Brand Extensions & Licensing Facts Ppt


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This material has been created & developed by Shankar Balan, Independent Management Consulting Professional. Material is under copyright but can be referenced.

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  • Brand Extensions & Licensing Facts Ppt

    1. 1. This material has been created & developed by Shankar Balan – Independent Management Consulting Professional, as a part of curriculum for Academic Sessions conducted for final year Management Students at the Bharathidasan Institute of Management Campus, Bangalore. © edu-ideas@shankar.balan™ 2008 Copyrighted Material. November 15 th 2008
    2. 2. Presentation Flow <ul><li>Part I – Brand Extensions </li></ul><ul><li>Why Brand Extension? </li></ul><ul><li>The Concepts of product/ brand extension </li></ul><ul><li>Brand extension possibilities </li></ul><ul><li>Cases of Successful extensions </li></ul><ul><li>Cases of Unsuccessful extensions </li></ul><ul><li>Use of the Brand Key </li></ul><ul><li>How far is too far or how much extension is too much extension? </li></ul><ul><li>Is it always too far? </li></ul><ul><li>Some possible business models for brand extensions with their Pro’s & Con’s. </li></ul><ul><li>Part II – Brand Licensing </li></ul><ul><li>Definition of Licensing </li></ul><ul><li>Licensing method/ Process </li></ul><ul><li>Case Studies & Examples in Licensing </li></ul><ul><li>Advantages/ Summary </li></ul><ul><li>Part III </li></ul><ul><li>Exercise/ Interactive session </li></ul>© edu-ideas@shankar.balan™ 2008
    3. 3. Part I Brand Extensions © edu-ideas@shankar.balan™ 2008
    4. 4. The fascinating World of Brands… © edu-ideas@shankar.balan™ 2008
    5. 5. A Definition of “Brand” <ul><li>A BRAND is a symbolic embodiment of all the information connected to a Company, Product or Service. </li></ul><ul><li>It serves to create associations and expectations from products made by a producer, in the mind of the consumer. </li></ul><ul><li>The Key Objective being “To create a Relationship of TRUST with its consumers.” </li></ul>© edu-ideas@shankar.balan™ 2008
    6. 6. Why Brand Extension? <ul><li>Leveraging brand equity/ value by introduction of logical & complementary new product categories </li></ul><ul><li>Product Innovation to surpass consumer expectations </li></ul><ul><li>It increases awareness of the brand name </li></ul><ul><li>Increases profitability from offerings in more than one product category. (widening the net to catch new consumers.) </li></ul><ul><li>It’s a great way to reinforce a brand, reach out to new customers, create a BUZZ. </li></ul>© edu-ideas@shankar.balan™ 2008
    7. 7. Some Terminology <ul><li>Brand Extension - A firm uses an established Brand name to introduce a new product. </li></ul><ul><ul><li>Tommy Hilfiger perfume, watches, home accessories. </li></ul></ul><ul><li>Sub-Brand - A new Brand is combined with an existing Brand </li></ul><ul><ul><li>Ralph Lauren Polo, Safari, V.Dot from Van Heusen, Dockers from Levi’s. </li></ul></ul><ul><li>Parent Brand – The pre-existing Brand that gives birth to the sub-Brand. </li></ul>© edu-ideas@shankar.balan™ 2008
    8. 8. Product extension <ul><li>Product extensions are different/ new versions of the same parent product. </li></ul><ul><li>They serve a different segment of the target market and increase the variety of a product offering. </li></ul><ul><li>Example: </li></ul><ul><li>(i) Coke extends itself to Diet Coke in the same product category of soft drinks. </li></ul><ul><li>(ii) Amul Butter extends itself to Amul “reduced salt” butter, Amul Cheese and Cheese slices in its Core area of milk product derivatives. </li></ul>© edu-ideas@shankar.balan™ 2008
