72
Journal of Marketing, October, 1969
though the products are purchased through the same
channels and would be classified similarly by the
generally accepted theories of goods classification.
The characteristics of the nature of competitive rivalry between sellers may make an optimal buying
strategy for one product inappropriate for another.
A student of the shopping process will have to consider the nature of supply as well as demand if he
is to bring some order to our understanding of the
shopping process.
Second, heavy users of a product do possess the
interest or gain the experience required for them
to pay prices which, on the average, will be lower
than those paid by les.s frequent purchasers. The
effect of pounds purchased was significant for both
products studied here.
Third, it may not be operationally useful to generalize the attributes of "deal proneness" or "private brand proneness" across product groups. A
shopper who is deal-prone for one of the products
studied may not be for the other. She need not be
private-brand-prone either. With individual differences in family requirements and personal motivation set, a woman who buys one product solely on
the basis of price may be very loyal to a particular
national brand of another product regardless of
price. The writer is currently engaged in a subsequent and more detailed analysis of this point.
Fourth, these results do give some insights into
Of Alphabets, Acronyms and
Corporate Identity
the potential benefits of "shopping around." In this
analysis, three measures of shopping proneness were
tested: NSPUR, NSPAN, and LOYCH. The latter
two bear no relationship to the average price paid.
The simple correlation between the number of different stores and average price is significant, but
this relationship did not appear in the multiple regression.
There is, however, one factor relating store loyalty
with average price which is of interest. For juice,
store loyalty is correlated with brand loyalty and
private brand proneness. Private brand buyers paid
lower prices, and thus, not shopping around led indirectly to paying lower prices. This indirect effect
was not significant for coffee.
In sum, between private brands, store specials, and
manufacturers' deals, the careful shopper seems able
to achieve a lower grocery bill for packaged goods
by shopping at only one or perhaps two well-managed and aggressive supermarkets. By stocking up
on specials and deals (at least over the 15 week
period studied here) the housewife can reduce the
average price she pays for a product through good
timing rather than through extensive store search
and store switching. In the process she also saves
the cost of additional search. These results suggest
that, coupled with careful buying through time,
store loyalty may be an excellent grocery shopping
strategy.
LAURENCE P. FELDMAN
Merger and diversification are causing a growing number of firms to
change their long-established corporate names to abbreviated, initialized
forms. This article discusses the potentially adverse impact of this type
of name change on the firm's overall marketing effort and suggests alternative approaches.
ONCE fashionable for businessmen to deI TrideWASgovernment
bureaucracies for their seemingly
endless proliferation of organization names A^ich
were abbreviated to initials. The attitude seemed to
be that the use of initials by these organizations
made it hard to distinguish them from each other,
and to determine their function. Given this background, it is ironic that in recent years a growing
number of firms have traded in their long-established
corporate names for initials. Food Machinery and
Chemical Corporation became FMC, to be followed
by Thompson-Ramo-Wooldridge (TRW), and the
Electric Storage Battery Company (ESB). Table 1
shows the firms listed on the New York Stock Exchange who have taken the same step since the beginning of 1968.
Name changes of this type raise an interesting
issue. A corporation is, by definition, an impersonal
form of organizational structure which from its inception faces the considerable task of building a
corporate identity. It may spend millions of dollars
to establish its image with members of the various
publics with which it deals, not in the intimacy of
personal contact, but at arm's length. This image
73
Marketing Notes and Communications
TABLE 1
COMPANIES LISTED ON THE NEW YORK STOCK
EXCHANGE WHICH HAVE ADOPTED INITIALIZED
NAMES, JANUARY, 1968—MAY, 1969*
Initialized
Name
ARA Services
BHM Industries
CPC International
GAC Corp."
GAF Corp.
INA Corp.*IPL Inc.
LFC Financial
MGIC Investment
PPG Industries
RCA Corp.
SCOA Industries
UGI Corp.
USM Corp.
VF Corp.
