By making a connection between the brand and another entity, consumers may form a mental association from the brand to this other entity and, consequently, to any or all associations, judgments, feelings, and the like linked to that entity. In general, these secondary brand associations are most likely to affect evaluations of a new product when consumers lack either the motivation or the ability to judge product-related concerns. In other words, when consumers either don’t care much about or don’t feel that they possess the knowledge to choose the appropriate brand, they may be more likely to make brand decisions on the basis of secondary considerations such as what they think, feel, or know about the country from which the product came, the store in which it is sold, or some other characteristic.

Linking the brand to some other entity may not only create new brand associations to the entity but also affect existing brand associations. The basic mechanism is this. Consumers have some knowledge of an entity. When a brand is identified as linked to that entity, consumers may infer that some of the particular associations, judgments, or feelings that characterize the entity may also characterize the brand. A number of different theoretical mechanisms from psychology predict this type of inference. One is “cognitive consistency”—in other words, in the minds of consumers, what is true for the entity, must be true for the brand.2

To describe the process more formally, here are three important factors in predicting the extent of leverage from linking the brand to another entity:

1. Awareness and knowledge of the entity: If consumers have no awareness or knowledge of the secondary entity, then obviously there is nothing they can transfer from it. Ideally, consumers would be aware of the entity; hold some strong, favorable, and perhaps even unique associations about it; and have positive judgments and feelings about it.

2. Meaningfulness of the knowledge of the entity: Given that the entity evokes some positive associations, judgments, or feelings, is this knowledge relevant and meaningful for the brand? The meaningfulness may vary depending on the brand and product context. Some associations, judgments, or feelings may seem relevant to and valuable for the brand, whereas others may seem to consumers to have little connection.

3. Transferability of the knowledge of the entity: Assuming that some potentially useful and meaningful associations, judgments, or feelings exist regarding the entity and could possibly transfer to the brand, how strongly will this knowledge actually become linked to the brand?

In other words, the basic questions we want to answer about transferring secondary knowledge from another entity are: What do consumers know about the other entity? and, Does any of this knowledge affect what they think about the brand when it becomes linked or associated in some fashion with this other entity?

Theoretically, consumers can infer any aspect of knowledge from other entities to the brand (see Figure 7-2), although some types of entities are more likely to inherently create or affect certain kinds of brand knowledge than others. For example, events may be especially conducive to the creation of experiences; people may be especially effective for the elicitation of feelings; other brands may be especially well suited for establishing particular attributes and benefits; and so on. At the same time, any one entity may be associated with multiple dimensions of knowledge, each of which may affect brand knowledge directly or indirectly.

For example, consider the effects on knowledge of linking the brand to a cause, like Avon’s Breast Cancer Crusade. A cause marketing program could build brand awareness via recall and recognition; enhance brand image in terms of attributes such as brand personality or user imagery like kind and generous; evoke brand feelings like social approval and self-respect; establish brand attitudes such as trustworthy and likable; and create experiences through a sense of community and participation in cause-related activities.

Judgments or feelings may transfer more readily than more specific associations, which are likely to seem irrelevant or be too strongly linked to the original entity to transfer. As we’ll see in Chapter 12, the inferencing process depends largely on the strength of the linkage or connection in consumers’ minds between the brand and the other entity. The more consumers see similarity between the entity and the brand, the more likely they will infer similar knowledge about the brand.

Leveraging secondary brand associations may allow marketers to create or reinforce an important point-of-difference or a necessary or competitive point-of-parity versus competitors. When choosing to emphasize source factors or a particular person, place, or thing, marketers

should take into account consumers’ awareness of that entity, as well as how the associations, judgments, or feelings for it might become linked to the brand or affect existing brand associations.