    9. 9. Brand Extension <ul><li>Brand extensions could be across different product categories. Examples: </li></ul><ul><li>(i)Harley Davidson Motorcycles extends to Harley Davidson Accessories. </li></ul><ul><li>(ii) Land Rover extends itself from Tough Off Road vehicles to a line of stylish, yet functional outdoor clothing, shoes etc. </li></ul>© edu-ideas@shankar.balan™ 2008
    10. 10. Brand Extension Assumptions <ul><li>In introducing a brand extension, it is typically assumed that: </li></ul><ul><ul><li>Consumers have some awareness of and positive associations about the brand in memory </li></ul></ul><ul><ul><li>Example: </li></ul></ul><ul><ul><li>(Raymond – “The complete man”) * This is why Raymond’s were able to extend from their core in manufacturing fabrics to a readymade clothing brand (Park Avenue) and from there to Accessories & Grooming even! </li></ul></ul><ul><ul><li>Some of these positive associations are evoked by the brand extension. -- since Raymond was always positioned as the “The Complete Man” and “Guide to the well-dressed male”, their extension into personal care was automatically promoted as the “Guide to the well-groomed male” and viewed as such by consumers. </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    11. 11. Some Advantages of Brand Extensions <ul><li>Enhance the parent brand image </li></ul><ul><ul><li>Improve strength, favorability, and uniqueness of brand associations </li></ul></ul><ul><ul><li>Reinforce the brand in the minds of the target group of consumers and aspiring consumers. </li></ul></ul><ul><ul><li>Help increase “buy-in” , “consumer mind-share” and slowly progress to “share of wallet”. </li></ul></ul><ul><ul><li>Improve consumer perceptions of company credibility </li></ul></ul><ul><li>Convey broader brand meaning to consumers </li></ul><ul><ul><li>Clarify core benefit proposition and business definition of the company </li></ul></ul><ul><li>Bring new customers into the franchise and increase market coverage </li></ul><ul><li>Facilitate new product acceptance (Nike clothing) </li></ul><ul><li>Reduced risk perceived by customers (Sony PC, Apple iphone) </li></ul><ul><li>Increase the probability of gaining distribution by brand’s reputation </li></ul>© edu-ideas@shankar.balan™ 2008
    12. 12. When are Brand Extensions Appropriate? <ul><li>When Prior B rand E quity exists </li></ul><ul><li>Consumers must see some “connection” between the proposed extension and the parent brand. </li></ul><ul><li>Eg: “Jeep/ Land Rover vehicles extending to Jeep/ Land Rover Brand outdoor clothing etc”. </li></ul><ul><li>The proposed extension contributes to and reinforces the overall brand equity of the parent brand. </li></ul>© edu-ideas@shankar.balan™ 2008
    13. 13. Model of Extension Evaluations <ul><li>Creating extension equity depends on 3 factors: </li></ul><ul><ul><li>Salience of parent brand associations in extension context </li></ul></ul><ul><ul><li>Favourability of any inferred associations in the extension context </li></ul></ul><ul><ul><li>Uniqueness of any inferred associations in the extension context </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    14. 14. Brand Extensions: How does a firm grow? <ul><li>A Company/ Brand can: </li></ul><ul><ul><li>Focus on current products and markets </li></ul></ul><ul><ul><ul><li>Market penetration strategy </li></ul></ul></ul><ul><ul><li>Put existing products into new markets </li></ul></ul><ul><ul><ul><li>Market development strategy </li></ul></ul></ul><ul><ul><li>Put new products into existing markets </li></ul></ul><ul><ul><ul><li>Product development strategy </li></ul></ul></ul><ul><ul><li>Put new products into new markets </li></ul></ul><ul><ul><ul><li>Diversification strategy </li></ul></ul></ul>© edu-ideas@shankar.balan™ 2008
    15. 15. Some Successful extensions Ralph Lauren © edu-ideas@shankar.balan™ 2008
