Brand Licensing News

Bennetton Eyewear

WWD reports, that Benetton Group SpA has signed a license for Benetton and 

Sisley eyewear.

The collection for Benetton will bow in spring 2007 and the companies forecast 

that the license will generate annual sales of about 35 million Euro.

The license runs to 2013.

Benetton had eyewear licensees, most recently the Italian subsidiary of 

German Metzler.

The new licensee also holds licenses for Gianfranco Ferré, Les Copains and 

Vivienne Westwood.

Thursday, December 14, 2006 

Getting Beyond "Made in China"

Until lately, Chinese companies have essentially been following a 

business-to-business (B2B) model.

To compete internationally, they were satisfied with the combination 

of good products and low prices. 

For instance, the Chinese home appliance manufacturer Galanz Group, 

based in Guangdong, produces about 50 percent of the world`s 

microwave ovens sold under some 80 different brands.

The difference between a good corporate name - e.g., Lucky Skydust - 

and a brand is in the way it competes along emotional dimensions. 

On a jet engine, travelers might prefer the name GE, which connotes 

time-tested seriousness, over the made-up name Lucky Skydust.

The Chinese government is aware that, to conquer the hearts and minds 

of consumers, it will be necessary for China to master the art of branding. 

The People`s Republic has set aside a US$ 15 billion budget for acquisitions 

of companies and brands, preferably with a brand management team.

In 2005, for example, the Nanjing Automobile Group wanted to acquire 

the British car maker MG Rover Group for £53 million (US$ 100 million). 

The deal would include a brand portfolio including Austin, Morris, MG 

and many other illustrious car brands.

Do you remember the 80ies, when "Made in Japan" mostly meant 

"of poor quality"?

Ten years from now we expect to see Chinese brands among the top brands 

like Sony today.

Monday, November 06, 2006 

Courvoisier Fragrance Products

Businesswire reports, that the Cognac of Napoleon enters the fragrance arena

Beam Global Spirits & Wine Inc., a unit of Fortune Brands, today announces 

that its flagship cognac brand Courvoisier will enter the high-end fragrance market 

through the launch of Courvoisier L`edition Imperiale.

The gentlemen`s fragrance line debuts today at the Tax Free World Association 

Exhibition in Cannes, France.

Developed by a licensee, the collection will feature two classes of the fragrance; 

an eau de parfum and an eau de toilette variety.

Both will be available for purchase worldwide at high-end retail locations 

starting in the spring of 2007.

Courvoisier L`edition Imperiale targets 25-35 year old males who are ambitious, 

determined and desire to succeed. These individuals tend to be fashion conscious 

and believe that authentic premium brands, such as Courvoisier, 

are a symbol of success.

Tuesday, October 24, 2006 

Search for life in a Ghost Brand

The NY Times has an interesting article on what they call „Ghost or Orphan Brands", 

in other words brands, that are not used.

The brand is Bromo Seltzer, the effervescent antacid and analgesic that dates to 1888.
Its new owner will seek to revive interest in the moribund brand with a campaign 

centered on a mnemonic device, the "Bromo burp," that its creators hope 

will become a catch phrase.

Bromo Seltzer is among scores of consumer products known as ghost brands 

or orphan brands because they were once formidable powerhouses in their 

categories but are now forlorn.

The brands were forgotten or neglected by their owners, typically giant companies 

that market dozens of products, then used as cash cows to raise revenue 

for developing newer, often more advanced brands.

As reduced advertising spending hastens the slowing of sales for ghost brands, 

retailers relegate them to lower shelves or stop stocking them to cut clutter. 

That reduces sales further, contributing to a downward spiral that usually ends 

in the graveyard of discontinued products among casualties like Duz detergent, 

Kellogg`s Pep cereal, Oasis cigarettes and Plymouth cars.

Recently, owners of many ghost brands have been selling or licensing them 

to smaller, more entrepreneurial marketers that hope to revive them 

through a combination of advertising, price promotions and public relations.

One goal is to capitalize on the residual fame of the brands by reminding 

older consumers who bought or remember them that they still exist.

Another goal for those trying to bring back orphan brands is to pique 

the curiosity of younger consumers, particularly those looking for products 

from the past that they deem to have authentic heritage.

Such consumers have helped start unlikely comebacks for bygone brands 

like Pabst Blue Ribbon beer.

Indeed, the slightly rude nature of the "Bromo burp," to be featured 

in the brand`s new TV commercials, is intended to appeal to consumers 

for whom Bromo Seltzer is just a name on a clock tower in downtown 

Baltimore.

