The power of the name.

September 1, 2004

You probably missed the news, but Schlotzsky’s Deli, a 513-unit sandwich chain, recently filed a Chapter 11 bankruptcy petition.

What went wrong at Schlotzsky’s? If you believe what you

read in the paper, it was the usual things. Intense competition from other fast food operators, a stale menu, poor operating procedures, not enough advertising.

When things go wrong, why is the blame almost never placed on the most obvious factor? The name itself.

Schlotzsky’s? Who can spell it, who can pronounce it? Furthermore, the name is dangerous close to “Schlock”sky’s, Yiddish slang for poor quality.

Quote from Positioning: The Battle for Your Mind, first published in 1981: “The name is the hook that hangs the brand on the product ladder in the prospect’s mind. In the positioning era, the single most important marketing decision you can make is what to name the product.”

Today, 23 years later, many marketers are still not convinced of the power of the name. This is the reason there are hordes of hopeless brand names that will never establish strong positions in prospect’s minds.

Not that some of these brands don’t sell. Many do. If you price something cheap enough, it will move in spite of a dreadful name. Hyundai, for example, sold 400,221 vehicles in the U.S. last year. But did you ever hear someone say, “Eat your heart out, I just got myself a 2004 Hyundai?”

Actually, imported cars with bad names have been dropping out of the U.S. market. Peugeot dropped out in 1991. Daihatsu in 1993. Daewoo in 2002.

That leaves a number of automobile brands with dubious names still trying to make a mark in America. Suzuki, Subaru, Mitsubishi and Kia, to name four.

Where is it written that you can’t change a name? ValuJet got into trouble when they lost a plane in Florida so they merged with AirTran and now have a new name. As you have probably noticed, AirTran is doing quite well.

But ATA, the nation’s 10th largest airline, is not. In August, the Indianapolis-based air carrier reported that it could run out of cash early next year.

ATA? What does ATA stand for? Who knows? You can’t use initials unless people already know what those initials stand for.

• IBM. International Business Machines.

• AT&T. American Telephone & Telegraph.

• GE. General Electric.

• IRS. Internal Revenue Service.

• FBI. Federal Bureau of Investigation.

But ATA? Who knew that ATA stood for American Trans Air, not a good name either.

The arguments for not changing a name are always the same. It’s not the name, it’s the product, the service, the price. That’s not true at all. It’s the perception of the product, the perception of the service, the perception of the price. Along with a bad name comes a bad perception. (Attila, the Hyundai?)

Years ago, we spend endless hours trying to convince Eastern Airlines to change its name. Eastern, we pointed out, is not a good name for an airline that flies to the West Coast. Even worse, “Eastern” is not synonymous with “good service.” Western maybe, but not Eastern.

The East, especially New York City, is synonymous with brash, rude, bold, curt, insolent behavior. (Hey, it’s a tough, fast-moving place with little time for the niceties of life.)

Eastern Airlines, as you know, is no longer with us. Even stranger is the saga of an Atlanta investment group that tried to raise $550 million to relaunch the airline as “New Eastern.” Fortunately, the investment community wouldn’t buy that piece of lunacy.

As marketing consultants, we are often approach by companies looking for a new strategy with one caveat. “You can’t change the name.”

Whoops. That rules us out for many assignments. If a bad name got a company into trouble, then that same bad name can’t be used to get the company out of trouble.

Canadian Airlines once approached us with the same deal. But how can anyone possibly differentiate that airline from Air Canada, the dominant Canadian air carrier, without changing the name? It’s impossible.

So did Cathy Pacific. Names are important. Consumers believe, rightly or wrongly, that the name a company uses has real meanings. It’s not just a name that happens to sail through a focus group without serious reservations.

We knew where the Pacific was. But where in the world is Cathy? You can’t use Cathy on an airline, we told the marketing manager, unless people know where it is. Another assignment we didn’t get.

Take Chi-Chi’s, a casual-dining chain that went bankrupt last year. What’s a Chi-Chi and who would possibly associate the name with Mexican food which is what they served? (With the strong trend towards Mexican food, it takes a particularly bad name to drive a Mexican chain out of business.)

How did a name like Chi-Chi’s get selected in the first place? All too often, it’s a question of fun and games in the boardroom. Come up with an outlandish name and get the crowd laughing and you’ve made a sale.

Names are serious. Names are important. The name is the hook that hangs the brand on the product ladder in the prospect’s mind. In the positioning era, and we are still in the positioning era, the single most important marketing decision you can make is what to name the product.