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Licensing of trademarks




Comprehension check.

DEGREES OF BRAND LOYALTY

SUPPLEMENTARY READING

SPEECH PRACTICE

1. Summarize the information of Unit 12 and speak on “Branding”. Make up a plan of your summary.

2. Competition between manufacturer brands and own label brands is sometimes called “the battle of the brands”. How should manufacturers be concerned about the popularity of their brands? How should they fight in the brand battle?

3. What major considerations consumers should take into account when selecting a brand?

4. Suggest a brand name for each of the following new products, and explain why you chose that name:

a) a development of exclusive home sites;

b) a low-price term life insurance policy sold by mail;

c) an airline’s improved business class service on Asian routes;

d) a lawn edge that is more durable than its competition.

 

Although branding is very important, the degrees of brand loyalty among consumers vary widely according to the type of product. A tennis player, for example, may insist on buying a Prince racquet. Many consumers, however, might readily accept a generic type of paper towel. Brand recognition, brand preference, and brand insistence are three degrees of brand loyalty.

Brand recognition simply means that the consumer is familiar with the good or service. Free samples and discount coupons are often used to build this familiarity since a recognized brand is more likely to be purchased than an unknown one.

Brand preference is the degree of brand loyalty at which the consumer will be loyal if the brand is available. Many consumer products, such as potato chips and soft drinks fall into this category. A considerable portion of all marketing expenditures go to build brand preference.

Brand insistence is the degree of brand loyalty at which consumers will accept no substitute for their preferred brand. If it is not readily available locally, the consumer will drive to an area where it is available, or order it from a factory, or turn to mail order or telephone buying. Brand insistence is the ultimate degree of brand loyalty, and few brands obtain it. Cosmetics are an example of a product that might inspire this degree of brand loyalty.

1. Define the term ‘brand loyalty’.

2. What degrees of brand loyalty do you know?

3. What is ‘brand recognition’, ‘brand preference’ and ‘brand insistence’?

4. What are the advantages associated with brand loyalty?

 

An organization is not limited to a single branding policy. Instead, branding policy is influenced by (1) the number of products and product lines the company produces, (2) the characteristics of its target markets, (3) the number and types of competing products available and (4) the size of its resources. A recent trend in branding strategies involves the licensing of trademarks. By means of a licensing agreement, a company may permit approved manufacturers to use its trademark on other products for a licensing fee. The licensee is responsible for all manufacturing, selling and advertising functions and bears the costs if the licensed product fails. Not long ago, only a few firms licensed their corporate trademarks but today the licensing business is worth billions of dollars and is growing. For example, Disney licenses its brand for use on a range of products.

The advantages of licensing range from extra revenues and low cost to free publicity, new images and trademark protection. For example, Coca-Cola has licensed its trademark for use on glassware, radios, trucks and clothing in the hope of protecting its trademark. Similarly, Jaguar has licensed a range of leisure wear. However, brand licensing is not without drawbacks. The major disadvantages are lack of manufacturing control, which could hurt the company’s name, and the undesirability of bombarding consumers with too many unrelated products bearing the same name. Licensing arrangements can also fail because of poor timing, inappropriate distribution channels or mismatching of product and name.




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