In addition to Bromo Seltzer, the ghost brands seeking second lives 

under new owners include once-familiar products like Aqua Net hair spray, 

Barbasol shaving cream, Close-Up toothpaste, Comet cleanser, 

Log Cabin syrup, Metrecal diet drinks, Niagara starch, Nuprin pain reliever, 

Prell shampoo and Swanson frozen foods.

Thursday, October 05, 2006 

Pushing the Limits of Extensions

Brandchannel.com has an interesting article about brand and line extensions:

In the marketing world, the Tide proliferation is known as line extension, 

and similarly, if Tide started making washing machines, it would be called 

brand extension.

It`s estimated that as of 2004, six percent of all new products launched 

each year in the US are in fact brand or line extensions.

While the practice of extensions is classic, today`s brand extensions 

can leave one`s head spinning.

Many attribute the plethora of extensions to being a more cost-effective means 

to stay in the mind of the consumer. A variation on advertising without resorting 

to using the same message in every instance.

But with over 30 (and counting) Oreo extensions created over the years,

not including the infamous Oreo Fun Barbie doll licensed to Mattel, 

just how relevant is the exposure, and is the consumer marketplace 

flat out oversaturated?

Is there too much out there?
There are plenty of opportunities and they are working, which is why more and 

more marketers are looking to brand extensions. Consumers find comfort in brands 

they`re familiar with - and are more comfortable with a new product 

from those brands.

Back in 1998, prior to Kraft`s acquisition of the beloved cookie brand, 

then-parent company Nabisco`s public relations department maintained 

that its core revenue was still derived from the Oreo cookie SKUs and 

that extensions were only a small segment of the revenue.

Fast forward to 2003, and the Wall Street Journal cited the ousting of 

Kraft`s co-chief executive Betsy Holden as the result of an "over-reliance 

on brand extending and lack of new products." 

The company had not profited from a new-brand success since the launch 

of DiGiorno Rising Crust frozen pizza in the mid-1990s. 

In the same article, industry professionals observed that Kraft had perhaps 

become too good at building brands, completely forgetting to create new ones.

Nonetheless, brand and line extensions are considered across the industry 

to be a vital part of growing the brand, particularly a mature one.
Business consultants McKinsey & Company recommended to consumer 

product companies in 2004 to develop product categories that 

"others have shunned" as an effective means for profitable growth. 

In the world of extensions, the danger lies in going too far with the model.

Extensions via licensing is a trend that continues to increase in the new 

millennium accounting for US$ 172 billion of retail sales worldwide, 

according to the Licensing Industry Merchandisers` Association (LIMA).

While licensing deals can be lucrative for both the licensee and licensor, 

they also have the ability to negatively impact a brand when there is 

a lack of creative and/or marketing management participation 

on the part of the licensing brand. 

If there isn`t one person who`s really controlling the quality of the product 

or the quality of the marketing and advertising, you can really hurt 

your brand and oversaturate the marketplace.

Thursday, October 05, 2006 

Top 10 categories of brand loyalty

WWD reports from a study by America`s research group:

Women covet their beauty brands.

Of the 10 products listed here, four are in personal care.

Female shoppers have a penchant for buying brand-name cosmetics, 

which translates to all beauty products, too, said Britt Beemer, 

chairman and founder of America`s Research Group.

The survey of 1,264 women who are primary household decision-makers 

also revealed that brand names matter even when it comes to 

daily sundries such as coffee or laundry product purchases.

1. Bath Soap

2. Health and beauty aids

3. Hair products

4. Soft Drinks

5. Mayonnaise

6. Laundry products

7. Hand and body lotion

8. Over-the-counter medicines/pain relievers

9. Coffee

10. Shoes

Thursday, October 05, 2006 

Kodak licensed Storage Products

KMP owns the exclusive global license to market CD-ROMs, DVDs, videotape 

and related media products under the Kodak brand name.

The company works to obtain the various products from manufacturers 

across the globe, according to Kodak`s minimum specifications, 

and then puts them on store shelves.

It has done so, with rapid success, by establishing and managing 

a wide network of sister companies and other distribution relationships 

from an office in the old button factory at 300 State St. in Rochester`s 

High Falls district.

Kodak decided to leave the business in connection with its historic transition 

from film to digital imaging, choosing instead a licensing arrangement 

with KMP that brings in a yearly royalty.

The name Kodak is powerful enough and so well-known around the world 

that it gives those products a leg up on competitors.

