Choosing a brand name that resonates with the customers while introducing a new product

Introduction

Choosing a brand name – that resonates with the customers – while introducing a new product is the most significant decision, it can have a serious impact on the overall performance of the company (Keller and Lehmann 2006). When introducing a new product, the company can either use the existing brand name or use a completely new brand name, both strategies have their pros and cons. A brand name is not only a name but also an ambassador of the whole company and it represents the product and the values of the company. The brand name is the very first element the customers encounter with. The brand distinguishes product of one company from that of its competitors, enabling the product to stand out in the market (evolvecreative, 2019).  Before moving on with choosing a brand name it is very important to conduct proper research. This paper will evaluate how Lucid motor can select a suitable brand name for the newly introduced product. The new product will have a new brand name rather than using the existing brand name and will go through the justifications behind choosing a new brand name strategy.

Exiting brand name

Although using an existing brand name offers a great deal of benefits like new product can leverage upon the brand equity and high brand awareness of the existing brand. Customers will react positively toward the new product as they already trust the existing brand, people are usually risk averse. By using the existing brand name, the marketing cost is saved, allowing companies to invest more in highlighting the functional attribute of the new brand, rather than developing an emotional connection with the people as the existing or parent brand will already have it. One can also save on research and development costs while using an existing brand name (Parkin, G., 2018).

New brand name

However, Lucid Motors is comparatively new to the market, the first car is yet to come out, although the production of Lucid Air has started and the customers still haven’t experienced it (Bassett, A., 2021). Therefore, the reaction from the customers is unknown as well as the brand equity. It is difficult to predict the performance of the existing brand. Using the existing brand name for the new product may not be a very good decision, because what if the existing brand doesn’t perform well as expected. Using an existing brand name can create uncertainty in the minds of the customers and if the new product fails it can have a negative impact on the brand image of the existing brand, consequently, decreasing the overall sales of the company. It is evident that using an existing brand name carries a lot of risks (Luxin, K., Sakos, Y. and Jaulent, S., 2007). Before choosing any strategy, one must first evaluate the current levels of brand equity and then conduct a significant study to determine which strategy will best serve the purpose. There are many ifs and then, therefore, the safer way is to introduce a new brand name for the new product.

As discussed above Lucid Motors is a new brand and the results of how it performs in the market are still unknown. Firstly, even if there is the slightest possibility that something might go wrong, or customers may not like the existing brand as expected. If that is true, it can hurt the brand image of the company as there is a cliché first impression is the last impression. Secondly, the biggest advantage of using the existing brand name would have been the brand equity and brand awareness but, in this case, these terms seem irrelevant as Lucid Motor is a relatively new brand, which struggling to develop brand equity and brand awareness. So, the new product cannot benefit anything by using the existing brand name. Moreover, there are chances that the brand image of exiting brands might hurt the new product or vice versa. With the introduction of the new brand name, the new product will be free from all the taboos, stereotypes, or any bad word of mouth attached to the existing brands. The new brand will have a chance to create its market and appeal to the customer in a way that best suits the product. Therefore, in this case, the best option is to go with a new brand name. By introducing a new brand name, Lucid Motors can penetrate and explore different market segments, which are not covered by the existing brands. This will widen the customer base of the company, consequently increasing the sales of the overall company. Building a new product with a new product name will enable Lucid Motors to enhance product recognition, helps build brand loyalty, helps with product positioning, and builds brand equity (Fanaras, L. A., 2013).

Studies showed that 47% of new brand launches were successful, as compared to product extension with only 28% were successful, or 72% failed (referenceforbusiness.com). Brand extensions are more likely to be successful when the parent brand is strong – has huge brand equity and loyal customers – the extension supports and adds value to the parent brand, and the extension is valuable to consumers (Simms, J., 2000). But Lucid Motors is in the developing stage, the brand equity is yet to develop, and customer loyalty can only be seen in the future when the brands of Lucid Motors are in the market. Therefore, it would not be a wise decision, keeping in mind the above discussion, to choose an existing brand name for the new product. The best way is to choose a new brand name so that neither the existing brand nor the new brand is prone to any type of risk.

Read More