Brand Equity Archives - Foresight Valuation Group

Fair Use: Friend or Foe?

Posted on March 29, 2019 10:45 pmModified on April 19, 2021 8:32 pmby Sebastian Custodia

Several months back in an article discussing Brand Extendibility, I touched on a humorous exchange between In-N-Out Burger and a microbrewery regarding some obvious trademark infringement. In that case, the burger chain’s attorneys decided to approach the situation in a light hearted manner, issuing a pun-filled cease and desist notice. Earlier this month, however, the company decided to take a different approach in dealing with infringement on its coveted trademarks. German shoe maker, Puma, recently released a sneaker called the “Cali-0 Drive Thru”which prominently features the In-N-Out palm tree logo on the laces, in addition to the white, yellow, and red color scheme used by the burger company. It is possible that Puma, and shoe designer Mike Cherman of Chinatown Market, felt that use of the trademark was in the confines of fair use, particularly given the amusing promotional videos released on Puma’s Instagram page. Although a statement made by In-N-Out’s executive vice president firmly asserts otherwise:

“By using In-N-Out’s designs and trade dress, Puma and Cherman intentionally confused consumers for their own benefit and have also created the impression that our marks and unique trade dress are available for public use.”

Trademark protection allows owners to stop the use of their registered marks in order to prevent any confusion by the public regarding the source of a good or service. Under certain circumstances, however, fair useof a registered trademark is permitted. According to the International Trademark Association, there are two types of fair use: Descriptive Fair Useand Nominative Fair Use. Descriptive FairUsepermits the use of an existing trademark in order to describe your own product or service. For example, courts ruled that the WD-40 Company’suse of the word “inhibitor” was permitted to describe its product as one that inhibits long-term corrosion, even though “The Inhibitor” is a registered trademark. Another example is the use of the phrase “sweet-tart” to describe the flavors of a juice, despite SweeTart being a registered trademark of a candy company. In Puma’s case, it would seem that descriptive fair use does not apply. In fact, after reviewing the official description of the sneakers, which says that they pay homage to California’s “burger diners,” one might argue that infringement of the In-N-Out palm trees is even more blatant. Puma might be covered by descriptive fair use if it described a pair of shoes as “easy to slip in and outof,” for example, but in this case infringement seems probable.

The second type of fair use, Nominative Fair Use, permits the use of a trademark to refer to the actual good or service offered by the trademark owner. Most commonly, nominative fair use is used by the media in its reporting on certain events or products, such as the Boston Marathon, which is a registered trademark of the Boston Athletic Association. Nominative fair use is also often leaned on for parody of a brand or product. I suspect that Puma may have gambled on the Drive Thru shoes being covered by nominative fair use given the videos (mentioned earlier) that show the sneakers frolicking in a field of hamburgers. However, Puma still included the palm tree logo on its shoes and never directly mentions or gives credit to In-N-Out. Under different circumstances, Puma may have been permitted to use In-N-Out’s name in a parody promotional video for its Drive Thru shoes, although direct use of the palm trees for Puma’s own benefit without In-N-Out’s consent would likely never be permitted.

In-N-Out has a reputation for taking swift action against any party that might be threatening the integrity of its brand. After investing millions of dollars to build brand equity, most companies aim to protect their brands with the same vigor. Fair use may seem like just another legal loophole at first; however, in some cases brands might actually stand to benefit from the use of its trademark (particularly through parody and nominative fair use) by nature of increased exposure. Take Levi’s for example – a company that has been successfully working to re-build its brand equity through various means such as stadium naming rights, which I’ve covered in the past. In 2017, Saturday Night Live broadcasted a skit that parodied both pop culture and the brand itself, titled “Levi’s Wokes.” Among the SNL regulars, the skit also prominently featured movie star Ryan Gosling wearing a pair of ridiculous jeans jokingly produced by Levi’s. As of this writing, the video has over 3.3 million views on the SNL YouTube channel alone. For a company that was looking to reinvent itself and reintroduce its brand name as a pop culture icon, one can only assume that this type of publicity was welcomed with open arms.