Thursday, October 05, 2006 

Top 10 Ad Icons of the Centur

 Adage reports:

Some of the best-loved ad images of the 20th century have names like 

Tony, Betty and Ronald. Others, like the Marlboro Man, may not be as beloved, 

but grew to have tremendous worldwide impact as an instant identifier of 

Philip Morris Co.`s Marlboro cigarettes.

From frozen vegetables to packaged cake mix, from fast food 

to automobile tires, these carefully drawn characters are the 

personifications of businesses that began small but grew to become
dominant brands in their fields - thanks in large part to their famous icons.

Many of the most famous ad icons were the brainchild of one agency: 

Chicago-based Leo Burnett Co., which specialized in building brands 

through the use of enormously popular characters, 

including the most effective icon of all time, the Marlboro Man.

Advertising Age`s list of the Top 10 ad icons of the 20th century 

recognizes those images that have had the most powerful resonance 

in the marketplace. 

The criteria include effectiveness, longevity, recognizability and 

cultural impact.

The Marlboro Man

Ronald McDonald

The Green Giant

Betty Crocker

The Energizer Bunny

The Pillsbury Doughboy

Aunt Jemima

The Michelin Man

Tony the Tiger

Elsie

Thursday, October 05, 2006 

Yurman`s Beauty Deal

WWD reports:

Paul Blum, just seven months into the job as David Yurman`s 

chief executive officer, is already bringing a new whiff into the air.

In an effort to propel the $500 million brand into the next stage 

of growth, the 26-year-old jewelry firm has inked a deal for its first 

fragrance.

Terms of the fragrance deal, which was signed Tuesday, 

were not disclosed. Ancillary products are also part of the contract.

"For the best product extensions, it`s important to have two things," 

said Blum. "It needs to be an understandable evolution of the brand, 

which the consumer has an emotional relationship with, 

and there has to be a close relationship to the brand."

It is too early to project sales, although the fragrance for the first 

12 months will only be sold through Yurman`s existing distribution 

channels.

 That amounts to only hundreds of doors, and industry sources 

estimated that as a result sales of the fragrance in the first year 

would be about $2 million to $3 million at retail.

The licensee also produces Thierry Mugler Parfums and Azzaro 

fragrances.

Thursday, October 05, 2006 

Escada Kids 

Escada re-shuffled its kids business.
The new licensee comes from France and already has the Burberry license.

Monday, September 25, 2006 

Another European Brand sold to China

According to the Financial Times, BMW sold its Rover brand to 

Shanghai Automotive Industry (SAIC) for 11 mill. pounds (16.2 mill. Euro).

Ford, which has a first right to buy is considering to use it.

Wednesday, August 16, 2006 

Telefunken has bright, innovative future

Profilo-Telra revitalizes the Telefunken brand with announcement of 

Pan-European licensing deal

Profilo-Telra, Europe`s third largest TV manufacturer, today announced 

a pan-European deal to license the Telefunken brand from Telefunken 

Licenses GmbH.

Profilo-Telra will combine its expertise in manufacturing consumer electronics 

products with the heritage of the Telefunken brand to deliver 

market leading products across Europe.

Telefunken is a pioneer in the electronics sector, responsible for over 20,000 patents 

and is particularly well-established in the television market.
The Telefunken brand is widely recognized among consumers and professionals 

as a sign for premium quality products.

Profilo-Telra has been manufacturing consumer electronics products 

for companies such as Sony, Matsushita, Thomson and Philips as well 

as large retailers` private labels since 1970.

The first Telefunken products from Profilo-Telra will be launched at IFA, Berlin. 

New launches will include Digital Wireless Flat TVs, unique six-colour DLP 

(Digital Light Projector) TVs, full HD TVs and unique four and five primary colours 

LCD TVs.

Friday, August 11, 2006 

Diesel Gets Intimate In New License Deal

WWD reports: The Diesel world keeps growing.

After fragrances, eyewear, accessories and jewelry, the Italian apparel company 

has signed a four-year licensing agreement for the production and distribution 

of a line of innerwear and beachwear for women and men called Diesel Intimate.

"Today, underwear is an essential element of an individual`s style," 

said Renzo Rosso, Diesel`s founder. "It`s not something that should always be hidden, 

but something that can truly enhance an outfit. 

Branded underwear plays an important role; that`s why we decided to develop 

a collection in line with Diesel`s style: original, innovative and unique."

The collections, which will be designed in-house, will bow for spring 2007. 

This is the first innerwear license for Diesel, which previously created just a few 

underwear pieces with some of the company`s producers. 

