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Category: Brand Licensing

Brand Licensing

Risks Rewards And Brand Extensions

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What To Consider For Strategic Brand Extensions

What do you do if you’re one of the world’s most famous lighter companies and the number of smokers is dropping? If you’re Zippo, you look for ways to capitalize on your ‘cool’ image and extend your brand into products ranging from watches to leisure clothing.

Zippo hit its zenith around the mid-1990s with 18 million lighters a year. In 2011, that figure dropped to around 12 million lighters a year and the hunt was on for products that were, in the words of president and chief executive Gregory Booth, “rugged, durable, made in America, iconic”.

It seems to be a standard operating procedure these days. Brands hit a certain scale and then look to diversify in order to fish in other waters, or else, their iconic products hit their use-by date and they start looking for ways to sweat their assets, or someone brings a brand back from the dead and looks to add product lines to what they hope is its revitalized equity.

Sadly, many of these diversifications and extensions don’t strike us as strategic. They are reactions or speculations – planned perhaps, but reactive or speculative nevertheless. And like all sequels to the original story, some will work but many will simply not live up to the original.

Simply attaching a brand to a catalog of goods does not guarantee success. Diversification has to make the brand stronger, more relevant, more accessible – not just look to draw on the existing equity in order to cast a wider net.

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Brand Licensing

Should You Extend Your Brand Via Licensing?

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Apple Brand Licensing Strategy

Companies extend their brands via licensing for a variety of reasons. Licensing enables companies with brands that have high preference to unlock their brands’ latent value and satisfy pent-up demand. Through licensing, brand owners have the ability to enter new categories practically overnight, gaining them immediate brand presence on store shelves and often in the media. Let’s take a deeper look at the benefits that make licensing so attractive to brand owners.

By licensing their brands, companies are able to satisfy consumer needs in categories that are not core to their business. When Apple launched the iPod a number of years ago they revolutionized the way in which people listen to their music. The iPod was so successful that its quick acceptance created an immediate need for accessories such as armbands, adapters and auto chargers. Apple could have chosen to manufacture and distribute these accessories themselves. Instead, Apple decided that these accessories were not core to their business expertise and therefore chose to satisfy the need through licensing. By licensing the iPod brand, Apple enabled a tremendous number of companies to produce all kinds of terrific products to make the iPod more user-friendly and to enhance the listening experience. Examples of licensed products for the iPod include the Bose Sound System with iPod docking station, the Nike+ running shoe, auto adaptor kits, armbands and many other products. All of these accessories are sold by licensees.

Some licensors see licensing as an opportunity to “test” the viability of a new category without having to make a major investment in new manufacturing processes, machinery or facilities. In a well-run licensing program, the brand owner maintains control over the brand image and how it’s portrayed (via the approvals process and other contractual structures), positioning itself to reap the benefit of additional revenue (royalties) and brand exposure through product displayed through new channels and incremental shelf space. For example, Rubbermaid gained additional revenue and brand presence by licensing kitty litter containers that are sold in the mass channel core to Rubbermaid, and specialty pet shops core to United Pet Group, the licensee.

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Brand Licensing

Brand Licensing: The Next Bad Idea?

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Brand Licensing Strategy Vespa

I sipped my espresso and waited nervously for her. The warm Italian sun was streaming into the café window and I savored the Milanese evening.

In the distance I spotted her little Italian scooter heading my way. She pulled up to the curb, nonchalantly dismounted and tossed her hair to one side. Entering the café she fixed me with a wide smile and strode confidently my way. We embraced and I looked deep into her smoldering Roman eyes. “What is that smell?,” I asked her.

“It’s my Vespa,” she said breathlessly.

It might sound like bad fiction but it is a reality. Piaggio, the Milan based manufacturer of the iconic Vespa brand of scooters has diversified into the perfume business. The brand has extended across a range of fragrances, each carrying the Vespa name.

We should pause at this stage and enjoy just how ridiculous this whole idea is. Vespa is a strong and, these days, very healthy brand with global awareness and attractive associations with Italy, freedom and the magical hedonism of ‘la dolce vita’. But it is also a small machine with a smelly 50cc four-stroke engine. Any brand extension in the olfactory area will always be hampered by associations with the exhaust fumes that emanate from below rather than the extrovert vibes experienced above.

Clearly, Vespa perfume is already destined for the giant dumpster of dumb brand extensions where it will take its rightful place next to Levi’s suits and Bic underwear. But surely the executives at Piaggio, who have done a superb job in recent years of rescuing and restoring the Vespa brand, are smart enough to realize that their new perfume concept smells bad from the start?

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Brand Licensing

Event Licensing Strategy

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Hello from Sochi, Russia. The Blake Project is here in support our client, The Coca-Cola Company, – we have been guiding their brand licensing efforts for these games. The assignment is at the intersection of brand licensing and event marketing a place where more marketers and brands should be paying closer attention.

