Money and Mayhem

Feature By Victoria Slind-Flor Money and mayhem Brand extensions and celebrity endorsements can be license things that otherwise might not make a whole lot of sense. the easiest route to a rapid increase in revenue. But as For lifestyle products you can extend the brand to all kinds of different things customers might buy.” some companies have found out, they are not According to licensing consultancy The Beanstalk Group, Harley- guarantees of success Davidson has 80 licences in 18 product categories and generates approximately $1 billion in retail sales annually. By comparison, at the end of Harley-Davidson’s 2006 fiscal year, the company earned $4.55 billion from motorcycle sales, $862 million from sales of parts and accessories, and $277.5 million from its own general Why do some brand strategists think Harley-Davidson beer makes merchandise. sense, but a Harley-Davidson cake-decorating kit is a dumb idea? Harley-Davidson’s licensing partners include KidKraft of Dallas, And who would ever expect that sales of a fat-free electric grill Texas, which manufactures Harley-themed children’s desks and would soar because of an association with a heavyweight boxer? rocking toys; Miller Brewing Company of Milwaukee, Wisconsin, Why would you be able to find the logo of the National Association which produced the pale lager Harley-Davidson beer; and Zippo for Stock Car Racing (NASCAR) on an ice cream bar? Manufacturing of Bradford, Pennsylvania, which makes cigarette Companies seek to extend their brands for a variety of reasons. lighters bearing the Harley-Davidson logo. For one thing, it’s a form of free and permanent advertising. Then, of Jacqueline Lampert, KidKraft's director of licensing, says her course, the revenues some brand-extensions deals generate can company has been making and selling a wooden Harley rocking contribute significantly to the bottom line. “If you’re a brand motorcycle for about eight years. Although her company makes other manager and can increase revenue without any expense, that’s a Harley-themed items, it's the rocking bike that sells the best. “We find good thing,” says Gregory P Gulia, a trademark partner at New York’s that if we make licensed items, the ones that do best are most closely Duane Morris. Sometimes, though, he says it’s “difficult to know related to the thing that's licensed,” she explains. And the rocking who is paying whom”, as the dollar value of a deal and the direction motorcycle “has the closest relationship to the Harley brand”. in which the money flows are generally very closely held. KidKraft approached Harley about licensing. “We had a line of If the product has a unique coined name, such as Crayola or products – rocking horses – that were relatively successful, but anyone Popsicle, the name becomes stronger with each additional product can make a rocking horse,” says Lampert. KidKraft wanted an item that to which it’s attached, says Gulia. POPSICLE – the trademark for what competitors couldn't copy. “Licensing is a bit of a science and an art at is known as a “quiescently frozen confection” – is a brand now the same time. Sometimes you can hit it right and sometimes you can extended to include children’s toothbrushes. Binney & Smith’s misread it completely. We try to capture an essence of the brand and Crayola brand has moved past colour crayons to show up on kids’ what it is in the eye of the consumer,” Lambert explains. She declines bedding, cake decorations and music CDs. to reveal sales figures, but says the rocking motorcycle has done very well over the years for KidKraft. The newest model features a sound Harley’s hit and miss chip that plays the distinctive roar of a Harley-Davidson motorcycle. But the world of brand extension is filled with many odd-seeming That sound itself is a registered trademark. marriages. For example, the logo of motorcycle manufacturer But some are critical of some aspects of the Harley-Davidson Harley-Davidson Inc can be found on an easily anticipated product licensing strategy and point to the cake-decorating kits and the range of leather jackets, t-shirts, helmets and beer. But it’s also perfumes as a step too far from the company’s core brand equity. possible to buy Harley-Davidson branded perfume, condoms, Such choices are signs the extension strategy is “seriously adrift”, cribbage boards, furniture for children, coffee, beef jerky, bedding, brand consultant Alycia de Mesa wrote in a piece recently published Barbie dolls, wedding-cake toppers and the aforementioned cake- on www.brandchannel.com. And in the annual ranking published by decorating kits. New York’s TippingSprung consultancy, the Harley-Davidson cake- Harley-Davidson is a “lifestyle brand”, says Edward Tauber, of decorating kit – licensed to Bakery Crafts of West Chester, Ohio and Palm Springs, California’s Brand Extension Research. “They have a intended for children’s birthday cakes – was deemed “the worst group of customers who use the product as a lifestyle, so Harley will brand extension of 2005”. 