    16. 16. Successful Extensions - Apple <ul><li>Apple </li></ul><ul><li>Imac </li></ul><ul><li>Ipod </li></ul><ul><li>Iphone </li></ul><ul><li>Brand’s Core Values of Superb Cutting Edge Design </li></ul><ul><li>and Technology leveraged into first class consumer </li></ul><ul><li>products! </li></ul>© edu-ideas@shankar.balan™ 2008
    17. 17. Other Successful extensions Virgin group Records Airlines Railways Radio Music Mobiles Retail © edu-ideas@shankar.balan™ 2008
    18. 18. Brand Extension End-to-end example 1 © edu-ideas@shankar.balan™ 2008
    19. 19. Brand Extension End-to-end example 2 © edu-ideas@shankar.balan™ 2008
    20. 20. Disadvantages of Extensions <ul><li>Extensions have risks, too. </li></ul><ul><ul><li>They can fail over time. </li></ul></ul><ul><ul><li>(Example: The Virgin Megastores retail business didn’t do well and now has been sold to Even Virgin Cola couldn’t make a dent in the market place.) </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    21. 21. Disadvantages of Extensions <ul><li>Extensions can potentially result in the following troubles/ costs: </li></ul><ul><ul><li>They can cannibalize sales of the parent brand </li></ul></ul><ul><ul><li>(Eg; Amul Reduced Salt Butter is slowly eating into sales of Amul’s normal Butter.) </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    22. 22. Disadvantages of Extensions <ul><ul><li>Extensions can also Hurt / Erode the image of the parent brand </li></ul></ul><ul><ul><ul><li>If the extension fails; </li></ul></ul></ul><ul><ul><ul><li>1. Xerox Computers; because Xerox was synonymous with copiers and no one believed they could make computers too. Luckily they recovered by focussing on “core –competence” and re-invented themselves as “The Document Company”. </li></ul></ul></ul><ul><ul><ul><li>Pierre Cardin extended too far by branding all sorts of un-related products with his name.) </li></ul></ul></ul><ul><ul><ul><li>Even if the extension is successful (Eg: Harley Davidson Fragrances because the macho and manly core consumers of the motorbikes could not identify with the fragrance product.) </li></ul></ul></ul>© edu-ideas@shankar.balan™ 2008
    23. 23. A few other Extension Failures <ul><li> - Levi's Tailored Classics suits did not succeed. </li></ul><ul><li> - Maggi pickles – what’s that?? </li></ul><ul><li> - Amul Instant Pizza failed to inspire the Indian public </li></ul><ul><li> - Nivea Men’s body care range – lukewarm response </li></ul>© edu-ideas@shankar.balan™ 2008
    24. 24. The Brand KEY - New category fit with mother brand’s values © edu-ideas@shankar.balan™ 2008
    25. 25. How far is too far? <ul><li>Example: Maggi. </li></ul><ul><li>Core Product = 2 minute Noodles </li></ul><ul><li>Extension 1 = Soup cubes and Sauces/ Ketchup </li></ul><ul><li>Extension 2 = Soup Packets </li></ul><ul><li>Extension 3 = Pickles </li></ul><ul><li>* The first 2 extensions did well and were accepted by consumers. In these two they created a number of “product line extensions” and introduced new flavours and variants which were accepted. </li></ul><ul><li>However, the third (Pickles) met with a poor response because Maggi was viewed as a “westernized ready-to-cook” concept and pickles were largely viewed as home made/ traditional. </li></ul>© edu-ideas@shankar.balan™ 2008
    26. 26. How far is too far? <ul><li>Example: Pierre Cardin. </li></ul><ul><li>Core Product = Designer Apparel. </li></ul><ul><li>Extension 1 = Fragrances and Cosmetics </li></ul><ul><li>Further Extensions = Watches, Pens, Base ball caps, cigarettes etc etc. </li></ul><ul><li>The first extensions did phenomenally well and were accepted by consumers because fragrances and cosmetics etc were a perfect brand fit and thus a natural extension. </li></ul><ul><li>However, the other “wildly non-adjacent/ indiscriminate/ commoditized” extensions, met with a poor response on account of a sharp drop in quality as well as perception. There was no way the consumer would believe that these products stood for the same values as the original products and product extensions had. </li></ul>© edu-ideas@shankar.balan™ 2008