"The consensus we received drove us to create a real business division," said Rosso. 

"It`s an ambitious project, through which we expect to increase our current business 

fivefold by 2010."

This is a new Diesel division within the group, with a team of 20 people and 

a dedicated budget for communications and advertising.

The collection will be in line with Diesel`s distribution and will be available 

in the more than 320 Diesel stores around the world, department stores 

that carry Diesel and selected innerwear boutiques.

The collection will comprise 90 women`s models and 70 men`s, 

ranging from sexy styles to everyday items.

Friday, July 28, 2006 

Porsche Perfume

Parfums Azzaro has signed a long-term partnership agreement with 

The Porsche Design Group, a subsidiary of the famed car maker 

that produces Porsche brand accessories, to create and 

distribute men`s fragrances.

The first Porsche scent under the new fragrance brand is expected 

to be introduced in early 2008. 

It will be sold through the distribution network of Groupe Clarins, 

Parfums Azzaro`s owner.

The partnership is the latest in a fleet of beauty-carmaker deals.

Lotus recently signed on Distinguished Fragrance Brands Ltd. and 

Riviera Concepts creates Hummer fragrances.

Wednesday, July 05, 2006 

Furla in Watch Deal

WWD reports:

Furla is expanding the firm`s product offering with its first watch license.

The Bologna, Italy-based leather goods firm had outside manufacturers 

produce a limited number of branded timepiece styles, 

but has now signed a three-year agreement to roll out a full line.

The licensee said in a statement that it anticipates the Furla watch line 

will have sales of 12 million Euro, or $15 million at current exchange, 

by 2008.

Retail prices for the line, which is set to bow for fall, will range from 

$100 to $265.

Wednesday, July 05, 2006

Luxury Study: Rating the Brands by Status 

Women`s Wear Daily reports:

Affluent consumers may be highly aware of a particular luxury fashion brand, 

but that`s no guarantee they will accord it high social status.

In fact, some of the best-known high-end brands
command the weakest cachet with the well-heeled set.

Six of the 10 luxury brands scoring the loftiest ratings for social status 

in a recently concluded study by the Luxury Institute were present 

in the minds of between 21 and 59 percent of a nationally 

representative sample of 500 wealthy consumers.

Bottega Veneta, which led a list of 21 designer brands evaluated 

for their social status - a designation based on their association with people 

who are admired and respected - nonetheless ranked at the bottom 

of the awareness scale, as assessed by the 500 adults, ages 21 and older, 

surveyed.

The group had a median annual income of $318,000; 

a median net worth of $2.5 million, including home equity, 

and a median age of 49.

With exclusivity and uniqueness being important aspects of the 

traditional luxury experience often high-end brands achieve 

greater awareness by expanding and broadening their
distribution.

The wide availability of designer labels at discounters is a long-term 

challenge that some high-end companies have begun to address.

One exception to the down-market status chill is Giorgio Armani, 

which has diversified but has maintained a halo effect.

Indeed, Armani was the third-best-recognized designer brand, 

known by 74 percent of the affluent adults, and was a close second 

to Bottega Veneta in the realm of status, as 57 percent of those 

who knew the Armani name strongly agreed it was worn by people 

who are admired and respected.

Monday, June 12, 2006

Licensing Industry Numbers

Here are the numbers from License Magazine`s Industry Annual Report, 

October 2005.

2004 Estimated Worldwide Retail Sales: $175.3 billion

That is roughly split into the following categories.

Characters $40.0 billion

Fashion $37.3 billion

Brands & Trademarks $35.5 billion

Entertainment $20.8 billion

Art & Publishing $18.6 billion

Sports $18.0 billion

Online & Interactive $5.09 billion

Thursday, June 08, 2006

Dodge Trailers

DaimlerChrysler signed a license for exclusive use of Dodge`s logo and designs 

over the next three years to have manufactured trailers, fifth wheels and 

toy haulers in the U.S. and Canada.

Products will be available on Sept. 30.

Tuesday, May 23, 2006 

Watch collection for ASICS

Endura announced signature of a global licensing agreement 

with the international sporting goods company, ASICS.

Endura will create a new collection of timepieces to express 

the values and cutting-edge technology of the ASICS brand 

and products.

In Spring 2007, the new ASICS watch collection will be ready 

for action with an international debut at the Baselworld Watch 

and Jewellery Show in March.

The ASICS timepieces will underline the sports shoe manufacturer`s 

commitment to providing serious athletes with technically advanced 

products.