10 World Trademark Review November/December 2007 www.WorldTrademarkReview.com Right Austin Katz, Director of business development, Brand Sense Partners in Los Angeles We developed a brand and a strategy that transcended Britney as a person. [The fragrances] were able to survive and flourish in a world in which there wasn't the best news about what Britney was up to The critics say that Harley-Davidson’s iconic outlaw image – the equity and pick good partners who are strong in their categories and bike of choice for members of the Hell’s Angels Motorcycle Club and a good cultural fit for your company,” she says. Easy Rider wannabes – is not consistent with something as innocent as a child’s birthday cake. And one could only imagine the kind of Brand integrity scent associations the name Harley-Davidson would conjure up on a Austin Katz, director of business development at Brand Sense perfume bottle. Eau de crankcase, perhaps? Partners of Los Angeles, says brand extension has changed dramatically over the years. “In the most traditional sense, it is taking Looking for synergies a logo or a trademark and attaching it to a hat or keychain. But that Any NASCAR auto race looks like brand extension run amok. The kind of extension has become less meaningful,” Katz explains. cars and the drivers’ uniforms are almost wallpapered with Companies that are content to do that kind of label-slapping can be corporate logos, with the names of tyre manufacturers and motor- dangerously careless of the integrity of the brand, he says. oil products predominant. But for the 2007 NASCAR racing season, “Some licensors have extended too far and have made terrible at least one of the cars will be wearing the logo of an ice cream mistakes, licensing new products that can be harmful to the brand,” confection, Unilever’s Klondike Bar. Additionally, race fans will be Katz continues. It’s a balancing act, he says, and all about factoring in able to find a specially labelled KLONDIKE NASCAR bar for sale at potential negative exposure against licensing revenue and their supermarkets. promotion of the brand. Gulia insists the KLONDIKE-NASCAR deal is a great marriage of Tauber agrees. He is critical of Sunkist which, he says, has two well-known brands. “Brand managers look for synergies,” he harmed itself through some of its brand extensions. Sunkist said. In the best deals, he explains, it works both ways. People will Growers Cooperative Inc is a 114-year-old citrus growers’ cooperative want to eat KLONDIKE NASCAR ice cream at the tracks and will think based in Sherman Oaks, California. “It was the first branded fruit. It of NASCAR every time they reach into the supermarket freezer case. was successful because it was a different orange. It tasted different. Church & Dwight Co Inc of Princeton, New Jersey, takes a They branded it and got a premium price for it,” Tauber says. hardline approach to brand extension. The company produces a But then Sunkist began to diversify, starting with a carbonated wide range of consumer products, among them home pregnancy soft drink. “They were taking the image of a healthy fresh fruit and tests, cat litter, denture adhesives, hair-removal cream, water putting it on something it wasn’t,” says Tauber. The orange soda was softeners and deodorants. But the crown jewel is the bright yellow a big success, and so were many of the other 500 Sunkist branded box of Arm & Hammer baking soda, with its distinctive logo products, such as baking mixes, candies, dried fruit snacks and incorporating a burly flexed arm wielding a sledgehammer. Church almonds. “They made a lot of money, but they’ve diluted the brand,” & Dwight has been selling Arm & Hammer for more than 150 years. Tauber claims. “Sunkist is not the brand it used to be.” “We have a wonderful history with consumers,” says licensing director Tammy Talerico. The Clorox solution All licensed products bearing the Arm & Hammer logo must fit One of Brand Sense Partners’ clients is the Clorox Company of within the “core equity of deodorization, safety and cleaning,” she Oakland, California. Besides the well-known bleach-related products, says. And every licensed product must actually contain Arm & Clorox also produces Kingsford charcoal briquettes used for Hammer baking soda. In one of the most recent licensing deals, Arm barbecueing. “The Kingsford division knows how to make charcoal & Hammer announced a hook-up with Electrolux Home Care really well. That’s their expertise,” says Katz. But it was Brand Sense Products Ltd last August for deodorizing vacuum cleaner bags.

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