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Also known as a trading name, a trade name is an identification that is used as the public name of a business or product. Trade names may be different from company names used as part of the incorporation process, or the registered names of products produced by a business. In some cases, the use of a trade name is restricted, but often the term is not trademarked, and is considered to be in the public domain.
Businesses often make use of trade names as part of their overall marketing strategy. When this is the case, business operations may be incorporated under one name, but do business under another name. For example, a large corporation may be incorporated as “Apple, Inc.,” but do business as “Seed City.” Often, the idea behind using trade names is not to confuse consumers, but provide them with a company name they can remember and identify with, thus making the process of reaching those customers much easier.
Many companies see the value in trademarking their trade names. As those names become well-known, competitors may attempt to gain control of an unprotected trade name, and utilize the familiarity of the name for their own profit making ventures. In addition, even though the incorporated name of the business is used in contracts and other legal documents, it is not unusual for trade names to be included in the text. When this is done, the process usually calls for listing the incorporated name first, followed by “d/b/a” or “doing business as,” and finally the trade name.
Along with business names, trade names may also refer to the goods and services that are marketed in different sectors of the consumer market. This is often the case when the registered name for the product is not one that consumers are likely to recall with relative ease. In this scenario, the trade name is likely to have some similarities to the registered name, but will be much easier for anyone to remember. Pharmaceutical companies often employ this approach, with a classic example being the use of the term “aspirin” to refer to a product that has a chemical name of acetylsalicylic acid.
Creating and launching trade names often involves utilizing at least some marketing research. Test groups composed of consumers from key markets are asked for their opinions about the names under consideration, including how easy consumers find it to remember each name, and whether or not the name is appealing and likely to motivate people to look closely at the company or product. If a particular name seems to have significantly more appeal overall than the others, there is a good chance that the name will be selected for use.
During the 20th century, the use of trade names became much more common. In many instances, the phenomenon had to do with the expansion of businesses into international locations. If the incorporated or registered name for a company or a product did not translate well into the local language, a trade name that would attract consumers within that country would often be created.