What's In A Name? The Strategic Value Of Strong Trademarks

“What's in a name?” That which we call a good, by any other name, would it be as valuable? Conceiving a trademark is much like crafting a poem – it should be original, distinctive, and memorable. Like Shakespeare's language, a strong mark stands apart from the ordinary, commands attention, and endures because it is unlike anything else.

Trademarks are more than legal protections or marketing tools; they are strategic business assets that function as company equity. A strong, well-developed trademark embodies consumer trust, market reputation, and commercial goodwill, often representing a significant portion of a company's overall valuation. When properly created and protected, trademarks become powerful drivers of competitive advantage and long-term enterprise value.

For many businesses, the brand value embedded in trademarks rivals, or exceeds, that of physical assets. Yes, an intangible word can exceed physical assets in value! Yet, trademarks are frequently underleveraged and instead treated as administrative necessities rather than value-generating assets.

But the catch is that not all trademarks contribute equally to enterprise value. “Some are born great, some achieve greatness.” Trademarks that are unique are best positioned to accumulate goodwill and serve as reliable indicators of source. By contrast, marks that are ordinary terms in the field, highly descriptive, or broadly used may face limitations that make it harder for them to build recognition and retain value over time.

What is a Strong Trademark?

Strong trademarks are typically made-up words or terms that have no inherent meaning in relation to the goods/services or common words that are used in an unexpected or unrelated way. Because made-up and random marks do not describe what the product is or does, they are immediately capable of identifying a single source and are easier to protect under trademark law.

Made-up/invented words, such as:

• Kodak – simply invented from various letters of the alphabet and using the inventor's favorite letter “K,”
• Nabisco – comprised of the first few letters of each word in “National Biscuit Company,” and
• Exxon – a computer-generated, meaningless name

all start with no prior meaning at all. Any association they gain comes entirely from the company's use, marketing, and the consumer experience, allowing the trademark to become a powerful container for goodwill. At this point, “all the world's a stage.”

Common terms used in an unexpected way (familiar words used in a context that has nothing to do with their ordinary meaning), such as:

– Apple for computers,

– Amazon for online retail,

– Shell for gasoline,

– Dove for soap and for chocolate, and

– Camel for tobacco

are all strong because the words do not describe the products; instead, they function solely as brand identifiers.

By contrast, words that describe a product's features, ingredients, or purpose require greater effort to educate consumers and are more limited in their ability to distinguish a single source. Made-up and arbitrary terms, on the other hand, begin their life uniquely tied to one company, which is why they are more likely to develop lasting recognition, legal strength, and enterprise value over time.

Name for Value, Not Just Clarity

Businesses often gravitate toward descriptive names because they seem clear and intuitive, especially at launch. Descriptive terms tell customers exactly what a product or service is. However, this instinct usually works against long-term brand value. Descriptive names are harder to protect, easier for competitors to use (and want to or need to use), and less effective at identifying a single source. As a result, any goodwill the business builds is harder to capture and defend. Conversely, made-up or arbitrary names may require some initial education, but they are far more effective over time. They distinguish the business, support enforcement, and allow brand value to compound as the company grows. Over time, consumers identify the made-up word as pointing uniquely to your brand – it becomes a recognized term and no longer appears invented. This outcome reflects the height of trademark strength. “There is nothing either good or bad, but thinking it makes it so.”

The practical consequences of these naming choices become most apparent when trademarks are viewed not as labels, but as long-term drivers of enterprise value.

Trademarks as Drivers of Enterprise Value

At their best, trademarks function as containers for goodwill. They capture customer experience, reputation, and trust built over time, creating value that compounds with consistent use and strategic investment. Unlike short-term marketing campaigns, strong trademarks anchor enterprise value for decades, persisting even as products evolve or markets shift. “Suit the action to the word, the word to the action.”

The ability of a trademark to drive enterprise value depends heavily on its strength. Marks that are less distinctive or closely resemble others in the marketplace may struggle to create clear associations in consumers' minds. When a mark does not consistently signal a single source of goods or services, its ability to capture and retain goodwill is naturally constrained, regardless of marketing spend. “Our doubts are traitors.”

Strong trademarks can:

• Capture accumulated goodwill, trust, and market recognition A strong trademark represents the sum of customer experiences associated with a brand. The Nike name and Swoosh logo, for example, immediately convey performance, innovation, and credibility, which is value built over decades. This goodwill exists independently of any single product line and continuously reinforces consumer preference.
• Create meaningful differentiation in commoditized markets In markets where products are functionally similar, trademarks often become the deciding factor. Bottled water brands like Evian and Fiji distinguish themselves not through the product itself, but through trademark-driven perceptions of quality and lifestyle.
• Enable customer loyalty that outlasts individual products Strong trademarks allow companies to introduce new offerings with built-in trust. Apple customers routinely adopt new product categories because the Apple brand itself signals quality, design, and reliability, often before consumers fully understand the product's features.
• Support pricing power and margin stability Strong trademarks support premium pricing and margin stability, both through product sales and licensing revenue. Starbucks, for example, commands higher prices not because of raw ingredients, but because its trademark represents a consistent, valued experience.
• Persist through business cycles and leadership changes Unlike executives or product strategies, trademarks endure. Companies such as Coca-Cola have weathered economic downturns, leadership transitions, and shifting consumer tastes while retaining immense brand value rooted in their core trademarks.