Thursday, May 11, 2006 

Four New Budweiser BBQ Sauces

Anheuser-Busch is kicking up the grilling season with a new line of 

Budweiser sauces, including a baste, two barbecue sauces and 

a wing sauce.

Through a licensing agreement the new line of Budweiser-branded sauces 

will be launched in time for Independence Day.

"When we think about summer, we think about getting together with friends, 

grilling and enjoying ice cold Budweiser," said Randall Blackford, 

director of Budweiser marketing. "There are few things as distinctly American 

as Budweiser and barbecuing, and our line of Budweiser-branded sauces 

provides another way for home cooks and grillers to add flavor to their dishes."

The Budweiser sauce recipes were created by a team of chefs led by 

Certified Executive Chef, Brent Wertz, at Anheuser-Busch`s Kingsmill Resort 

in Williamsburg, Va., in conjunction with Anheuser-Busch brewmasters.

Budweiser is a key ingredient in the creation of these sauces. 

The alcohol content after production meets all government requirements 

to be classified as a non-beverage food product.

The Budweiser sauces will be available at grocery, gourmet and 

convenience stores and in casual dining chains.

Thursday, May 11, 2006 

How to throw away (brand) capital

A few years ago, after billions had been spent to establish the brand AT&T 

and to make it the world`s best known telephone service brand, 

managers decided that the brand AT&T was out-dated, old-fashioned, 

dusty, etc.

So the brand AT&T was dropped and the same managers spent an estimated

four billion US dollars (US$ 4,000,000,000)

to create the brand Cingular and make it the best known cellphone service brand 

in the USA.

Now, managers decided to throw away all this brand equity and 

to go back to AT&T.

The switch (back!!!!) will cost an estimated

1/2 of a billion US dollars (US$ 500,000,000).

We are beyond comment.

Tuesday, May 02, 2006 

General Mills Flavoured Milk Drinks

General Mills has entered into a five year licensing agreement for milk 

and cereal products.

The deal covers General Mills`s Trix, Cocoa Puffs, and Wheaties as well 

as extended shelf life milk drinks. In addition to these brands the agreement 

includes Lucky charms, Count Chocula, Booberry, and Frankenberry. 

The licensee has the right to use the equity characters associated 

with each brand.

The General Mills brands of flavored milks will be available in grocery stores, 

mass market retailers, convenience stores, and vending machines 

in 50 US states and in Canada.

Terms of the deal were not disclosed.

Monday, April 24, 2006 

Lacoste signs watch license

Lacoste SA has struck a licensing agreement for the manufacture of 

timepieces under the French company`s trademark crocodile brand.

A Lacoste spokeswoman said on Tuesday the agreement would 

take effect Jan. 1, 2007, and did not define when it would end.

In a statement, Lacoste said the first watches would be presented 

in spring 2007 and would be sold worldwide through its own network 

of 870 Lacoste boutiques, department and specialty stores and 

jewelers.

In a separate statement, the licensee, which also makes watches 

under the Coach, Tommy Hilfiger and Hugo Boss brands, said 

the watches would be priced at $195 and $595.

Wednesday, March 29, 2006 

Puma Eyewear License

Puma signed a global license for eyewear.

The first collection of shades and glases will be presented this fall 

and will be at retail by the end of 2006.

The Asian licensee has 50 years of experience and belongs to the 

leading producers, designers and marketers of eyewear. 

It has experience with brand licenses like Boss, Hugo, Elle and Esprit.

The licensee works international in more then 100 countries. 

In the USA it will collaborate with Luxottica.

At present, Puma has licenses in place for watches, perfume, 

bodycare and socks.

Wednesday, March 29, 2006 

First Brand Sale-Lease-Back-Transaction

Finally, the first pure transaction of borrowing against a brand in Germany.

According to Handelsblatt, a pool of German banks and leasing companies 

completed a sale-lease-back-transaction with Underberg AG, 

a leading marketer of spirits.

Brand owners should thank Underberg for this innovative transaction, 

as it opens the door to capitalize on their single biggest asset.

Wednesday, March 22, 2006 

Product Integration completed

The shades from CSI Miami, the dress from American Idol?

StarStyles.com makes an important step completing product integration. 

Here one can find and buy products from TV shows.

The list of participating shows is still very short, but the list of brands 

is long already.

Yet, StarStyles is not a retailer, instead it collaborates with many 

well-known retail companies and works as a link between them 

and TV shows.

It will be interesting to see, whether StarStyles will be able to add 

feature movies. In other words, how soon will they offer the new 

Bond car?

Certainly, StarStyles is a very good way to measure your 

product placement success.

