- Posted by Holmes Weinberg, PC
- On December 3, 2014
There are a number of ways to grow a brand from its core product or service (for brevity’s sake, throughout this blog, I refer to both as “products”). Two prevalent forms are licensing the brand and brand extension. In licensing, the brand owner gives permission to third parties to make and market products under the brand in categories not necessarily related to the category(ies) in which the brand is established. Success for the licensing model depends in large part on the third party’s expertise and reach in sourcing and merchandising in specific products categories and often in specific channels in specific countries. The entertainment, art and fashion (designer) industries employ licensing extensively, which is how one gets, for example, Mickey Mouse® toothbrushes and Ralph Lauren® just about anything lifestyle. Iconic consumer brands also have used licensing to move into new categories where they can rely on their brand strength. Two great examples are Arm & Hammer® air filters and Tide® dry cleaning establishments. (I’ve been involved in licensing for 30 years, as lawyer, brander and agent, and will have a lot to say about it in a future post.)
The subject of today’s post is the other major model – brand extension. Unlike licensing, which usually takes brands into new categories, brand extension occurs when a brand with success in a category is extended to a new product or product line within that category or to an entirely new product that expands the category (the latter called “brand expansion”). Not a “new and improved” version of an existing product, but a new product that is designed to meet or create a new consumer driven need or a perceived new need. A successful example of brand extension is Reese’s® Minis — moving from full size to a mini size.
There are dozens of books and even more blogs about how one successfully can expand a brand, but there’s probably no better way of doing it than studying how others have done it well, or not, and then integrating those learnings into one’s own innovation process. Starting with basic notions, such as branding guru Marty Neumeier’s brand strategy of “zagging” when others are zigging (his book “Zag” is a must read), is of course necessary to innovating, but taking away the learnings from real examples helps to frame a collaborative process that is likely to lead to marketplace success. And of course there are the important legal considerations as well – starting with determining whether the name for the extended product is available for use and subject to trademark protection in all of the countries where it will be marketed. Or deciding not to seek protection for the extension name. For example, when DuPont invented what became popularly known as “polyester” it decided to give that word away to the public so that the new brand name Dacron® would not become generic for this new invention.
The Nielsen company, the same folks who bring us TV ratings, has been publishing very useful reports related to brands and consumers. In its recently published 2014 “Breakthrough Innovation Report,” ( to download, go to: http://www.nielsen.com/content/corporate/us/en/insights/reports/2014/breakthrough-innovation-report.html) it tells the stories and analyzes the teachings of what it characterizes as “Breakthough Winners” — 14 of 3463 consumer products launched in 2012 that “delivered a new value proposition to the market,” “generated a minimum of $50 million in year-one U.S. sales” and “achieved at least 90% of year-one sales in year two.” One of the more important lessons to emerge from this report, combined with the results of earlier studies, is the conclusion that real extension/expansion innovation is defined by consumers. As Nielsen concluded: “We have found a consumer-centered behavioral definition of innovation turns out to be the only really reliable one when establishing criteria, beliefs, and mental models about what is and what is not ‘innovation.’ The right question and the trustworthy guide is ‘does the brand offer a benefit bundle that brilliantly performs an important job in consumers’ lives for circumstances in which previously available solutions were unsatisfactory or nonexistent?’ When consumers discover brands that reliably perform important jobs for them, they pull these brands into their lives again and again.” Wherever Steve Jobs may be, he’s certainly smiling.