    27. 27. Is it always too far? <ul><li>Would it be possible for the luxury designer jewellery brand BVLGARI to successfully extend into Boutique Hotels too? </li></ul><ul><ul><li>Considering the core values of BVLGARI are “design”, “craftsmanship” and “aesthetics” - YES! </li></ul></ul><ul><ul><li>However, an Hotel’s core values are predominantly built around “hospitality”. </li></ul></ul><ul><ul><li>Thus, the BVLGARI designed hotel in Central Milan has RITZ-CARLTON as their “hospitality partner”. </li></ul></ul><ul><ul><li>A natural fit, since the RITZ-CARLTON has impeccable credentials in “luxury” and “hospitality.” </li></ul></ul><ul><ul><li>To summarize this thought, the extension will most likely succeed, provided the “right” synergies exist and there is a clear “target consumer group”. </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    28. 28. Is it always too far? <ul><li>Take the case of the Caudalie Winery, Vineyard and Vinotherapie Spa in Bordeaux, France. </li></ul><ul><ul><li>The core values of their chateau bottled wine are their distinctive bouquets, flavours and other characteristics. </li></ul></ul><ul><ul><li>It is also a fact that the grapes from which the wine is distilled, have unique and healthful endorphins and natural enzymes in them. </li></ul></ul><ul><ul><li>The chateau also owns Prime Real Estate. </li></ul></ul><ul><ul><li>Therefore; </li></ul></ul><ul><ul><li>Extending the Vineyard concept to a Luxury Vinotherapie Spa was just a step away and taking it to the next level via a high-end range of wellness cosmetics was only another step! </li></ul></ul><ul><ul><li>The success can be judged by the immense response from their guests and consumers. </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    29. 29. Some Brand Extension Methodologies Own Manufacture etc - Pro’s & Con’s <ul><li>Own Manufacturing, Packaging, Marketing and Distribution. </li></ul><ul><li>Pro’s: The Brand/ Company retains complete control of: </li></ul><ul><li>Product </li></ul><ul><li>Quality </li></ul><ul><li>Brand </li></ul><ul><li>Manufacture </li></ul><ul><li>People </li></ul><ul><li>Inventory </li></ul><ul><li>Packaging </li></ul><ul><li>Marketing & Distribution </li></ul><ul><li>Profit </li></ul><ul><li>Con’s: High Cost of Infrastructure/People/Inventory. </li></ul><ul><li>However HIGH RISK = HIGH RETURN. </li></ul>© edu-ideas@shankar.balan™ 2008
    30. 30. Some Brand Extension Methodologies External Sourcing - Pro’s & Con’s <ul><li>External Sourcing. </li></ul><ul><li>Pro’s: The Brand/ Company retains control of: </li></ul><ul><li>Product </li></ul><ul><li>Quality </li></ul><ul><li>Brand </li></ul><ul><li>Inventory </li></ul><ul><li>Marketing & Distribution </li></ul><ul><li>A good profit </li></ul><ul><li>Con’s: Variables relating to delivery credibility for “go-to-market”/ Lead times/ unforeseen circumstances at the vendor side. </li></ul><ul><li>Slightly reduced risk = Slightly reduced return. </li></ul>© edu-ideas@shankar.balan™ 2008
    31. 31. Some Brand Extension Methodologies Vendor Managed Inventory -Pro’s & Con’s <ul><li>Vendor Managed Inventory. </li></ul><ul><li>Pro’s: The Brand/ Company gains from cost control & Inventory control (just –in- time supply) at a lesser investment. </li></ul><ul><li>Con’s: There is a high chance of duplication, Vendor Integrity and Quality issues leading to loss of Brand/ Company good-will. </li></ul><ul><li>High deployment of intellectual capital but the returns are good, considering </li></ul><ul><li>that the Company/ Brand is not expending too much management time/ </li></ul><ul><li>resource on this kind of business model. </li></ul>© edu-ideas@shankar.balan™ 2008