Marketers can choose entities for which consumers have some or even a great deal of similar associations. A commonality leveraging strategy makes sense when consumers have associations to another entity that are congruent with desired brand associations. For example, consider a country such as New Zealand, which is known for having more sheep than people. A New Zealand sweater manufacturer that positioned its product on the basis of its “New Zealand wool” presumably could more easily establish strong and favorable brand associations because New Zealand may already mean “wool” to many people.

On the other hand, there may be times when entities are chosen that represent a departure for the brand because there are few if any common or similar associations. Such complementar ity branding strategies can be strategically critical in terms of delivering the desired position. The marketer’s challenge here is to ensure that the less congruent knowledge for the entity has either a direct or an indirect effect on existing brand knowledge. This may require skillfully designed marketing programs that overcome initial consumer confusion or skepticism. For example, when Buick signed Tiger Woods as an endorser, many questioned whether consumers would find a fit or consistency between the golfer and the car maker, and, if not, how much value the endorsement would add to the Buick brand.

Even if consumers buy into the association one way or another, leveraging secondary brand associations may be risky because the marketer gives up some control of the brand image. The source factors or related person, place, or thing will undoubtedly have a host of other associations, of which only some smaller set will be of interest to the marketer. Managing the transfer process so that only the relevant secondary knowledge becomes linked to the brand may be difficult. Moreover, this knowledge may change over time as consumers learn more about the entity, and these new associations, judgments, or feelings may or may not be advantageous for the brand.

The following sections consider some of the main ways by which we can link secondary brand associations to the brand.

The Science of Branding 7-2 provides some academic insight about how consumers evaluate co-branded products. To create a strong co-brand, both brands should have adequate brand awareness; sufficiently strong, favorable, and unique associations; and positive consumer judgments and feelings. Thus, a necessary but not sufficient condition for co-branding success is that the two brands separately have some potential brand equity. The most important requirement is a logical fit between the two brands, so that the combined brand or marketing activity maximizes the advantages of the individual brands while minimizing the disadvantages.24

Smart Car

Some eyebrows were raised when DaimlerChrysler AG’s Mercedes Benz unit agreed to manufacture a “Swatchmobile,” named after SMH’s colorful and fashionable lines of Swatch watches. Personally championed by SMH’s charismatic chairman, Nicolas Hayek, the Smart Car, as it came to be known, was designed to be small (less than 10 feet long) and low cost (under $10,000). The car combined the three most important features of Swatch watches—affordability, durability, and stylishness—with important features of a Mercedes Benz automobile—safety and security in a crash. A number of critics believed the Mercedes-Benz image could suffer if the car was unsuccessful, which was a possible outcome given the fact that many products bearing the Swatch name (like clothes, bags, telephones, pagers, and sunglasses) had disappointing sales or were dropped altogether. However, those concerns were quickly proven to be incorrect, with their successful launch in Europe. Since then Smart has been a worldwide hit with the Smart Fortwo being sold in over 35 countries worldwide.25

Besides these strategic considerations, marketers must enter into and execute co-branding ventures carefully. They must ensure the right kind of fit in values, capabilities, and goals in addition to an appropriate balance of brand equity. When it comes to execution, marketers need detailed plans to legalize contracts, make financial arrangements, and coordinate marketing programs. As one executive at Nabisco put it, “Giving away your brand is a lot like giving away your child—you want to make sure everything is perfect.” The financial arrangement between brands may vary, although typically the firm using the other brand will pay some type of licensing fee and/or royalty from sales. The aim is for the licensor and the licensee to benefit from these agreements as a result of the shared equity, increased awareness for the licensor, and greater sales for the licensee.

More generally, brand alliances, such as co-branding, require marketers to ask themselves a number of questions, such as:

• What capabilities do we not have?

• What resource constraints do we face (people, time, money)?

• What growth goals or revenue needs do we have?

In assessing a joint branding opportunity, marketers will ask themselves:

• Is it a profitable business venture?

• How does it help to maintain or strengthen brand equity?

• Is there any possible risk of dilution of brand equity?

