The Role of Informative Names in Niche Dynamics and Product Survival in a High‐Velocity Industry

Abstract

AbstractHow do customers discover new products? Recent research has found that a firm can facilitate the discovery and subsequent purchase of its product by giving it an advantageous name. However, no product exists in isolation, rather it competes for customer attention with other products both within and across product niches. We theorize that a product may benefit from the names of competitors’ products within its niche because certain product names can trigger a positive spillover effect. Specifically, product viability should increase with the proliferation of products with informative names in a focal niche because informative names attract attention to the niche, and consequently benefit all its products, regardless of whether they have informative names or not. This beneficial influence should be especially strong when a niche is new. Additionally, a product's market fate may depend not only on the prevalent naming practices in its niche, but also on naming practices in competing niches. We find support for our theorizing in event‐history analyses of all CD‐drive products shipped in the worldwide optical disk drive industry, 1983–1999. Ultimately, our findings suggest that in high‐velocity markets, to facilitate product discovery by customers, firms should enter niches populated by products with informative names.