Former Name
Automatic Retailers
of Amer.
Buckingham Corp.
Corn Products Co.
General Acceptance Corp.
General Aniline & Film
Insurance of N. America
International Packers
Lytton Financial
Mortgage Guaranty
Insurance
Pittsburgh Plate Glass
Radio Corp. of America
Shoe Corp. of America
United Gas Improvement
United Shoe Machinery
Vanity Fair Mills
Date of
Change
3-69
5-69
4-69
7-68
4-68
-68
5-68
-68
8-68
4-68
5-69
5-69
7-68
7-68
4-69
'Various sources.
"As holding companies.
represents the unique meaning of the corporation
to these publics, and it is created through the continuous association of the firm's name with the activities in which it is engaged.
While a name change of any sort tends to diminish
the strength of this association, it is the author's
contention that the replacement of a corporate name
by initials can hinder marketing communication efforts and make the job of rebuilding the association
particularly difficult. This paper considers (1) several reasons why firms adopt initialized names; (2)
the deficiencies of this approach in terms of the
findings of information theory and psychology; and
(3) suggested alternative name-changing strategies.
Reasons for Initialization
One of the most obvious reasons for a corporate
name change involving initials is a complete change
of corporate function arising from the abandonment
of the firm's original purpose. For example, AJ Industries was formerly Alaska Juneau Gold Mining.
It is now a diversified manufacturing corporation
making everything from airplane drop tanks to
water filtration systems.
A second and related reason for the initialization
of corporate names is that the company, through
merger or acquisition, has diversified to the point
where its original name would be an inappropriate
description for all of its present activities. UMC
Industries is an example of this. Formerly Universal Match Corporation, and still engaged in match
production, its activities have grown to embrace
various aspects of vending machine manufacturing
as well as the production of casting materials.
A third motive for the conversion of corporate
names to initials lies in the awkwardness or difficulty
of verbalizing long corporate names. This may well
have been the reason for changing Thompson-RamoWooldridge to TRW, and Smith-Corona-Marchant to
SCM. Unlike the preceding examples, the original
names of these two companies contained no inherent
suggestion of an outmoded corporate function.
It would be reasonable at this point to raise the
issue of companies such as G.E., IBM, and A.T. & T.
which make frequent use of initials in their communications with the public but which, nonetheless,
have been successful in maintaining their corporate
identity. While these examples seem to contradict
the point the author is making here, a little refiection
shows two factors to be in operation. First, these
companies still retain their full corporate name, and
frequently use the initials as a complement rather
than a substitute for this name. Both name and
initials often appear together in the companies' advertising and are mutually reinforcing. The second,
and perhaps more important factor that fosters the
successful use of initials by these firms is that
they are major or dominant firms in their industries.
They are not in the same position as corporations
striving to attain or maintain an identity of their
own in the shadow of dominant firms.
Deficiencies of Initialized Names
Regardless of the reason for adopting a new corporate name, if the initialized name is to play an
effective role in the firm's promotion efforts it should
possess two basic attributes. First, it should be
distinctive. This prevents confusion by making it
easier for actual and potential customers to differentiate the company name from those used by other
firms and institutions. Second, it should be memorable in the sense of being easily learned so that it
may be more readily associated with the image of
the company.
Unfortunately, the change to an initialized corporate name is likely to lead to the unwitting sacrifice of both distinctiveness and memorability because
the resulting trigram (or, more rarely, two or four
letters) has (1) low redundancy, (2) low pronounceability. and (3) lacks inherent meaning.
Low
Redundancy
The concept of redundancy is concerned with the
extent to which additional symbols result in added
information. Perfect or 1009^ redundancy exists if
symbols occur in a regular sequence such that knowl-
• ABOUT THE AUTHOR. Laurence P.
Feldman is assistant proiessor of marketing at the University oi Illinois, Chicago Circle. He received his BSBA and
MBA at Washington University. St.