    32. 32. Some Brand Extension Methodologies Licensing - Pro’s & Con’s <ul><li>Brand Licensing. </li></ul><ul><li>Pro’s: The brand/ company gains from the following: </li></ul><ul><li>Low management time/ engagement with Product </li></ul><ul><li>Category / Product /Manufacturing/ Distribution expert takes the baton. </li></ul><ul><li>Company retains No inventory commitment – licensee owns the inventory </li></ul><ul><li>Licensee handles complete distribution and spreads the brand message into channels the main products of the brand cannot enter – Eg: Scorpio Branded Watches can be sold from both the SUV dealerships as well as specialty watch shops. </li></ul><ul><li>Company/ Brand gains a Royalty/IPR/ License fee – which is a healthy injection to bottom-line. </li></ul><ul><li>Con’s: Brand/Company loses some control on quality, production, distribution etc. Brand goodwill is put at some risk. </li></ul><ul><li>Since the entire business is managed by a Third Party – the Brand/ Company does not </li></ul><ul><li>spend time/ resources in running the business day-to-day and yet stands to gain via </li></ul><ul><li>Royalty Income. </li></ul>© edu-ideas@shankar.balan™ 2008
    33. 33. Successful Umbrella Brand Extensions <ul><li>There are also cases of some Super brands that never needed to re-brand or introduce sub-brands and yet created huge successes in brand/ product extensions. </li></ul><ul><ul><li>Examples: </li></ul></ul><ul><ul><li>1. Mitsubishi covers products and services from Banking through construction to cars. </li></ul></ul><ul><ul><li>2.The South Korean “chaebol” covers shipping through logistics to vehicles. </li></ul></ul><ul><ul><li>3.Godrej covers office furniture through hair dye to ready-to-cook chicken. </li></ul></ul><ul><ul><li>4.TATA covers a whole range of products/ services from Salt to SUV’s. </li></ul></ul><ul><ul><li>5. Mahindra covers products and services from Tractors to Holidays. </li></ul></ul><ul><ul><li>6. GE covers financial services thro’ nuclear reactors to fridges! </li></ul></ul>© edu-ideas@shankar.balan™ 2008
    34. 34. Part II Brand Licensing © edu-ideas@shankar.balan™ 2008
    35. 35. What is Licensing? <ul><li>Licensing is a discipline followed by brands, to unlock their “latent value/ goodwill” by venturing into new, “non-core” product categories. </li></ul><ul><li>The method followed is to identify and appoint business partners who are “experts” in the manufacturing and distribution of those “non-core” categories, but who wish to benefit from the goodwill of the brand names. </li></ul><ul><li>The Brand gains from excitement generated by new products and a healthy “Royalty/ License fee” income. </li></ul><ul><li>The Licensee gains from using his product expertise, backed by the brand’s goodwill as well as an outlet to his production / manufacturing capacity. </li></ul>© edu-ideas@shankar.balan™ 2008
    36. 36. Why Licensing? <ul><li>The brand/ company gains from the following: </li></ul><ul><li>Low management time/ engagement with Product </li></ul><ul><li>Category / Product /Manufacturing/ Distribution expert takes the baton. </li></ul><ul><li>Company retains No inventory commitment – licensee owns the inventory. </li></ul><ul><li>New Brand Accelerator categories get created – and suddenly one sees the brand everywhere. </li></ul><ul><li>Licensee handles complete distribution and spreads the brand message into channels the main products of the brand cannot enter </li></ul><ul><li>– Eg: Scorpio Branded Watches can be sold from both the SUV dealerships as well as specialty watch shops. </li></ul><ul><li>Company/ Brand gains a Royalty/IPR/ License fee – which is a healthy injection to bottom-line. </li></ul>© edu-ideas@shankar.balan™ 2008
