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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.

Zippo was strategic in how they extended their brand. They spotted the problem well ahead of time and planned carefully for the transition. They made sure that whatever they did had line of sight with their on-going story, rather than on depending on recognition alone. And they are enjoying their best years ever.

If you’re tempted to go down this route yourselves for any of the reasons mentioned above, here’s our questions:

  • If you introduce this new line as part of your brand, what are you asking the consumer to believe?
  • Is that a reasonable belief? Will it make sense for them? Does it extend what they already believe about you?
  • Will it intensify the loyalty that your customers have for the brand?
  • Why are they going to believe your new story over the story they’re already hearing from another brand for whom that product line is core business?

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2 Comments

Pete Canalichio
Twitter: petecanalichio
on June 08th, 2015 said

Mark poses a number of important questions when considering a brand extension. Some others to consider include:

• Does the brand have the consumers’ permission to enter the category?
• Does the category support the brand’s position and promise?
• Does the brand bring a competitive advantage to the category?
• Will any negative associations with the extension hurt the parent brand?
• Will any negative associations with the parent hurt the parent?

In the case of Zippo, I would like to understand better their brand position. Is it about being “rugged, durable, made in America, iconic”? Why would a Zippo product need to have any of these attributes if it is intended to be disposable? It seems to me that is their core equity and that any extension should meet that litmus test first. Does anyone else agree? While being iconic or made in America are lofty goals for any brand, being rugged and durable almost smack in the face of Zippo’s primary attribute of being disposable. Good brand stewards can help consumers avoid this the kind of confusion by ensuring the attributes of their brand reinforce the brand’s position and promise.

Mark Di Somma
Twitter: markdisomma
on June 08th, 2015 said

Great questions Pete. Thanks for sharing.

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