Tuesday, March 21, 2006 

Jockey Socks

According to WWD, Jockey expanded the relationship with it manufacturer 

of hosery to socks for women and men in the USA.

Beginning this fall Jockey socks will be available in department and 

specialty stores.

Monday, March 20, 2006 

Too many accept Designer plagiatism

According to a recent ACNielsen study these are the most attractive 

Designer brands globally:

Giorgio Armani 30 %
Gucci 27 %
Versace 26 %
Chanel 22 %
Christian Dior 19 %
Ralph Lauren 18 %
Prada 17 %
Yves Saint Laurent 17 %


Slightly different is the ranking for Designer brands that are actually bought:

Giorgio Armani 19 %
Chanel 19 %
Versace 16 %
Ralph Lauren 16 %
Yves Saint Laurent 15 %
Christian Dior 15 %
Gucci 15 %

Scary is, that for example in Germany only 20% believe, 

that Designer brands are worth more than regular brands.

And even worse, 20% believe fakes are just as good as the originals.

Thursday, March 02, 2006

Asian companies buying American & European brands

2005 saw a some high profile deals where Asian companies bought American 

and European brands.

The Chinese electronic company Lenovo`s acquisition of IBM`s computer division 

gave Lenovo a multinational presence and the ability to leverage its 

manufacturing and extend its reach into the global consumer marketplace.

Chinese television manufacturer, TCL, acquired RCA, another example of a 

Chinese manufacturer looking abroad to buy a brand and capture margin 

and sales sustainability.

BenQ acquired the mobile phone business from Siemens and German TV 

business Grundig was acquired by an Asian company as well.

Besides maintaining profit margins and gaining market access two factors 

are contributing to the Asian buying spree.

One is the growing enforcement of intellectual property laws.
Companies, who have relied on manufacturing pirated and counterfeit goods, 

suddenly face real legal challenges. They realize that in order to survive, 

they need to acquire established brands and begin to develop their own, 

or be knocked out of the marketplace.

And, over the past years Asian companies have been stockpiling US dollars. 

Now these companies begin to utilize the "war chests" in their acquisitions 

of American and European brands.

We are sure, there is more to come.

Tuesday, February 07, 2006 

Welcoming the Blast from the Past

Although the recycling of "vintage" brands in the fashion industry 

is not a recent phenomenon, we are witnessing the resurrection of 

many trademarks once considered dusty, as apparel manufacturers try 

to differentiate themselves in an competitive marketplace.

A lack of healthy brands for sale motivates buyers to consider trademarks 

in need of some T.L.C. This trend seems to expand beyond apparel into 

food and beverage industries and OTC drug brands.

Despite the heavy investment necessary to reposition older trademarks, 

this option compares favorably to the expense of creating new brands. 

Most manufacturers and retailers acknowledge that building a trademark 

into a brand is a long process requiring time, capital, and industry knowledge, 

along with the need to create repetitive purchasing and the development 

of consumer expectation via advertising.

Furthermore, brands and trademarks have life cycles 

which may be generational, but which require careful planning 

and investment by management to keep design, merchandising 

and communication strategies current.

Recently rescued vintage brands include Wrangler, Generra, 

Original Penguin, and London Fog.

These trademarks, once relegated to second tier or mass-market distribution,

have experienced a successful rebirth at top retailers such as Barney`s, 

Neiman Marcus, Bloomingdales, and Saks Fifth Avenue through the 

exploitation of their strong consumer recognition.

The resonance of these brands among consumers and their 

historical name recognition, combined with calculated re-positioning 

strategies by their owners, has resulted in a return to the pinnacle 

of the brand life-cycle with a new target customer.

Tuesday, February 07, 2006 

Pitfalls of Brand Extension Strategies

With new brands failing at rates more than 90% in many categories, 

and the demand for top-line growth as relentless as ever, 

it`s no wonder that managers turn to brand extensions in their search 

for salvation.

Coke got it fabulously wrong with New Coke but got it right 

when they pioneered the now ubiquitous "FridgePack."

The unassailable logic usually employs some combination of the following:
faster speed to market, better return on equity of existing brands 

and the ability to target known segments; 

utilization of existing production and distribution infrastructure; 

minimization of risk of huge losses from a total failure; 

and defending the established brand from competitive assault.

And yet, not only are most brand extensions failures in their own right, 

but they often leave collateral damage to the original "golden goose."

Our research suggests following some proven principles for success 

to avoid the well-trod road to ruin. 