Some are. More and more companies are choosing to sponsor events. They understand the connection between fans and events and wish to take advantage of the positive associations that consumers and fans get from attending events. When a company becomes intertwined with an event, as occurs with a long-standing sponsorship, that company name becomes synonymous with the event. This type of relationship creates powerful brand cohesion. NASCAR fans only know their championship as the NASCAR Sprint Cup. To not include the Sprint name in the title would be to omit part of the title. NASCAR fans appreciate the role the Sprint Nextel Corp. has played in supporting their sport. For this support, fans reward Sprint Nextel by buying their cellular phone products.

However, Sprint Nextel’s NASCAR product line does not extend beyond the cellular phone category. Wouldn’t it be great if Sprint Nextel created a complete line of NASCAR merchandise? If you don’t agree, keep reading. There is a huge opportunity waiting to be tapped if executed properly. For this reason Sprint Nextel should consider creating an event licensing program that compliments their existing Sprint Cup event marketing program.

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Brand Licensing

Brand Licensing And Brand Equity

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Branding Strategy Insider readers know, we regularly answer questions from marketers everywhere. Today we hear from Laura, a Marketer in New York, New York who writes…

“What is brand licensing and what is its effect on brand equity? Please give me a general overview.”

Thanks for your note Laura. Let’s take it from the top. The stronger a brand’s reputation, the higher the value of the brand and the greater revenue it will drive for its owner. Prospective licensees seek to license brands with the strongest reputation, as these are the brands consumers demand and retailers prefer most. The stronger the brand, the higher likelihood retailers will buy the licensed products and that they will be subsequently purchased by consumers. Brand loyalists and advocates look to their preferred brands to deliver more and better products year after year. When this occurs, the brand gains permission to extend into categories that complement its original offering. This is known as brand extension.

For example, the Mr. Clean brand, owned by P&G, was launched in 1963 as the first household liquid cleaner. Over time, the brand gained a strong reputation for its ability to clean effectively on a variety of surfaces. By delighting its consumers, Mr. Clean built significant brand loyalty and allegiance. When asked, consumers told the Mr. Clean brand team that they expected the Mr. Clean brand to offer additional products that simplified and enhanced the household cleaning experience. To satisfy these consumers, Mr. Clean developed a line of branded mops, brooms, and brushes.

These products were met with enthusiasm and eventually, consumers demanded even simpler and more effective ways to clean their homes. Today, the Mr. Clean brand can be found on an expansive list of products including scrubbing tub and shower pads, Magic Eraser cleaning pads, auto dry car wash systems, multi-surface disinfecting wipes, rubber gloves and many other products. Many of these Mr. Clean products are licensed. By owning a brand that can be extended into numerous categories, companies are able to attract and retain multiple prospective licensees. Using licensing to augment internal resources actually accelerates a company’s overall time to market.

Brand Equity and Extendibility

Companies that know their brands well will have a good understanding of the equity of each brand. A brand’s equity is derived from the awareness and image a brand holds with its consumers. Often brand managers will leverage a brand’s equity to enter or extend their brands into new product categories to help drive strategic growth for the company. For example Crest extended its brand from toothpaste into whitening. Before Proctor & Gamble (P&G), who owns the Crest brand, launched Crest Whitestrips, they conducted research to understand if the brand had ‘permission’ to enter into the retail whitening category, long held by established brands such as Rembrandt and Aquafresh.

P&G wanted to find out if consumers would expect Crest to offer a whitening product and if so, purchase this new product based on their preference for the Crest brand. As many of us are aware, Crest Whitestrips have performed well in the marketplace, achieving high rankings and advocacy ratings. While P&G decided to enter the whitening category by sourcing the product overseas and distributing globally, they could have chosen either to manufacture it themselves or enter the market through licensing and have their licensee manufacture and distribute the product.

In the case of Mr. Clean, P&G discovered that consumers expected the company to offer cleaning accessories under the Mr. Clean brand. In this instance, they decided to enter the market by licensing the category to Magla, a company that already had expertise and presence in this category. When we say that P&G entered the cleaning accessories category through licensing, we mean that P&G allowed Magla, a manufacturer of cleaning accessories, to use the Mr. Clean brand in exchange for a licensing fee.

Best in class brand licensing programs are designed with a highly strategic process that aligns the meaning of your brand with the licensed brand. In other words, if the alignment is not there strategically you do not do the deal.

Laura, you can find more on brand licensing here.

Have a question related to branding? Just Ask The Blake Project

Sponsored by: The Blake Project’s Brand Licensing Audit

Join us at The Un-Conference: 360° of Brand Strategy for a Changing World
May 6th and 7th, 2014 in South Beach, Florida
A unique, competitive-learning workshop limited to 50 participants (Selling Out Quickly)
As in the marketplace — some will win, some will lose, All will learn
~In Partnership with the American Marketing Association and the Miami Marlins~

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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