ASSOCIATION FOR CONSUMER RESEARCH
Labovitz School of Business & Economics, University of Minnesota Duluth, 11 E. Superior Street, Suite 210, Duluth, MN 55802
Brand Name and Consumer Inference Making in Multigenerational Product Introduction Context
Seigyoung Auh, University of Melbourne
Chuan-Fong Shih, Wake Forest University
EXTENDED ABSTRACT - What is the significance of Microsoft using brand names that correspond to Windows 95, Windows
98, Windows 2000 and now Windows XP? What message does Intel convey to customers when they change their chip's brand name
from 486 to the Pentium series? Although, research has confirmed that brand names associated with numbers and certain letters of
the alphabet fit the description of high-tech and complex products (Boyd 1985; Pavia and Costa 1993), little is known as to why that
is the case. A related research question that we address in this paper is the role of brand names in affecting upgrade likelihood
decisions and the incremental willingness-to-pay for next generation products. Moreover, little is known as to what types of brand
names would best summarize different levels of upgrades (normal vs. breakthrough) for next generation products.
[to cite]:
Seigyoung Auh and Chuan-Fong Shih (2004) ,"Brand Name and Consumer Inference Making in Multigenerational Product
Introduction Context", in NA - Advances in Consumer Research Volume 31, eds. Barbara E. Kahn and Mary Frances Luce,
Valdosta, GA : Association for Consumer Research, Pages: 390-391.
[url]:
http://www.acrwebsite.org/volumes/8655/volumes/v31/NA-31
[copyright notice]:
This work is copyrighted by The Association for Consumer Research. For permission to copy or use this work in whole or in
part, please contact the Copyright Clearance Center at http://www.copyright.com/.
Brand Name and Consumer Inference Making in Multigenerational Product Introduction
Context
Seigyoung Auh, University of Melbourne
Chuan-Fong Shih, Wake Forest University
EXTENDED ABSTRACT
What is the significance of Microsoft using brand names that
correspond to Windows 95, Windows 98, Windows 2000 and now
Windows XP? What message does Intel convey to customers when
they change their chip’s brand name from 486 to the Pentium
series? Although, research has confirmed that brand names associated with numbers and certain letters of the alphabet fit the
description of high-tech and complex products (Boyd 1985; Pavia
and Costa 1993), little is known as to why that is the case. A related
research question that we address in this paper is the role of brand
names in affecting upgrade likelihood decisions and the incremental willingness-to-pay for next generation products. Moreover,
little is known as to what types of brand names would best
summarize different levels of upgrades (normal vs. breakthrough)
for next generation products.
According to cognitive representation of information, when
these brand names are used in isolation or outside of any context that
provides it any substantive meaning, they would be processed in a
manner consistent with surface-level processing. However, multigenerational high-tech products are usually interpreted within a
time progressive framework. In other words, the notion of time
provides life and meaning to what otherwise would be nothing more
than a group of numbers. A brand name such as MySoft 3.0 may
convey a different meaning to consumers than its counterpart
MySoft Elite (prone to meaning-level processing), which are both
in the 3rd generation of its life cycle. In short, we expect that in the
context of time progression, a brand name that is subject to surfacelevel processing (e.g., MySoft 3.0) can provide several advantages
to firms compared to a brand name that is most likely subject to
meaning-level processing (e.g., MySoft Elite). We test this general
hypothesis in experiment 1.
In experiment 1, we found that brand name type had an effect
on perceived technological improvement, product differentiation,
and the degree to which one was willing to pay more for the current
version compared to the previous version. Moreover, it was confirmed that the extent to which subjects are willing to pay more for
the current version model compared to its predecessor is driven by
technological improvement. These results bolster our belief that
brand names operate as strong cues for enabling respondents to
make inferences about how a current generation of a high tech
product may be perceived to be different from its prior generation.
Our empirical work is consistent with the results of Brucks, Zeithaml,
and Naylor (2000).
In experiment 2, we examined how well different types of
brand names can reflect respondent’s perceptions of the degree of
innovation of an attribute on some key dependent variables. In
labeling brands in a sequential manner to reflect generational
progression, a common procedure is to adopt progressive numeric
labeling (version 1, 2, 3 etc). Such practices are inherently appealing because it is clearly understandable by the consumers as a
continuation of prior generation. As such, brand equity and performance expectations can easily be transferred from one generation
to the next. Alternatively, firms can pursue brand labeling strategies
that signal to the consumer that the next generation product significantly deviates from its prior generation by abandoning sequential
branding. A non-sequential brand labeling strategy (e.g., version 1,
2, 3, XT) can break the monotony of the brand signals and suggest
that the next generation product is significantly different from prior
generations.
The two types of brand labeling (sequential vs. non-sequential) can be interpreted as either congruent or incongruent with the
attribute improvement of the new generation product. That is, if we
have a series of brand names in the order of MySoft 1.0, MySoft 2.0,
MySoft 3.0 and a new introduction that corresponds to MySoft XT,
this can be conceived as either a congruent or an incongruent brand
label depending on the nature of the innovation type. Under a
breakthrough innovation condition, MySoft XT would be considered congruent brand name because XT conveys non-continuous
improvements. Conversely, when brand name MySoft 4.0 is used,
it does not convey this information (breakthrough innovation) to
consumers accordingly. When congruency exists between brand
labeling and attribute improvement, both are used to evaluate
products. When incongruency exists between brand labeling and
attribute improvement, product information signaling is averaged
to form an overall evaluation such that a breakthrough improvement may not be perceived as innovative as it could have been
otherwise (i.e., sequential brand labeling attenuates the impact of a
breakthrough innovation) or a non-sequential brand labeling can
actually enhance the effect of a nominal innovation.
This is similar to the information integration theory such as
cognitive algebra introduced in the impression formation literature
by Anderson (1965, 1971). According to the cognitive algebra
model, when conflicting and incongruent information is present,
people tend to engage in an averaging mentality to arrive at a final
decision. Our predictions for sequential brand labeling to diminish
the effect of a breakthrough innovation and non-sequential brand
labeling to improve the beliefs about a normal innovation are
consistent with the anchoring and adjustment framework of Hogarth
and Einhorn (1992). In simple terms, one information either pulls
down or up the belief formed from the other piece of information.
Using a 2 (innovation type: normal vs. breakthrough) x 2
(brand name type: sequential vs. non-sequential) experiment, we
found a significant interaction between innovation type and brand
name type in that the effect of a breakthrough innovation was
stronger for congruent brand names than for incongruent brand
names. In particular, respondents expressed greater degree of
upgrade, differentiation, willingness-to-pay, worthy of upgrade,
and purchase likelihood for the next generation product compared
to the current generation product in the breakthrough innovation
condition as opposed to the normal innovation condition. The
results underscore the importance of having brand names for hightech products that are congruent with the level of attribute innovation, especially when the innovation is a breakthrough development. However, the effect of a normal innovation had similar
effects on the dependent variables regardless of brand name type.
References
Anderson, Norman H. (1965), “Averaging Versus Adding as a
Stimulus Combination Rule in Impression Formation,”
Journal of Experimental Psychology, Vol. 70 (4), 394-400.
Anderson, Norman H. (1971), “Choice Test of the Averaging
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Advances in Consumer Research
Volume 31, © 2004
Advances in Consumer Research (Volume 31) / 391
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