Firms by Other Names Are Seldom as Sweet

It’s official: People hate the name Allegis.

Also Unisys, Navistar, Primerica, Nynex, USX and just about any other corporate name that sounds like it was cooked up by a NASA computer.

According to a new survey, consumers who know these names rank the companies low in esteem. Worse still, most consumers have never heard of them. They have heard of the companies that Allegis, Unisys, et al, used to be, and they like the old names a lot more than the new.

Landor & Associates, a San Francisco-based graphic design and name consulting firm, found in its survey that even after several years of exposure, newly coined corporate names--Landor calls them “meaningless names”--were slow to catch on.

Allegis No, United Yes

The company interviewed 1,000 people at random in shopping malls across the country, asking them to rank 672 names in terms of their recognition and the esteem they have for the companies.

Allegis was a major dog: It ranked in the bottom 5% in both categories. Conversely, United Airlines--Allegis’ largest subsidiary--ranked in the top 15% in awareness and the top 5% in prestige.

Allegis recently changed its name back to UAL Corp., although a spokesman, Joe Hopkins, said that the decision wasn’t related to consumer confusion or preference. Rather, he said, the change reflected UAL’s strategy of focusing on its airline business.

Similarly, USX--nee U.S. Steel Corp.--changed its name two years ago to reflect its diversification into the oil and gas business, and to more closely identify its name with its stock-ticker symbol, X. But consumers ranked the new name in the bottom 5% of the survey, while U.S. Steel scored in the top half.

USX’s reply: Give the new name time. “You have to remember that U.S. Steel was around for 85 years, and USX has been around for only the last two,” said Bill Keslar, a company spokesman.

USX’s name change is one among dozens that occur each year, mostly among middle and smaller-size companies. With an explosion in merger and acquisition activity, name consulting has become a $200-million-a-year business.

John Diefenbach, Landor’s chief executive, said a name change can help employee morale following a merger or boost a company’s general image following a restructuring.

But the cost of changing a corporate name--as much as $20 million a year, he estimated--isn’t justified when it destroys whatever good will the old name had.

Some Changes Help

“The unbelievable cost of changing a name makes one question why some companies bothered,” he said. “You have to wonder whether it’s (management’s) ego or naivete or both. Why not link your name to your heritage, or a meaningful association, rather than picking these nonsensical names?”

In fact, the survey found that some name changes helped to more closely identify a company with its most famous product or service. Consolidated Foods ranked near the bottom of the list, but its new name, Sara Lee Corp., ranked in the top 15% of the sample.

Allegheny Airlines was also a loser relative to its successor, USAir--a name selected by Landor.

Diefenbach pointed out that some companies with otherwise meaningless names have been able to establish an identity with a singular product--Xerox, for example, or Polaroid.

The technology reinforces the brand and company identity, and vice versa, he said.