Louis and his PhD irom the University
oi Minnesota. Proiessor Feldman has
published in the lournal ot Retailing.
The author wishes to thank Proiessor
Robert E. Weigand ior his helpiul
comments.
t^KSTT
74
Journal of Marketing, October, 1969
edge of the preceding symbols permits the perfect
prediction of the next one; for example ABABAB.
. . . On the other hand, zero redundancy exists
when all symbols have an equal probability of occurrence, such that knowledge of prior symbols gives
no clue to the occurrence of the next one.*
Consider for example, the two insurance and finance groups which have recently adopted the names
CNA and INA, respectively. The low redundancy
of these names means that a loss of only one letter
in transmission would make them indistinguishable.
Furthermore, knowledge of the way English words
are constructed would not help one to deduce the
missing letter if only C-A were received. On the
other hand, it would be relatively easy to complete
"Continental National American" and "Insurance of
North America" even if sizeable portions of each
were lost in transmission. In addition, it would be
easy to distinguish one from the other.
Considering that much marketing communication
takes place amid the "noise" of competitors and
others vying for the attention of the audience, the
low redundancy of an initialized name tends to reduce recognition and promote confusion.
or associative value of a trigram, the harder it is
to memorize and retain it.*
Thus a firm which adopts a new name consisting
of its initials or stock trading symbol may announce
the event to its customers and shareholders and sit
back assuming a fait accompli. However, on the basis of the evidence with respect to the redundancy,
pronounceability, and meaningfulness of the resulting trigrams, it is likely that the effectiveness of
the firm's marketing communications program will
be diminished.
Pronounceability
In addition to their low redundancy, most initialized corporate names form digrams or trigrams
(pseudo-words) which are unpronounceable unless
spelled out; for example CPC, MGIC, PPG. This
also has certain implications with respect to ease of
recognition of these names. Gibson, et al., in two
experiments regarding the importance of pronounceability to word recognition, found that easily pronounceable words were recognized more often.^ In
addition to aiding recognition, it has been found
that pronounceable trigrams are memorized for
longer periods.'
These findings suggest that conversion of corporate names into initials tends to render them less
recognizable and less memorable to their intended
audience than names which are more pronounceable.
Strategies Based on Carryover
The first strategy could be characterized as the
"brute force" approach. The firm using this strategy
adopts initials under the assumption that there is
some carryover from the original name and that
with the expenditure of sufficient time, money and
effort, the public can be taught the meaning of the
new name. This was the approach taken by TRW in
their advertising campaign "Is TRW a sportscar
. . . (airplane, etc.)?" The intent is to build an
association in the minds of the audience between the
producer of a diverse product line and a group of
letters which are both unpronounceable and without
inherent meaning. While success is not impossible,
the difficulty of discriminating the new corporate
name (from that of a new sportscar, for example)
tends to reduce its chances.
A second strategy that is likely to be much more
effective, where circumstances permit, is to retain
most of the full company name, dropping only that
part which has become obsolete. For example, GeorgiaPacific Plywood Company became Georgia-Pacific
Corporation, and Canada Dry Ginger Ale, Inc. became Canada Dry Corporation."*
A third approach is to combine letters or groups
of letters from the present company name into an
acronym. This approach is not new. For example,
Philco was once Philadelphia Storage Battery Com-
Lack of Inherent Meaning
With rare exceptions, of the type exemplified by
IBM, corporate initials have little or no inherent
meaning. In fact, the task of imparting meaning to
them is a major focus of the firm's promotion efforts.
However, evidence shows that the lower the meaning
1 Fred Attneave, Applications of Information Theory
to Psychology (New York: Henry Holt and Co.,
1959), pp. 13-14.
2 E. J. Gibson, A. Pick, H. Osser, and M. Hammond,
"The Role of Grapheme-Phoneme Correspondence in
the Perception of Words," American Journal of Psychology, Vol. 75 (December, 1962), pp. 554-570 at
p. 562.
