Linens & Things — The Problem With Generic Company Brand Names
I wrote in an earlier post about the liquidation of CompUSA, and how descriptive/geographic names can be very limiting in the long run. While CompUSA seems to say “We sell computers in the United States,” names like Best Buy convey a key attribute/benefit… that you will always get the best buy on any current product, be it computers or DVD players or flat screen TVs.
The latest victim appears to be another literally named company, Linens & Things. Today’s New York Times reports that the company, which has over 500 stores in 47 states, is putting off $16 million in interest payments, and lost over $242 million in 2007. Is this simply due to the name? Of course not. But company names do speak volumes about the business, and ones like Linens & Things narrowly define the business to a product category, and make it appear more like a commodity based business than a brand.
People desire brands because they provide a sense of affiliation and identification. A dedicated core of customers will readily admit to being “Mac heads” but few would say “I’m a CompUSA addict.” It’s much more acceptable to be a fan of The Gap than The Dress Barn. One of the beautiful side benefits of a strong brand is that it creates demand, and therefore higher profit margins. So in light of the power of a well named, well conceived brand image, do companies go for literal/functional names? Most likely it’s due to the success of starting out well in one small niche and never taking the time to reassess and reposition the brand as it grow and evolves over time. Imagine buying Post-It Notes from Minnesota Mining & Manufacturing vs. 3M? Growth companies would be well advised to take the time to take stock in their image before they find their products, and associated company name, falling out of favor with the buying public.