We`ll look first at some of the patterns of failure and push beyond 

to find firm footing for successful brand extensions.

Of course, brand destruction borne of brand extension doesn`t happen 

spontaneously. Marketers often make key, but avoidable, mistakes 

when extending a brand.

Mistaking a marketplace "void" for a customer "need."
How many customers would object to more features, new benefits, 

increased performance or fresh uses? 

Better is better, so who would argue with more? 

And that`s just the external reinforcement; ask around inside 

the organization where developers are always eager to build 

"new and improved" and advertising folks are already 

brainstorming a launch campaign.

But what happens all too often?
Actually, we didn`t need to look beyond the experience of one 

of the co-authors of this article, Scott Cook, who presided over 

the princely failure of Quicken`s Financial Planner. 

And, as with many brand-extension failures, this was no half-baked effort.

Research confirmed a large market of consumers conscious of their 

inadequate financial planning. Competitive assessments reinforced 

the suitable positioning of Intuit`s Quicken brand. 

Developers produced and tested a world-class product; then, 

based on in-market learning from V1, 

produced a substantially improved V2. 

The entire multiyear effort was a total flop.

So what went wrong?
Simple as it sounds, many folks weren`t doing comprehensive 

financial planning for a reason: They didn`t want to. 

They were not prioritizing this as a critical "job" to complete.

What`s the lesson?
Watch your customers, don`t ask them.
Where are they struggling to find adequate solutions?
Build a brand to perform that "job," and it`s more than likely 

that many customers will hire your brand.

Coke got it fabulously wrong with New Coke but got it right 

when they pioneered the now ubiquitous "FridgePack." 

Observational research revealed that consumers were likely 

to consume more - and therefore buy more - if a cold can 

was at hand. Make it easier to keep `em cold, and sure enough, 

sales increase.

Sometimes, out of fear of alienating potential customers, 

marketers fail to design solutions to specific jobs and push 

only vaguely differentiated products into increasingly 

cacophonous marketplaces.

Example? Look in your driveway.
Odds are no brand really aligned with your precise need 

but one offered financing terms or a promotional giveaway 

that swung the tide. This from some of the most experienced 

marketing firms in the world.

One of the drivers of "fear of focus" is its evil twin, 

the "seduction of large numbers." 

Because big companies need big markets to have a proportional impact, 

they often screen out ideas with uncertain target markets.

The problem: Most markets that are verifiably large 

are also verifiably occupied. 

"If we can just get 10% of that billion-dollar market, we`ve got 

a $100 million brand," the thinking goes, and it often leads 

to price-based competition and cheapened brands. 

Great brand extensions create significant markets, 

they don`t enter them.

Kodak got it wrong when they dove into the alkaline battery business.
They got it right with the FunSaver and EasyShare cameras.

Why is it that established leaders with the resources, incentives and 

market expertise to succeed regularly fail to anticipate new customer needs 

when it comes to extending into new product segments?

What we have found is that the very models - both mental models 

and business models - that fuel success along one performance trajectory 

often blind managers to emerging opportunities.

Consider Microsoft.
With the most powerful software brand in the world, the company was 

enviably positioned to take leadership positions in emerging technology 

and software segments.

Yet, ask any "Microsoftie" and they will confirm that Microsoft has long 

survived as a "developer-driven" rather than a "sales-driven" 

(read: product-driven vs. need-driven) organization. 

Taking nothing from their dominance of PC operating systems and 

desktop software, Microsoft has either missed or misfired in a number 

of hot new markets:
Internet portals (where Yahoo got the lion`s share); 

PDAs (Palm); wireless e-mail (RIM/Blackberry); online search (Google); 

music downloads (iPod); Internet commerce (Amazon and eBay); 

utility software (Norton); financial software (TurboTax, Quickbooks and 

Quicken) and gaming (Sony PlayStation and Nintendo).

Microsoft`s mental model was so rooted in past successes that they either missed emerging consumer trends - browsers, search, gaming and music - or tried to solve new needs with old solutions - PDAs and wireless e-mail, where attempts to stuff a PC onto a pocket-sized device have failed convincingly and repeatedly. There are really only two ways to extend brands without destroying them.

Both start with a fundamental principle that was best articulated
by the great Harvard marketing professor Theodore Levitt:

"People don`t want to buy a quarter-inch drill. They want a quarter-inch hole."

The marketer`s task, then, is to understand what jobs periodically arise
in customers` lives and to design products and services that customers
can then hire to do that job.