Monitoring trademark infringement is key to any successful branding strategy. The last thing a brand manager wants is to lose control of public perception of the brand, and infringing products or services can be a catalyst for just that. In-N-Out actually sells its own pair for branded shoes on the company website and seems to command adequate public attention without Puma’s help – a quick Google search for something like “In-N-Out vs. Shake Shack” reveals just how prominent the burger chain is in pop culture. In certain instances, particularly those covered by fair use, brand managers with a keen instinct to protect their investments may have to take a back seat. In such cases, it is important, to understand and even embrace fair useof a brand, and recognize the benefits that it may bring. Just ask Levi’s who recently went public after a 30+ year hiatus from the stock exchange and has seen a roughly 30% increase over its $17 IPO price.

From Santa Claus to Kaepernick: The Role of Brand Association in Building Iconic Brands

Posted on October 15, 2018 8:13 pmModified on November 8, 2018 11:50 amby Sebastian Custodia

Iconic brands share many common attributes that a brand holder must build over time and actively manage in order to maximize the value of the brand, also known as “Brand Equity” (or Brand Value).

In a previous post, I explored the Brand Extendibility component of Brand Equity. One other key component is Brand Association. Building a positive Brand Association is one of the critical components of building a relevant and valuable brand — Amazon is associated with efficiency; Apple is associated with innovation; the Gold Rush often triggers consumers to think of Levi’s; animated films are associated with Disney whether or not they are actually produced by the company.

Brand Association: Defined

“Brand Association” encompasses attributes such as emotions, products and images that trigger consumers to think of your brand, and that come to mind when they interact with your brand. The Coca Cola brand has done a great job evoking feelings of happiness and kinship from its consumers, and furthermore, the company has succeeded in associating itself with the Christmas holiday in the U.S. – so much so that it has actually had a tangible impact on the embodiment of Santa Claus as we know him today. Brand Association plays a key role in consumer purchase decisions, and can help bolster other components of Brand Equity, such as Brand Loyalty. Conversely, Brand Association can become negative very quickly, leading to consequences that are extremely difficult to undo; for example, the British Petroleum (BP) brand has developed a negative association as a result of the disastrous oil spill of 2010, which left many feeling angry and disappointed with the brand. Reversing this association and preventing consumers from immediately thinking of this event when interacting with the BP brand is the large and difficult task of the BP brand managers.

Creating an Emotional Brand

Brand Association is strengthened by the ability to conjure emotion from the brand’s consumers. The book Basics of Branding: A Practical Guide for Managers, by Jay Gronlund, discusses the key principles for developing and maintaining a strong brand. According to Gronlund, “you’re not there until you have an emotional brand;” echoing the notion that the most valuable and iconic brands have an emotional tie with consumers.

One way to evoke emotion is by taking a stance on a cultural issue. Whether or not specific consumers agree or disagree with the stance that a brand chooses to take, it is common wisdom that the action itself has the potential for great impact on Brand Association, and ultimately on Brand Equity. One could argue that Cheerios’ open embrace of “non-traditional” family constructs, and conversely, Chick-Fil-A’s embrace of traditional religious values, have each had a large impact on the respective companies’ Brand Equity.

One recent example of emotional branding by taking a stance is Nike’s “Dream Crazy” ad campaign featuring Colin Kaepernick. This campaign received enormous press coverage and viewership outside of just its paid placements (the YouTube video of the ad has over 26 million views on the company’s page as of this writing). Over the years, Nike has masterfully constructed an emotional brand that is often associated with overcoming adversity and celebrating one’s abilities. The company’s slogan of “Just do it” carries a certain emotional weight as a call to action for anyone doubting themselves. With the recent Kaepernick ad, the company is clearly trying to appeal to the emotions of pride and passion by showcasing a variety of athletes overcoming hardship in the form of cultural, physical and societal barriers to achieve greatness in and out of their sports.

