In business, having a top brand name can be better than money in the bank.
Many companies—and rubber firms are no exception—find that brand extension can bring in royalties and, more importantly, bring in new customers for their core products.
"When a company looks to extend their brand, when it does the job the right way, it extends it in a way to not have a negative impact," said David Gaglione, associate director of Landor Associates´ naming and strategy team.
Groupe Michelin and Goodyear are two rubber firms with active brand extension programs. Among many other items, both are involved in athletic shoes, a step that Gaglione sees as logical.
"It´s not unbelievable to see them partner with a shoe company," he said. "It´s where there´s no clear connection when a company has to be careful. You want to extend the brand, not break the brand."
How it works
Michelin in 2002 began operating England-based Michelin Lifestyle Ltd. to extend the firm´s brand into new consumer markets worldwide.
"The Michelin brand is considered a great brand," said Chris Dawes, Michelin Lifestyle managing director. "We made a name for ourselves producing the best tires in the world. With that technology and brand strength, we felt it could be extended further."
Michelin, which works with The Licensing Co., groups its brand extension lines into three categories: automotive and cycle-related products; footwear, apparel, accessories and equipment for work, sport and leisure; and personal accessories, gifts and collectibles promoting Michelin´s heritage and culture, with an emphasis on Bibendum (aka the "Michelin Man").
"Each item in the program is a stylish, high-quality product that offers genuine points of difference," Dawes said. "This is much more than putting a logo on an existing product."
To date, Michelin has done the most business with the automotive accessories line, which also happens to be the closest to its core business. Dawes said the 35-40 products aim to enhance mobility but also add value with technology. Products in the line include inflation- and pressure-monitoring goods, air compressors and air tools, wiper blades, wheel- and tire-changing products, wheel and tire care goods, and automotive floor mats.
Dawes, however, feels the work, sport and leisure category has the long-range potential to overtake the auto accessories line.
In August, Michelin and French firm Babolat made a big splash with the U.S. debut of the high-performance Babolat Team All Court tennis shoe. The shoe features a sole developed using Michelin technology.
"That´s a natural fit for us," Dawes said. "We can use our technological expertise to develop the sole of a shoe."
Goodyear´s structured licensing program also is in its infancy, formed in 2003. That followed the success the company had for a number of years in licensing rubber shoe soles and heels for use on brands such as Red Wing, Dexter, Puma, Prince and, most recently, adidas.
The adidas athletic shoe, especially, has sold well beyond expectations, according to Bob Paciulan, Goodyear manager of licensed products. "Most people don´t know that Goodyear was involved in the footwear industry almost since its inception," he said.
He said that generally, a company approaches Goodyear and asks to use its trademark. Goodyear then does due diligence and a series of tests to make sure the product lives up to the Akron-based firm´s quality standards before entering into a licensing agreement.
"One objective is to ensure the quality of the product to protect our good name," Paciulan said.
Like Michelin, Goodyear has one category of products closely aligned to automotive, including tools used for auto repair and a set of jack stands sold through warehouse clubs.
But it, too, has branched into other areas, such as a mechanics´ glove, a line of cleaning wipes for windows and upholstery, and a Goodyear-brand garden hose nozzle being sold in Home Depot stores. "Home Depot came to us," Paciulan said. "That shows the power of the Goodyear brand."
Benefits to companies
Gaglione said when Landor Associates works with firms on brand extension, it first determines how their product or raw material can be used elsewhere. He pointed to the Goodyear/adidas collaboration as one that really could bring new customers to Goodyear.
"It keeps them in high performance, but high performance in an entirely new industry," he said. "It can wake people up as a consumer."
In measuring impact, Landor often will do large-scale quantitative surveys upfront to measure the equity of a brand, Gaglione said. Then, after a brand extension program, Landor follows up in smaller groups to gather qualitative information to see if the brand moved from the baseline study.
Paciulan said Goodyear has three objectives in its brand extension program: increase brand awareness; generate royalties; and generate other intangible benefits, including having other companies looking to protect Goodyear´s trademark.
It´s difficult to track how well the firm is meeting these objectives, but he did say Goodyear made "License" magazine´s Top 100 list of licensors after just one full year of its licensing program.
Michelin sees its licensing program as a long-term venture, with the main objectives to have a positive impact on its core tire line and also to "offer the right products, in the right markets at the right time," Dawes said. "If we do those two right we feel we will have a positive financial impact on our company."
In auto accessories alone, Michelin items are being sold at 17,500 outlets in 35-40 nations.
"We feel the brand extension market is $110 billion," he said. "We feel it´s not out of range to get 1 percent of that market over the next five years, or $1 billion or so in sales. Certainly we are on target with where we think a company like ours can be."
Dawes acknowledged, though, that it´s more difficult to measure the impact on the core tire brand. "Invariably, the feedback has been positive," he said. "The more we penetrate the market, the more easily we´ll be able to assess what the public thinks about us and what effect it has on our core product."