Relevance Beyond Customer Loyalty and Trust

Trademarks reduce friction in the marketplace by clearly communicating source and quality. When a mark is recognizable and distinctive, it functions as a shortcut in consumer decision-making. Marks that lack familiarity or clarity may require greater effort or investment to achieve the same level of confidence and recognition.

The influence of trademarks extends well beyond consumer perception. Well-managed trademark portfolios reduce risk, increase efficiency, and shape how investors, lenders, and acquirers evaluate a business. “So long lives this, and this gives life to thee.”

• Reduce friction in purchasing decisions Consumers rely on trademarks as shortcuts in decision-making. Strong marks accelerate purchasing decisions. Less established marks can slow decision-making and weaken repeat engagement.
• Lower customer acquisition costs and increase lifetime value Recognizable trademarks reduce long-term marketing spend because customers actively seek out the brand. This recognition drives organic demand and repeat business.
• Signal operational maturity to investors Investors often view strong trademark portfolios as indicators of discipline, scalability, and risk management. Startups with registered, consistently used trademarks demonstrate readiness for growth and long-term planning.
• Influence deal structure and valuation in M&A In mergers and acquisitions, trademarks with high recognition or licensing potential can greatly increase valuation. When Meta acquired Instagram, much of the company's value stemmed from brand recognition and user trust embodied in its trademark rather than its physical infrastructure.
• Drive enterprise valuation as intangible assets Trademarks are routinely treated as high-value intangible assets in corporate transactions. When Kraft acquired Cadbury for nearly $19 billion, a significant portion of the premium reflected Cadbury's iconic brands (such as Dairy Milk) each representing decades of goodwill, established market share, and global recognition.

Unlocking the Full Value of Trademark Assets

Despite their importance, trademarks are often treated as mere legal filings. Companies that unlock their full value instead manage trademarks as living assets that support growth, revenue, and strategic flexibility.

Marks with limited distinctiveness or inconsistent use can constrain opportunity. They may be harder to enforce, less attractive to license, and less likely to be reflected meaningfully in valuation, ultimately reducing the return on brand investment.

One of the clearest ways strong trademarks generate revenue is through licensing.

• Generate high-margin revenue through licensing and partnerships Well-recognized trademarks can be monetized without expanding manufacturing, headcount, or geographic footprint. Companies like Disney and the NFL generate substantial revenue by licensing trademarks across media, merchandise, and experiences.
• Command higher royalty rates and attract stronger licensees Trademarks with established recognition command higher royalty rates because they bring built-in consumer demand. Licensees are willing to pay a premium for marks that reduce market-entry risk and fast-track time to profitability.
• Support financing, collateralization, and long-term planning Trademarks can be independently valued, pledged as collateral, and leveraged in financing transactions. Businesses with well-documented trademark portfolios are better positioned in negotiations with lenders and strategic partners.
• Preserve value through enforcement and brand consistency Failure to monitor and enforce trademarks can lead to dilution over time. Luxury brands such as Louis Vuitton enforce their marks aggressively to maintain exclusivity and pricing power.
• Enable global expansion and scalability Strong trademarks lower barriers to international growth by facilitating franchising, distribution, and partnerships. McDonald's golden arches are recognized worldwide, enabling rapid and consistent global expansion.

A Necessary Shift in Mindset

“To thine own self be true.” To fully realize trademark value, organizations must rethink how brand assets are conceived and managed internally. Trademarks function most effectively as equity when legal, marketing, and business leadership operate in alignment.

• Manage trademarks with the discipline applied to capital assets Like physical assets, trademarks require monitoring, investment, and strategic oversight to maintain and grow value.
• Encourage cross-functional collaboration The strongest brands emerge when creative vision is supported by legal protection and business strategy, avoiding missteps such as unprotectable names or inconsistent use.
• View enforcement as an investment, not a cost center Consistent use and enforcement strengthen trademarks over time, making them more defensible, recognizable, and valuable.

Looking Ahead

“Be not afraid of greatness.” Trademarks that are recognized, remembered, and trusted function as enterprise assets, carrying goodwill and supporting long-term value creation. As intangible assets continue to dominate enterprise valuation, trademarks will play an increasingly central role in competitive advantage. Companies that treat trademarks as equity, and manage them accordingly, are better positioned to scale, attract investment, and achieve stronger outcomes in an increasingly brand-driven marketplace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.