The Effectiveness of Cultural Branding

What made the “Dream Crazy” ad campaign highly efficient, is Nike’s utilization of Cultural Branding, a process that has taken shape in the digital era along with the rise of social media. Cultural Branding is a nice vehicle for emotional branding in that it makes the campaign highly targeted and focused, thus appealing to people’s emotions in the most effective way. An HBR article titled “Branding in the Age of Social Media” breaks down the framework for Cultural Branding into 5 steps:

Map the Cultural Orthodoxy – Identify the cultural conventions that the brand intends to challenge given its missions and role in society

Locate the Cultural Opportunity – Identify the alternatives to the Cultural Orthodoxy that consumers are searching for

Target the Crowdculture – Cater to the consumers that have pioneered the Cultural Opportunity. The rise of social media has allowed for increased access to subcultures that drive broader cultural change

Diffuse the New Ideology – Communicate and make mainstream the new ideology that the brand is representing

Innovate Continually, Using Cultural Flash Points – Continue this process as new Cultural Orthodoxies are identified and challenged in order to build and maintain the authenticity of the brand as a cultural icon

With the “Dream Crazy” campaign, Nike has embraced the elements of Cultural Branding. The Cultural Orthodoxy surrounding the acceptance of societal barriers and the current state of social justice is the challenge that Nike has chosen to pursue, recognizing the Cultural Opportunity to embrace the ideologies of freedom, equality, and unbounded opportunity. Naturally, the company has framed its efforts around the sports culture in general; but more specifically, we see the campaign targeting a number of different subcultures in the advertisement, collectively forming the Crowdculture, which Nike hopes would act as a conduit to Diffuse the New Ideology to a broader audience. In a pre-digital era, targeting these underrepresented cultures may not have allowed Nike to reach the critical mass it requires as a global, public company. However, in the age of social media, the targeting of subcultures has not only become easier, but has become an extremely effective tool for brand strategists to spread their message and impose their ideologies on the broader society.

The Aftermath of “Dream Crazy”

For Nike, much has been made about the decision to endorse Colin Kaepernick and launch the ad campaign. People have been seen across media platforms burning the company’s gear or otherwise publicly denouncing the brand. But did this decision actually hurt the brand? Or did the effort serve to bolster Brand Equity even further?

A recent study published by Quid, a big-data analysis and visualization company, provides some insight on the buzz generated by the campaign. According to the article, the “Dream Crazy” ad received 15% of all media coverage surrounding controversial ad campaigns over the past 16 months – more than any other campaign. Next, they analyzed 1,500 articles specifically covering the campaign and noted that 31% used language that was skewed negative, 13% positive, and the remaining 56% neutral – which is actually noted to be favorable compared to the “predominantly negative” reception of other campaigns such as the Kendal Jenner Pepsi advertisement and the H&M sweatshirt event. With these 2 analyses in mind, we see that the campaign generated significant press coverage for the brand, meaning its messages were conveyed (well-received or not) to a very large audience, thus fulfilling the 4^th principle of effective Cultural Branding. The campaign seems to have strengthened Nike’s image as an emotional brand, unafraid to push boundaries and take a stance.

The Kaepernick campaign is just another example of how Brand Equity is built through positive Brand Association, achieved through emotional branding and carried through Cultural Branding. Somewhat counterintuitively, standing for something greater than the product itself, much like Cheerios, Chick-Fil-A and others, is a driving force behind the sale of Nike goods.

Should Your Toothpaste Company Launch a Frozen Food Line? A Closer Look at Brand Extendibility

Posted on September 13, 2018 9:43 pmModified on April 19, 2021 8:30 pmby Sebastian Custodia

Brand equity (often equated with brand value) is an all-encompassing measure of the benefits that a company receives from its brand as a result of its cumulative marketing and brand maintenance efforts. There are various valuation methodologies that attempt to assign a specific monetary value to a given brand which range from simple cash flow models to complex combinations of various rankings and analyses (such as the methodology used by Interbrand). In an article titled Brand Equity: An Overview published out of the University of Virginia, brand equity is said to encompass the following measures:

Brand Association: What triggers consumers to think of the brand and what comes to mind when they see the brand

Brand Vision: The way the brand presents itself and reflects the overall business strategy

Brand Positioning: How to brand positions itself in the target market relative to competitors

