Marketing: Brands expand their horizons: Companies are cashing in by extending their famous trademarks to different products
Sunday 06 March 1994
A number of British organisations have developed licensing programmes. The Club (formerly Club 18-30), which specialises in holidays for young people, recently launched a range of branded clothes created by the fashion company Joe Bloggs.
Meanwhile, Pepsi-Cola has unveiled fashion ranges developed with another manufacturer, Smith & Brooks. Their product, Pepsi Max-wear, cashes in on 1950s Americana. A different Pepsi-Cola range features the 'Done It, Loved it' theme from the company's current advertising campaign.
JCB, the British construction equipment company, is also developing branded goods outside its core activities. And in the US, Caterpillar is as well known for its rugged fashion boots as its construction vehicles.
Anthony Temple, joint managing director of Design Rights International (DRI), believes corporate licensing is poised for take-off in Britain. tremendous growth. It is already big business in the US, where many companies have long licensed their trademarks and brand names for products outside their core areas, he says.
In the US, the companies behind the Millers, Coors and Budweiser beers all have comprehensive licensing programmes. Coors Brewing Company says its beer brands 'have come to symbolise the heritage of the American West, romance and the natural splendour associated with the Rocky Mountains'. Many American companies are now looking for brand opportunities in Europe.
Sales of licensed merchandise in the US last year amounted to dollars 66.6bn ( pounds 44.4bn), of which 19 per cent was down to trademark and brand licensing, according to EPM Communications, which collects figures for the industry. Trademark licensing in the US continues to grow more rapidly than other sectors of the business, and a similar pattern is developing in Europe, although accurate UK sales figures are not available.
'In many respects, corporate licensing in this country lags a long way behind the US, where licensing is a common and regular way of developing activities beyond a company's core business,' says Mr Temple. However, he adds: 'There is undoubtedly great interest in the potential for developing corporate licensing here.'
Clothes are a potentially promising area for brands whose advertising promotes a 'high life' image. Marlboro markets a Marlboro Classic range of outdoor wear which, says its advertising, 'fits the man'. Meanwhile, Cadillac has a big licensing programme in the US, which is being exported to the UK by DRI. Mr Temple explains that the focus will be on California beach life in the 1950s and 1960s, with products that include stationery and clothing.
Nostalgia is also an important element in the licensing activities developed by Cadbury, which has changed its strategy.
'At one time, the Cadbury trademark could be found on mashed potato, savoury snacks and canned meat products - but not any more,' says Chris Wood, managing director of CLK, the brand development company. Cadbury is now focusing on the core brand values for a range of products that includes greetings cards and limited-edition prints, while franchising its name for other food and drink products.
Jackie McAllister, international franchise manager for the company, says: 'We are getting more involved in this area than previously, and with growing interest in the Cadbury brand name, we realise we have a powerful property. This comes down to the Cadbury brand name heritage, as well as individual brands and the characters (from advertising campaigns) associated with different products.'
Companies get involved in corporate licensing for a variety of reasons. Some do it purely to make money, some to alter or update their corporate image, and some - notably tobacco companies - to protect themselves from any future restrictions on advertising and sponsorship.
'Licensing into other areas undoubtedly has the effect of subliminal advertising and promotion,' says Mr Temple. Corporate licensing can generate interest in a company's core business through exposure in markets for other products. But activities must be controlled carefully.
'Traditionally, people look at this as a licence to print money; it's not,' says Mr Wood.
Companies should take care to protect trademarks when they diversify. They must ensure they understand the nature of the trademark - both its strengths and weaknesses - and have a clear idea of what they want a licensing programme to achieve. 'It's surprising how many companies don't do this,' adds Mr Wood.
A corporate licenser must also be able to prove that the association between trademark and product can generate added value and promote a consumer purchase.
Businesses also need to understand that even if they succeed, corporate licensing offers no fast returns. ''Normally a company will share with the licensee the cost of building the brand through marketing,' Mr Wood warns. 'These associations should be viewed as genuine joint ventures, and so often require joint funding.'
As companies become aware of the potential in this field, they are keen to seek ways to capitalise on their brand names. But time will tell how many expanding British trademarks have the potency of a Cadbury, Camel or Caterpillar.
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