• Does it offer any extrinsic advantages such as learning opportunities?

One of the highest-profile brand alliances was that of Disney and McDonald’s, which had the exclusive global rights from 1996 to 2006 in the fast-food industry to promote everything from Disney movies and videos to TV shows and theme parks. McDonald’s has partnerships with a number of different brands, including leading toy and entertainment companies for its Happy Meals, and Kraft’s Oreo, Hershey’s M&M’s, and Rolo brands for its McFlurry dessert.

A special case of co-branding is ingredient branding, which creates brand equity for materials, components, or parts that are necessarily contained within other branded products.27 Some successful ingredient brands over the years include Dolby noise reduction, Gore-Tex water-resistant fibers, Teflon nonstick coatings, Stainmaster stain-resistant fibers, and Scotchgard fabrics. Ingredient brands attempt to create enough awareness and preference for their product that consumers will not buy a host product that does not contain the ingredient.

From a consumer behavior perspective, branded ingredients are often a signal of quality. In a provocative academic research study, Carpenter, Glazer, and Nakamoto found that the inclusion of a branded attribute (“Alpine Class” fill for a down jacket) significantly affected consumer choices even when consumers were explicitly told that the attribute was not relevant to their decision.28 Clearly, consumers inferred certain quality characteristics as a result of the branded ingredient.

The uniformity and predictability of ingredient brands can reduce risk and reassure consumers. As a result, ingredient brands can become industry standards and consumers will not want to buy a product that does not contain the ingredient. In other words, ingredient brands can become, in effect, a category point-of-parity. Consumers do not necessarily have to know exactly how the ingredient works—just that it adds value.

Ingredient branding has become more prevalent as mature brands seek cost-effective means to differentiate themselves on the one hand, and potential ingredient products seek means to expand their sales opportunities on the other hand. Some companies create their own ingredient brands, such as Chevron with its Techron gasoline additive, Westin with its Heavenly Bed, and Best Buy with its Geek Squad technical support team.29 To illustrate the range of alternatives in ingredient branding, consider how Singapore Airlines uses both co-branded and self-branded ingredients in their service delivery.

Singapore Airlines

In its Suites class of service, Singapore Airlines offers bedding and tableware from Givenchy as well as new chairs hand stitched by “master Italian craftsman” Poltrona Frau. The First Class SkySuites feature leather seats trimmed with Burrwood. The airline offers the Krisworld entertainment system and Givenchy fleece blankets. In the more expensive Suites, first, and business classes, customers can enjoy Bose QuietComfort 2 acoustic noise-canceling headphones (economy flyers get Dolby). For its cuisine, Singapore Airlines’s meals are prepared by its International Culinary Panel and premium classes enjoy ethnically branded meals such as Shahi Thali (Suites and first class) and Hanakoireki (business class). All passengers can join the KrisFlyer frequent flyer program.30

Thus, as in this example, one product may contain a number of different branded ingredients. Ingredient brands are not restricted to products and services. For example, through the years, electronics specialty retailer RadioShack has established strategic alliances with Hewlett Packard, Microsoft, RCA, Sprint, Verizon Wireless, and others that let the manufacturers set up kiosks within many of RadioShack’s 7,000 U.S. stores. RadioShack itself has set up mobile phone kiosks in almost 1,500 Target stores in the United States, served by Radio Shack’s own black-shirted employees and using its own point-of-sale systems.31

One danger in licensing is that manufacturers can get caught up in licensing a brand that might be popular at the moment but is only a fad and produces short-lived sales. Because of multiple licensing arrangements, licensed entities can also easily become overexposed and wear out quickly as a result. Sales of Izod Lacoste, with its familiar alligator crest, peaked at $450 million in 1982 but dwindled to an estimated $150 million in shirt sales in 1990 after the brand became overexposed and discount priced.34 Subsequently purchased by Phillips-Van Heusen, the brand has been making a comeback as the result of more careful marketing.