    37. 37. Ideal desirables in a potential licensee <ul><li>Product expert – Immense Strengths in the category vide Manufacturing, Product development , Design Strength </li></ul><ul><li>Financial capability – to sustain and grow a new business venture. </li></ul><ul><li>Commitment to Quality </li></ul><ul><li>4. Distribution Expertise. –Strong Relationships with category specific outlets. </li></ul><ul><li>And above all, </li></ul><ul><li>5. Good Chemistry – A relationship based on INTEGRITY, MUTUAL RESPECT and TRUST between the two organizations, Brand Owner and Category Expert. </li></ul>© edu-ideas@shankar.balan™ 2008
    38. 38. LOGIC BEHIND BRAND LICENSING CASE I – MAHINDRA SCORPIO Own Mfg Sourcing Licensing <ul><li>Basic, Core , </li></ul><ul><li>strategic products </li></ul><ul><li>Great knowledge and </li></ul><ul><li>expertise on products </li></ul><ul><li>& manufacturing </li></ul><ul><li>capabilities </li></ul><ul><li>Integral part of brand, </li></ul><ul><li>retail & communication. </li></ul><ul><li>Eg: Vehicles, SUV’s etc. </li></ul><ul><li>Related products </li></ul><ul><li>Adequate expertise on </li></ul><ul><li>products but low interest </li></ul><ul><li>in manufacturing. </li></ul><ul><li>Products play a useful </li></ul><ul><li>but secondary role in </li></ul><ul><li>brand, retail & </li></ul><ul><li>communication. </li></ul><ul><li>E.g.; Alloy Wheels, Lights, </li></ul><ul><li>Functional Accessories, </li></ul><ul><li>In-Car-Entertainment. </li></ul><ul><li>Completely un-related </li></ul><ul><li>technology of products </li></ul><ul><li>but the products can be sold to </li></ul><ul><li>the Same customer from the </li></ul><ul><li>same dealerships/retail. </li></ul><ul><li>Company has low expertise on </li></ul><ul><li>these products and low interest </li></ul><ul><li>in manufacturing. </li></ul><ul><li>Useful but Secondary role in </li></ul><ul><li>retail and communication. </li></ul><ul><li>E.g.; Scorpio “S” Brand Clothing, </li></ul><ul><li>Accessories, Umbrellas etc. </li></ul>© edu-ideas@shankar.balan™ 2008
    39. 39. LOGIC BEHIND BRAND LICENSING CASE I – MAHINDRA SCORPIO Own Mfg Sourcing Licensing <ul><li>The Brand/ Company loses direct control on a few categories by licensing them. </li></ul><ul><li>However, the Brand/ Company acknowledges that they do not want to manage them directly via own manufacture/ own sourcing . </li></ul><ul><li>There is the fact that another expert on that category can manage the business better while the Company/ Brand focusses on its CORE. </li></ul><ul><li>It is clear that these licensed products can add a lot of excitement to business and that these products can be sold to Brand’s Core Consumers from some of their existing dealerships/ retail. </li></ul><ul><li>External distribution of these categories will help increase consumer mind-share since they encounter the brand name unexpectedly in external places. </li></ul>© edu-ideas@shankar.balan™ 2008
    40. 40. Products Different Similar Distribution Similar Different Game Plan Own Mfg Sourcing Licensing © edu-ideas@shankar.balan™ 2008
    41. 41. Products Different Similar Distribution Similar Different Progress of Game Plan Licensing Route © edu-ideas@shankar.balan™ 2008
    42. 42. SCORPIO Extension : Possible Road Map Products Different Similar Distribution Similar Different Jeeps Tractors Farm Equipment Alloy Wheels In Car Entertainment Others Clothing Sunglasses Watches Shoes Caps SUV’s & Lifestyle Vehicles Fog Lamps Toys © edu-ideas@shankar.balan™ 2008
    43. 43. Another way to look at Brand/ Product Extensions is to analyze their relevance based on 2 Key Tenets; i.e., Brand Accelerators & Key Value Drivers. “ Brand Image Accelerators ” and “ Key Value Drivers ” ….. © edu-ideas@shankar.balan™ 2008
    44. 44. SCORPIO Extension : Possible Road Map Key Value Drivers Low High Brand Accelerators High Low Jeeps Tractors Farm Equipment Alloy Wheels In Car Entertainment Others Clothing Sunglasses Watches Shoes Caps SUV’s & Lifestyle Vehicles Fog Lamps Toys © edu-ideas@shankar.balan™ 2008