3 W. A. Bousfield and T. M. Cowen, "Immediate Memory Spans for CVC Trigrams," Journal of General
Psychology, Vol. 70 (April, 1964), pp. 283-293 at
p. 288.
Name Changing Strategies
There are several strategies available to a corporation considering a name change. Essentially these
fall into two categories. First there are strategies
which utilize some aspects of the present name. The
presumption here is that the result will be some
image transfer from the old form to the new. Second,
there are strategies which completely abandon the
old name, either because they no longer wish to be
identified in any way with the activities associated
with it, or because the advantages of the new name
outweigh those accruing from a loss of carryover.
•• For a comprehensive summary of numerous studies
relating to this subject see: Albert E. Goss and Calvin F. Nodine, Paired-Associates Learning (New
York: Academic Press, 1965), especially Chapter 2.
5 George Rood, "Companies Try for Catchier Names,"
The New York Times (May 7, 1963), pp. 57 and
68, at p. 68.
75
Marketing Notes and Communications
TABLE 2
COMPANIES LISTED ON THE NEW YORK STOCK
EXCHANGE WHICH HAVE ADOPTED ACRONYMIC
NAMES, JANUARY, 1968—MAY, 1969"
Acronymic Nam^
AMBAC
Ancorp National
Services, Inc.
Easco
Ebasco
Insilco
Interpace
Marlennan"
Westvaco
Date of
Change
American Bosch Arma
5-68
American News Co.
Eastern Stainless Steel
Electric Bond and
Share Co.
International Silver Co.
International Pipe &
Ceramics
Marsh & McLennan
West Virginia Pulp
& Paper
5-69
4-69
5-68
4-69
4-68
4-69
3-69
'Various sources.
"As holding company.
pany, and Genesco was formerly the General Shoe
Corporation. Table 2 gives the names of companies
listed on the New York Stock Exchange who have
utilized this strategy.
However, some company names do not lend themselves to acronymic abbreviation, either because of
the structure of the name or because the resulting
acronym has some unfortunate meaning. This problem can be solved by modifying the acronym in some
distinctive manner. ABEX, formerly the American
Brake Shoe Corporation, is a good example of this
approach (merged into Illinois Central Corporation,
1969). Citgo, formerly Cities Service Corporation,
is another.
There are several advantages to the names generated by the last three strategies. All have some
redundancy which makes them distinguishable from
names of other companies, although the redundancy
is more circumscribed in the case of an acronymic
approach. All are pronounceable, and because of
this are likely to have a higher associative value. In
addition, the carryover from the names which they
replaced is desirable because it helps to facilitate
the maintenance of continuity of corporate identity
over time.
Strategies of Complete Abandonment
There are several other strategies which might be
followed. One is to abandon the original company
name altogether in favor of a new one which is
completely synthetic. This course of action leads to
names like Chemetron Corporation, formerly National Cylinder Gas Co. or, more recently, Sybron
(from a merger of Ritter Pfaudler Corp. and Taylor
Instruments Co.). Names of this type strongly resemble acronyms and possess all of their advantages
except that of corporate carryover.
Finally, the company might adopt a completely
new name which is not synthetic. An example is
the recent transformation of the former Rexall Drug
and Chemical Corporation into DART Industries.
This particular example is unusual in that the company was apparently renamed after the Chairman
of the Board. Clearly, the carryover in this name is
non-existent, perhaps intentionally so. However, here
again the name meets the criteria which should help
to facilitate, rather than impede, the firm's promotion efforts.
Conclusion
In an era characterized by merger and diversification, it is difficult to determine what the size and
scope of a company's marketing activity will be
five or ten years from now. These environmental
factors suggest that an increasing number of companies will be faced with a name-changing decision.
These factors also make it more important than ever
that firms considering a name change do so under
the assumption that the new name will be a salient
factor in their marketing program. Given the large
number of alternatives, choice of initials may be the
line of least resistance, but the re.sult is likely to
be a detraction from the total marketing effort of
the firm.