Firms are taking a number of steps to protect themselves in their licensing agreements, especially those firms that have little brand equity of their own and rely on the image of their licensor.35 For example, firms are obtaining licensing rights to a broad range of licensed entities—some of which are more durable—to diversify their risk. Licensees are developing unique new products and sales and marketing approaches so that their sales are not merely a function of the popularity of other brands. Some firms conduct marketing research to ensure the proper match of product and licensed entity or to provide more precise sales forecasts for effective inventory management.

Corporate trademark licensing is the licensing of company names, logos, or brands for use on various, often unrelated products. For example, in the depths of a financial crisis a number of years ago, Harley-Davidson chose to license its name—synonymous with motorcycles and a certain lifestyle—to a polo shirt, a gold ring, and even a wine cooler. Once it regained firmer financial footing, the company developed a much more concerted strategy, meeting with much success as described in its 10K report in 2011.

The Company creates an awareness of the Harley-Davidson brand among its customers and the non-riding public through a wide range of products for enthusiasts by licensing the name “Harley-Davidson” and other trademarks owned by the Company. The Company’s licensed products include t-shirts, vehicles and vehicle accessories, jewelry, small leather goods, toys and numerous other products. Although the majority of licensing activity occurs in the U.S., the Company continues to expand these activities in international markets. Royalty revenues from licensing, included in Motorcycles segment net revenue, were $39.8 million, $38.3 million and $45.4 million in 2010, 2009 and 2008, respectively.

Other seemingly narrowly focused brands such as Jeep, Caterpillar, Deere, and Jack Daniels have also entered a broad portfolio of licensing arrangements.

In licensing their corporate trademarks, firms may have different motivations, including generating extra revenues and profits, protecting their trademarks, increasing their brand exposure, or enhancing their brand image. The profit appeal can be enticing because there are no inventory expenses, accounts receivables, or manufacturing expenses. In an average deal, a licensee pays a corporation a royalty of about 5 percent of the wholesale price of each product, although the actual percentage can vary from 2 percent to 10 percent. As noted in Chapter 5, some firms now sell licensed merchandise through their own catalogs.

As in any co-branded arrangement, however, the risk is that the product will not live up to the reputation established by the brand. Inappropriate licensing can dilute brand meaning with consumers and marketing focus within the organization. Consumers don’t care about the financial arrangements behind a particular product or service; if the brand is used, the brand promise must be upheld.

Despite the potential upside of linking a celebrity endorser to a brand, there are a number of potential problems. First, celebrity endorsers can endorse so many products that they lack any specific product meaning or are seen as opportunistic or insincere. Although NFL star quarterback Peyton Manning has parlayed success on the football field and his “Aw shucks” personality into endorsement contracts for a number of different brands—DirectTV, Gatorade, MasterCard, Oreo, Reebok, and Sprint, among others—he runs the risk of overexposure, especially given that so many of his ads run concurrently with the football season.39

Second, there must be a reasonable match between the celebrity and the product.40 Many endorsements would seem to fail this test. Despite being featured in their ads, NBA star Kobe Bryant and race car driver Danica Patrick would seem to have no logical connection to Turkish Airlines and Go Daddy Internet domain registrar and Web hosting company, respectively. Some better matches in recent years include comedian Bill Cosby’s playful tone for Jell-O and champion cyclist and cancer-survivor Lance Armstrong for Bristol-Myers Squibb’s cancer medicines.

