Context!

• If context makes costs of adoption seem more
  likely to occur, bad contingency more
  consequential? name change will cause consumers
  to focus on the risks associated with innovation
• If context makes benefits seem more likely to
  occur, good contingency more consequential? name
  change will cause consumers to focus on the
  rewards associated with innovation

H2 When the risks of new product adoption are
more salient than the rewards, consumers will be
more likely to choose a next-generation product
under brand name continuity than under brand name
change. H3 When the rewards of new product
adoption are more salient than the risks,
consumers will be more likely to choose a
next-generation product under brand name change
than under brand name continuity.
14
Does Length of Prior Sequence Matter?

• If relationship between naming strategy and
  product adoption is the result of expectations,
  then the longer the firm uses existing name
  convention the stronger the effect (or
  conversely, effects should disappear if previous
  sequence is short)

H4 The length of the established naming
convention will moderate the predicted effect of
brand name change on perceptions of risks,
perceptions of rewards, and ultimately likelihood
of product adoption.
15
Study 1 Risk, Length of sequence (N282)
In a week you will be attending the wedding of a
close friend. As a favor, your friend asked you
to take photos of the ceremony. Apparently you
will be one of several people taking photos
the only one taking photos and the couple is
counting on you to take memorable pictures
You gladly accept. Unfortunately, you lost your
camera on the last vacation and need to buy a new
one. One option you consider is purchasing the
exact camera you had. Made by Minox, and model is
DX-100 DX-400. The DX-100 DX-400 was the
first fourth version of this model
The second option is to purchase the very latest
version of that same model DX-200 DX-500
Spectra
Note that spec changes are now given and are
identical !
16
Study 1 Impact on Perceived Change
The same next-gen product perceived to have more
problems if brand name changed radically (H1a)
The same next-gen product perceived to have
greater product improvement if brand name changed
radically (H1b)
17
Study 1 Does this Translate into Choice?
Effect of risk environment on choice
of Participants
of Participants
Choosing Next
Choosing Next-Gen camera over the previous
generation
78.4
78.4
80
80
Brand Name
Brand Name
70
Change
70
Change, i.e, Spectra
Brand Name
Brand Name
60
60
Continuity
Continuity, i.e., DX500
50
50
51.5
51.5
40
40
45.4
45.4
30
30
25.6
25.6
20
20
Low
High
Low
High
Risk Salience
Risk Salience
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Study 1- Length of Sequence
Effect of risk environment at different lengths
of generation
How good is perceived deal on next-gen?
Effect is significant
Effect not significant
19
Study 2
Effect of risk-reward environment on choice
(N199)
Consider purchasing tax software Smartax
1.0-5.0 Next Gen branding Smartax 6.0 or
Pro-tax Rewards salient
Friend obtained a significant tax refund using
the next-gen software Risk salient
Friend tried to use but ended up
hiring a tax consultant
20
Study 2 Effect of risk-reward environment on
choice
Perceived Risk and Rewards with Brand Name
Change More problems/learning difficulty (4.13
vs. 3.59 p(4.62 vs. 4.25 p(Protax)
(Smartax6)
21
Conclusions and Implications

• Name change confers adoption advantage
• Only if prior sequence established
• Only if low risk/high reward context
• Name change creates adoption disadvantage
• Only if prior sequence established
• If high risk context/consumption environment
• Xeon?Itanium, Playstation 2?Playstation 3
• Competitive Benchmarking (open)

22
Branding and Leadership Patterns
Home Video Game Platforms
Late 1970s Early 1980s
Mid-Late 1980s Early 1990s
Mid-Late 1990s Early 2000s
Mid-Late 2000s
Atari (2600) Coleco (Colecovision)
Nintendo (NES) Sega
(Genesis) Sony (Playstation)
Sony (Playstation2) Microsoft (Xbox
360) Atari
(5200) Atari (7800)
Nintendo (SNES) Atari
(Jaguar) Microsoft (Xbox)
Nintendo (Wii)
Mattel (Intellivision) Sega
(Master) Philips (CDI)
Nintendo (N64) Nintendo
(GameCube) Sony (Playstation3)



Sega (Saturn) Sega (Dreamcast)
PC Microprocessors
Late 1970s Early 1980s Mid-Late
1980s Early 1990s Mid 1990s
Late 1990s Early 2000s Mid
2000s
Intel (8086/88) Intel (286)
Intel (i386) Intel (i486)
Intel (Pentium) Intel (P2)
Intel (P3) Intel (P4)
Mot. (68000) Mot. (68010)
AMD (AM29000) AMD (AM386) AMD
(AM486/K5) AMD (K6) AMD (Athlon)
AMD (AthlonXP) Zilog (Z8000)
Zilog (Z80000) Mot. (68020)
Cyrix (Cy486SLC) Cyrix (M1)
Cyrix (M2) Cyrix/VIA (III)

DEC (Alpha)
Transmeta (Crusoe)


IBM/Mot.
(PowerPC)
Company listed first in boldface was the
industry leader.
23
Vertical vs. Horizontal

• In your opinion, how likely is it that
  introduced brand new features?
• In your opinion, how likely is it that improved
  performance on existing features?
• (1 not at all likely 7 very likely)

LIKELIHOOD
LIKELIHOOD
NEW
BETTER
FEATURES
PERFORMANCE
BN Continuity
4.22
4.66
5.39
5.09
BN Change
24
Generation-Next for UsStudy 3 or Experiment I
Continuous Sequence
Brand Name Change
New Features
25
(No Transcript)
26
Study 1

• A radical brand name change is accompanied by a
  greater bump in the perceived amount of product
  change between versions (than a sequential brand
  change)
• Effect appears to be driven by belief that
  radical brand name changes signal introduction of
  significantly new features and some vertical
  product improvement. (or opposite direction, if
  the change were just some vertical improvement,
  the firm would have been consistent and just have
  kept the sequence going).

27
Mediation Analysis