    45. 45. BRAND LICENSING – Other Cases <ul><li>The following Brands which most of us have heard of, are primarily apparel brands: </li></ul><ul><li>All these brands have very successfully extended themselves into high- visibility, high- </li></ul><ul><li>fashion, highly aspiration driven and attractive categories like Perfumes, Bags, Watches, </li></ul><ul><li>Sunglasses and Footwear. </li></ul><ul><li>The methodology/ discipline followed for these extensions is common. i.e.; </li></ul><ul><li>“ Brand Licensing”. (Eg: Armani Sunglasses are licensed to a company called Safilo & Hugo Boss </li></ul><ul><li>fragrances are actually licensed to P&G) </li></ul><ul><li>These branded/ licensed product extensions are worn and shown-off by their wearers </li></ul><ul><li>as “outward” signs of success etc. </li></ul><ul><li>This leads to a high brand acceleration/ awareness, aspiration and desire, which attracts </li></ul><ul><li>more consumers and which in turn leads to intellectual and monetary capital for the </li></ul><ul><li>brands. </li></ul>© edu-ideas@shankar.balan™ 2008
    46. 46. Some Successful Licensees and their Brands. <ul><li>Luxottica (Italy)– Worldwide Sunglasses licensees for Ralph Lauren, Donna Karan, Chanel etc. </li></ul><ul><li>They own the RAY-BAN brand! </li></ul><ul><li>Safilo (Italy)– Worldwide Sunglasses licensees for Carrera, Armani, Dior, etc. They own the OXYDO brand of sunglasses! </li></ul><ul><li>Inspecs (UK) – Worldwide Sunglasses licensees for Speedo, Caterpillar etc. </li></ul>© edu-ideas@shankar.balan™ 2008
    47. 47. Some Successful Licensees and their Brands. <ul><li>Egana (Europe) – Worldwide Watches Licensees for Esprit, Carrera, Puma, Cerrutti 1881etc. </li></ul><ul><li>Timex (US & India) – Worldwide Watches Licensees for Tommy Hilfiger, Armani, Emporio Armani etc. They own the TIMEX Brand! </li></ul><ul><li>Pentland Group (UK) – Worldwide Shoes Licensees for Lacoste & Ted Baker. They own the Speedo Sportswear brand! </li></ul><ul><li>Reebok International – Manufacturing Licensees for the Greg Norman Line of Golf Apparel, Sportswear & Headgear. </li></ul><ul><li>As you can see, some successful Licensees may even create, distribute and market their </li></ul><ul><li>own brands in their core categories – this will earn them bigger profits. </li></ul>© edu-ideas@shankar.balan™ 2008
    48. 48. Summary of Salient Points - Extensions & Licensing <ul><li>1.Brand Extensions can make the Mother Brands more </li></ul><ul><li>exciting and more relevant to an ever-changing consumer. </li></ul><ul><li>2.They could help Brands to gain a greater share of consumer </li></ul><ul><li>Lifestyles, mind-share and eventually, share-of-wallet. </li></ul><ul><li>3.Greater Distribution and universal availability of these products </li></ul><ul><li>can reinforce brand awareness in non- traditional outlets, and desire </li></ul><ul><li>in non- traditional consumers. </li></ul><ul><li>4.The gains to brands via Licensing can be manifold – no direct </li></ul><ul><li>inventory, no direct warehousing/ supply chain management, solid </li></ul><ul><li>bottom-line income via royalties. </li></ul><ul><li>5. A licensing business can run as a relatively low cost operation, with </li></ul><ul><li>minimum resource mobilization/utilization. </li></ul>© edu-ideas@shankar.balan™ 2008
    49. 49. Brand Extensions & Licensing <ul><li>Part III </li></ul><ul><li>Interactive Exercise </li></ul>© edu-ideas@shankar.balan™ 2008
    50. 50. Important Points <ul><li>A brand's &quot;extendibility&quot; depends on how strong the consumer's associations are to the brand's values and promise. </li></ul><ul><li>Examples: </li></ul><ul><li>Land Rover’s legendary reliability and toughness motivate consumers to buy in to the Land Rover brand apparel/ outdoor wear/ footwear. </li></ul><ul><li>The Dove brand has extended itself from “skin-care” to “hair care”. </li></ul>© edu-ideas@shankar.balan™ 2008