Third, celebrity endorsers can get in trouble or lose popularity, diminishing their marketing value to the brand, or just fail to live up to expectations. Most companies conduct background checks before signing celebs, but that doesn’t guard against bad behavior in the future. A number of spokespeople over the years have run into legal difficulties, personal problems, or controversies of some form that diminished their marketing value, such as O.J. Simpson, Martha Stewart, and Michael Jackson.41 Figure 7-5 is a rogue’s gallery of high-profile celebrity endorsement mishaps. To broaden the appeal and reduce the risks of linking to one celebrity, some marketers have begun to employ several different celebrities or even celebrities who are deceased and therefore a known commodity—dead celebrities were estimated to generate $2.25 billion in revenue in North America in 2009.42

Fourth, many consumers feel celebrities are doing the endorsement only for the money and do not necessarily believe in or even use the brand. Even worse, some feel the fees celebrities earn to appear in commercials add a significant and unnecessary cost to the brand. In reality, celebrities often do not come cheap and can demand literally millions of dollars for endorsements.

Celebrities also can be difficult to work with and may not willingly follow the marketing direction of the brand. Tennis player Andre Agassi tried Nike’s patience when—at the same time he was advertising for Nike—he appeared in commercials for the Canon Rebel camera. In these ads, he looked into the camera and proclaimed “Image Is Everything”—the antithesis of the “authentic athletic performance” positioning that has been the foundation of Nike’s brand equity. Winning the French Open, however, put Agassi back in Nike’s good graces.

Finally, as noted in Chapter 6, celebrities may distract attention from the brand in ads so that consumers notice the stars but have trouble remembering the advertised brand. PepsiCo decided to drop singers Beyoncé Knowles and Britney Spears from high-profile ad campaigns when they felt the Pepsi brand did not get the same promotion boost from the campaign that the stars were getting. The firm decided to put the spotlight back on the product with its endorsement-free follow-up, “Pepsi. It’s the Cola.” After signing Celine Dion for a three-year, $14 million deal, Chrysler dumped her in the first year when commercials featuring Dion driving a Pacifica produced great sales for the singer, but not for the car!

Brands can become overreliant on a celebrity. Founder and chairman Dave Thomas was an effective pitchman for his Wendy’s restaurant chain because of his down-home, unpretentious, folksy style and strong product focus. Recognized by over 90 percent of adult consumers, he appeared in hundreds of commercials over a 12-year period until his death in early 2002.43 The brand struggled for years afterward, however, trying to find the right advertising approach to replace him.

To overcome these problems, marketers should strategically evaluate, select, and use celebrity spokespeople. First, choose a well-known and well-defined celebrity whose associations are relevant to the brand and likely to be transferable. For example, despite false starts for his retirement, Brett Favre’s rugged, down-to-earth persona fits well for the backyard football games in the “Real. Comfortable. Jeans.” Wrangler ads.

Then, there must be a logical fit between the brand and the person.44 To reduce confusion or dilution, the celebrity ideally will not be linked to a number of other brands or be overexposed. Popular Hong Kong actor Jackie Chan has been criticized for endorsing too many

products—from electric bikes to antivirus software to frozen dumplings and more. Unfortunately, many of the products he has endorsed have run into problems—a shampoo was alleged to contain carcinogens, an auto repair school was hit by a diploma scandal, and makers of both video compact discs and an educational computer went out of business. As one Chinese editorial commented: “He has become the coolest spokesperson in history—a man who can destroy anything!”45

Third, the advertising and communication program should use the celebrity in a creative fashion that highlights the relevant associations and encourages their transfer. Dennis Haysbert has played the president of the United States in the TV series 24 and adopts a similarly stately, reassuring tone for his spokesperson role in the “You’re in Good Hands” ads for Allstate insurance. William Shatner’s humorous Priceline ads take a completely different tack and take advantage of the actor’s self-deprecating, campy wit to draw attention to its discount message.

Finally, marketing research must help identify potential endorser candidates and facilitate the development of the proper marketing program, as well as track its effectiveness.

Celebrities themselves must manage their own “brands” to ensure that they provide value. By the same token, anyone with a public profile, even if just within the company in which he or she works, should consider how to best manage his or her brand image.47 Branding Brief 7-4 offers some thoughts about how personal branding works in general and how it differs from more traditional branding for products and services.