{"id":1208,"date":"2015-01-14T16:16:21","date_gmt":"2015-01-14T21:16:21","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=1208"},"modified":"2015-01-07T16:22:49","modified_gmt":"2015-01-07T21:22:49","slug":"dont-blame-brand-licensing","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/dont-blame-brand-licensing\/","title":{"rendered":"Don\u2019t Blame Brand Licensing"},"content":{"rendered":"

\"Disney-logo\"Jack Trout in his blog published on BrandingStrategyInsider.com\u00a0\u201cLicensing<\/a>: Trouble for Brands\u201d dated February 25, 2008 makes a compelling argument for why not to consider licensing as a method of\u00a0brand extension<\/a>.\u00a0 Furthermore, he backs it up with multiple examples of established brands with flawed licensing programs that serve to prove his hypothesis. After reading about Pratt & Whitney and Pierre Cardin, what CEO in their right mind would choose to risk the company\u2019s crown jewels to a group of third party manufacturers, which don\u2019t have a clue about how to build a\u00a0brand<\/a>, let alone manage one? \u00a0With so much at stake, only those CEOs that are either reckless or desperate would consider licensing. Right?<\/em><\/p>\n

Maybe the problem isn\u2019t licensing, but its poor or improper execution? After all, why would a company choose to forgo its consumer driven innovation process or marketing principles only when it comes to extending their brands through licensing? \u00a0Some of the best and biggest brands around the globe have been actively and successfully licensing. \u00a0Disney, P&G, Coke, and Harley Davidson each have outstanding licensing programs. These programs not only enjoy strong royalty income, they\u00a0enhance their brands\u2019\u00a0attributes<\/a>\u00a0in the process.<\/p>\n

The problem definitely isn\u2019t licensing. \u00a0Rather, it\u2019s either the lack of sound brand guardrails in the brand licensing process or a failure to heed to those guardrails.\u00a0 Jack Trout builds multiple assumptions into his argument that are flawed. \u00a0I agree that the promise of royalty revenue can be intoxicating, especially to a public company struggling to meet its forecasted quarterly operating income. \u00a0However, this is an indictment of management and not licensing. \u00a0Licensing is simply a tactical execution of a brand extension strategy (even if the strategy is no strategy).<\/p>\n

In considering\u00a0brand licensing, the first question that needs to be addressed is\u00a0where the brand should play.\u00a0 In other words, what categories should the brand be in?\u00a0 If a company begins with a sound understanding of their brand\u2019s architecture and positioning, they can then develop a robust brand extension strategy. \u00a0Knowing where the brand has permission to play enables a company to identify extensions that offer the best overall business opportunity. \u00a0Once the company knows where the brand can play, they must determine \u201chow to win.\u201d \u00a0Should the company extend the brand organically? Or, should they source the category? \u00a0If the company chooses not to extend the brand with internal resources, they do so through acquisition or licensing. \u00a0Like any brand extension, each licensed category must support the brand\u2019s architecture and positioning. \u00a0At Newell Rubbermaid, we would draft a category positioning statement aligned with the brand positioning statement for each licensed category. \u00a0This ensured each category licensed reinforced the brand\u2019s positioning.<\/p>\n

If a company chooses to extend their brand without a fundamental understanding of the brand\u2019s architecture and positioning, the licensed products will at best have a neutral impact on the brand.\u00a0 More likely, they will permanently erode the brand\u2019s\u00a0equity<\/a>. \u00a0This consequence would occur irrespective of how the company chooses to extend their brand. \u00a0Licensing gets a bad rap\u00a0for damaging brands when either internal licensing teams or their agencies decide to extend a brand into \u201cadjacent\u201d categories in the pursuit of a quick royalty infusion. \u00a0Whether or not a company chooses to use other peoples\u2019 resources and money when executing their brand extension strategy, they must always ensure every product brought to market continues to support the brand\u2019s commitment and promise.<\/p>\n","protected":false},"excerpt":{"rendered":"

Jack Trout in his blog published on BrandingStrategyInsider.com\u00a0\u201cLicensing: Trouble for Brands\u201d dated February 25, 2008 makes a compelling argument for why not to consider licensing as a method of\u00a0brand extension.\u00a0 Furthermore, he backs it up with multiple examples of established brands with flawed licensing programs that serve to prove his hypothesis. After reading about Pratt… Don\u2019t Blame Brand Licensing<\/span><\/a><\/p>\n","protected":false},"author":30,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[81],"tags":[622,623,619],"class_list":["post-1208","post","type-post","status-publish","format-standard","hentry","category-strategy","tag-brand-equity","tag-brand-extension","tag-brand-licensing"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1208","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/30"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=1208"}],"version-history":[{"count":1,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1208\/revisions"}],"predecessor-version":[{"id":1210,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1208\/revisions\/1210"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=1208"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=1208"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=1208"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}