If you`re lucky, you`ve got a strong purpose brand to begin with.
A purpose brand is one that consumers tightly associate with the job they perform.
Many of today`s strongest brands - Crest, Starbucks, Kleenex, eBay and Kodak,
to name a few - started out as purpose brands.

A clear purpose brand is like a two-sided compass.
One side guides customers to the right products. The other side guides
the company`s product designers, marketers and advertisers as they
develop and market improved and new versions of their products.
A good purpose brand clarifies which features and functions are relevant
to the job and which potential improvements will prove irrelevant.

There are two ways marketers can extend a purpose brand without
eroding its value.

Different products, same job.
They can develop different products that address a common job.
If a company chooses this path, it can do so without concern that the extension
will compromise what the brand does. For example, Sony`s portable CD player,
although a different product than its original Walkman branded radio and
cassette players, was positioned on the same job (the help-me-escape-the-chaos-
in-my-world job). So the new product caused the Walkman brand to pop
even more instinctively into customers` minds when they needed to get that job done.
Had Sony not been asleep at the switch, a Walkman-branded MP3 player
would have further enhanced this purpose brand. It might even have kept
Apple`s iPod purpose brand from preempting that job.

Different job, new product.
The other way to extend a brand without eroding its value is to identify new,
related jobs and create new purpose brands that benefit from the "endorser"
quality of the original brand. An established brand can provide valuable
endorsements where the brand extension is perceived to be relevant.

That said, an established brand is a "subject expert" not a "know all."
When Michael Jordan endorses a basketball shoe, consumers get it.
When McDonald`s tries pizza, consumers don`t.

In some cases, it can be as simple as adding a second word to its
brand architecture - a purpose brand alongside the endorser brand.
Different jobs demand different purpose brands.
Marriott International`s executives followed this principle when they
sought to leverage the Marriott brand to address different jobs for which
a hotel might be hired. Marriott had built its hotel brand around full-service
facilities that were good to hire for large meetings. When it decided
to extend its brand to other types of hotels, it adopted a two-word brand
architecture that appended to the Marriott endorsement a purpose brand
for each of the different jobs its new hotel chains were intended to do.

Individual business travelers who need to hire a clean, quiet place
to get work done in the evening can hire Courtyard by Marriott -
the hotel designed by business travelers for business travelers.
Longer-term travelers can hire Residence Inn by Marriott`s, and so on.
Even though these hotels were not constructed and decorated
to the same premium standard as full-service Marriott hotels,
the new chains actually reinforce the endorser qualities of the
Marriott brand because they do the jobs well that they are hired to do.

For another example, study Church & Dwight`s dominant Arm & Hammer
Baking Soda. Looking for growth, the company invested in
observational research of their customers and found them using
the product for myriad deodorizing and disinfecting jobs.

Further analysis revealed attitudinal insights:
Consumers trusted Arm & Hammer to provide "natural," "strong," "pure,"
"reliable" answers to household chores.
Today, the iconic "orange box" accounts for less than 10% of sales.
The Arm & Hammer endorser supports strong purpose brands in
carpet cleaning, toothpaste, laundry detergent, pet deodorizer,
pool-cleaning chemicals and more.

Executives are charged with generating profitable growth.
And, rightly, they believe brands are the vehicles for meeting their growth
and profit targets.
By carefully protecting your brand - first, do no harm - and understanding
what jobs your customers need to get done, you`ll be on track to build
purposeful products and achieve genuine innovation.

Monday, February 06, 2006

Diesel & L`Oreal

L`Oreal, Luxury Products Division has just signed a licence agreement with Diesel,
the cult brand founded in 1978 and developed by its president Renzo Rosso.
The contract covers the creation of a line of fragrances.

This partnership will build on the synergy between the expertise of L`Oreal,
the world`s leading cosmetics group and number one company in luxury
fragrances, and the creative strength of Diesel, whose over 25 years of original
and innovative style has created a group worth one billion Euro.

Diesel is a cult brand among 18-35 year-olds all over the world.
Taking a highly original approach to jeans and high-end casualwear,
Renzo Rosso, its founder, has invented something more than simple fashion:
he has given birth to a unique lifestyle that is illustrated in an emblematic way
through its ground-breaking advertising campaigns and unconventional
marketing techniques.

Diesel, an unlisted company based in Molvena (Italy), is present in 80 countries,
through 5,000 sales outlets, over 300 of them directly owned.
Its flagship stores, the first of which opened in New York in 1996 followed by all
the major capitals, are always located in prime position trendy shopping districts,
making Diesel products essential accessories of today`s luxury wardrobe.

Tuesday, January 17, 2006