Brand Image: How consumers view the brand and what target personas the company wants to associate with the brand

Brand Awareness: A measure of how well consumers recognize the brand; on a scale from “Unaware” to “Top of Mind Awareness”

Brand Loyalty: How likely consumers are to switch between brands within the same product category

Brand Extendibility: Potential to leverage the positive perceptions associated with the brand to new customers

Each one of these components of brand equity deserves to be explored at length; however, this piece will focus on exploring Brand Extendibility in further detail. As mentioned in a previous post, the direct monetary benefits that a well-constructed brand offers the company are traditionally boiled down to 2 main categories; the ability to charge premium prices, and diminishing marginal marketing costs as a company expands. Brand Extendibility is the main value driver of the second category. A company can introduce its brand to new customers in 1 of 2 ways. First, a company can launch a new product in a new product category. Modern tech companies are a great example of utilizing Brand Extendibility in this way. For example, Amazon has successfully launched products in the e-reader, virtual assistant, tablet, and smart TV product categories (among many others) all under the Amazon name which has become known for its highly efficient and customer centric image. The second method of brand introduction to new customers is extending to a different target market within the same product category. Proctor & Gamble has done an excellent job of this over the years. For example, P&G has extended the Tide brand to many different subcategories within the broader detergent category, and has extended its Crest brand to many different subcategories of the broader oral care category. Under both of these brand extension methodologies, a strong brand relieves the parent company of a great deal of marketing and other brand building expenses. Similar to the concept of economies of scale, where a company’s fixed costs become less significant as production of a product increases, Brand Extendibility reduces the significance of marketing costs as the brand extends to new products and customers.

It is important to remember, however, that a brand can be over extended. When this happens, the value of the brand can actually take a hit, as the intended messages and associations begin to get diluted (appropriately called “Brand Dilution”). Think Harley-Davidson Perfume, or Colgate Beef Lasagna. You can imagine the rugged image of Harley taking a hit as bottled fragrances hit the shelves, and Colgate’s association with freshness and cleanliness beginning to fade when depicted next to layers of marinara sauce in the frozen foods section. The lesson is not only to intelligently manage the brand internally, but also to develop restrictions on who licenses your brand and under what terms. Unfortunately, there are times when a brand extension is attempted without the company’s permission.

Such was the case with In-N-Out Burger, when a micro-brewery launched a new beer called the “Neapolitan Milkshake Stout” back in July. The Neapolitan Milkshake may be ubiquitous with the burger chain for some west coast residents, but the real problem was the proposed can design for the beer, which mimicked the In-N-Out soda cup design almost exactly and used a clear copy of the company’s logo bearing the text “In-N-Stout.” You can imagine the In-N-Out executives’ reaction to seeing their clean-cut brand being used to market what some would consider a vice. If this were a deliberate move made by In-N-Out burger to try and extend their brand to the adult beverage market, we would have to question the thought process behind the decision and wonder whether or not this would actually serve to damage the family-friendly brand. In this case, however, the release of the product was out of the company’s control, and thus, swift action was the only way to mitigate such potential damage to brand equity. Fortunately, In-N-Out’s legal team crafted arguably the perfect response; issuing a pun-filled cease and desist notice which has received a great deal of publicity to date. One could argue that this response and the press coverage that followed may have actually resulted in increased brand equity.

Surprisingly, this is not the sole case of a questionable brand extension into the beer arena. Back in 2015, breakfast cereal brand Wheaties teamed up with a micro-brewery in Minnesota to launch the “HefeWheaties” beer in an intentional brand extension effort. Whether or not this extension positively or negatively affected the Wheaties brand equity can be debated; however, the value-add of Brand Extendibility is clear. When a recognizable and respected brand is used in the marketing of a new product, the marketing team benefits from all past branding efforts and is relieved to a certain degree of expenses that they would normally have to incur in launching an entirely new brand. Imagine the relative expenses that Apple (the world’s most valuable brand) will undertake when it finally launches its rumored Apple Car, compared to the expenses that will arise when Wheaties inevitably launches its own electric vehicle.