    51. 51. Some Challenges faced by Brands <ul><li>The Core product of the brand is at a “mature life cycle” stage – it has reached out and retained a large consumer base and has come to “stand for” something. (Louis Philippe is almost synonymous with good quality apparel.) </li></ul><ul><li>It may not stand out in competition or have an unique point of view when compared to say Van Heusen. </li></ul><ul><li>May lack international appeal – may not drive “lifestyle” imagery when compared to say, Hugo Boss. </li></ul><ul><li>Top of Mind customer recall is product based – not lifestyle based. (It is predominantly a Shirt/ Trouser brand – consumers view it as such – so how will it excite them with Lifestyle imagery?) </li></ul>© edu-ideas@shankar.balan™ 2008
    52. 52. The delicate balance <ul><li>Brand </li></ul>PAST GLORY STATIC GROWTH NEED TO CORRECT THE BALANCE NEW Product Excitement & FUTURE OPPORTUNITIES © edu-ideas@shankar.balan™ 2008
    53. 53. Guidelines to establish better connect with consumer Guideline One: Extend a strong Attribute / Performance Characteristic Association. Example – Amul (milk association) Example – Fair & Lovely (skin fairness benefit association) Guideline Two: Extend an association with a Consumer Attitude or Belief. An intangible like this can actually be a very strong basis for extending a brand. Example – Nike (pushing oneself beyond the limit and an individualistic attitude) Guideline Three: Extend the brand based on Brand Essence. The essence of the Ferrari brand is the thrill and excitement associated with fast cars and winning races. The essence of the Dunhill brand is old-world, refined, sophisticated luxury. © edu-ideas@shankar.balan™ 2008
    54. 54. Customer’s Perception of mother brand PREMIUM MASS NICHE AFFORDABLE © edu-ideas@shankar.balan™ 2008
    55. 55. New Categories Relationship with Mother Brand Categories Directly related to the brand Complementary Categories Categories Un-related to the brand © edu-ideas@shankar.balan™ 2008
    56. 56. New category fit with mother brand’s values © edu-ideas@shankar.balan™ 2008
    57. 57. Architecture for marketing & distribution positioning Price Extension category Premium Basic Limited edition Mass distribution Limited distribution Selective showcase Premium © edu-ideas@shankar.balan™ 2008
    58. 58. Think Break <ul><li>What is the market potential of the new category? </li></ul><ul><li>How will it compare against any competitors product in the same category in terms of consumer benefits, features & price? </li></ul><ul><li>Will this new category attract a new customer profile or will existing consumers also move to the new product? </li></ul>© edu-ideas@shankar.balan™ 2008
    59. 59. Think Break (Examples) <ul><li>Examples: </li></ul><ul><li>If Horlicks were to launch a Chocolate Drink, how would it fare against Cadbury’s ? </li></ul><ul><li>Can TATA Salt extend itself to TATA Pepper ? </li></ul><ul><li>Can the CATCH Brand move into other categories of foodstuffs apart from their current table-salt, ground-pepper and masalas? </li></ul><ul><li>Can Sunsilk move out of only Hair-care into Skin-care? </li></ul><ul><li>Can Gillette get into the Dental care category as well? </li></ul>
    60. 60. Brand Extension & Licensing Exercise <ul><li>1. Think of any brand and its core product. </li></ul><ul><li>2. Consider what this brand can extend itself into. </li></ul><ul><li>3. Suggest which methodology it should use to extend. </li></ul><ul><li>4. Work out the salience of the extensions –from the consumer’s point of view. </li></ul><ul><li>5. Use the guideline slides provided to crystallize your thoughts. </li></ul><ul><li>6. Present your point of view in the interactive session. </li></ul>© edu-ideas@shankar.balan™ 2008
    61. 61. Recommended Reading <ul><li>Strategic Brand Management – Jean-Noel Kapferer </li></ul>© edu-ideas@shankar.balan™ 2008
    62. 62. <ul><li>Thank you </li></ul>© edu-ideas@shankar.balan™ 2008