Brand Value 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.

If the Shoe Fits: The Case for Endorsements as a Branding Tool

Posted on January 22, 2019 6:14 pmModified on January 22, 2019 6:16 pmby Sebastian Custodia

Endorsements have long been a strategy for brand managers to help boost brand equity and product sales. Historically, high profile endorsements have primarily been reserved for the world’s largest companies – those with deep pockets. In today’s world of social media influencers, however, the strategy is far more available even to the smallest startups. And furthermore, with athletes and other celebrities increasingly diversifying their interests and personal brands, there is rising access to even the most coveted partnerships. Today, we are seeing endorsements being utilized by companies of all sizes and from all industries. From apparel, to financial services, to technology, big name endorsements have become a go-to for the world’s top brand managers.

Endorsements in the Basketball Shoe Game

Traditionally, we have viewed endorsements and partnerships as a way to gain an advantage over competitors and grow sales. No business utilizes such a strategy quite like the basketball shoe business. Since the introduction of the Air Jordan sneaker by Nike in the mid-80s, the generic, unendorsed basketball shoe has all but vanished. The vast influence of basketball endorsements has even carried over to other sports – for example, Nike’s website offers football and baseball cleats under the Lebron and Jordan brands. Nike has since made a concerted effort to corner the market by signing the game’s top stars to exclusive endorsement deals. To get an idea on just how highly the company values these deals, we can look to the 2014 deal made with Kevin Durant, reportedly worth $300 million over 10 years. And it gets better – just a year later in 2015, Nike signed Lebron James to a lifetime endorsement deal worth “north of $1 billion.” With deals like these, in addition to exclusive contracts with other stars such as Russell Westbrook, Kyrie Irving, Paul George, and retired superstar Kobe Bryant, it is difficult to imagine how any company could dream of challenging Nike’s dominance in the basketball shoe business.

This, however, is exactly what Under Armour set out to do. The athletic apparel company, which started with a simple mission to replace cotton undershirts with microfiber shirts for elite athletes, has since established itself as a viable challenger to Nike in the shoe game. How exactly did Under Armour set out to contest the company that once held over 90% of the sneaker market? Endorsements! One such endorsement in particular – Stephen Curry. In 2009, before he was one of the greatest shooters of all time, Curry entered the NBA under contract with Nike. When it came time to renegotiate, Under Armour saw its opportunity to leverage the power of endorsements and take a shot at Nike. Ultimately, in 2013, Curry signed a deal with Under Armour for just $4 million per year (a relatively insignificant amount in the world of celebrity endorsements, which Nike refused to match). Since then, Under Armour has made significant headway in the shoe business, and the original endorsement deal signed with Curry continues to be defined as nothing short of a “steal.” In 2016, one Morgan Stanley analyst estimated that the affiliation with Curry could be worth up to $14 billion to the company and its shareholders, on the back of a 350% increase in basketball shoe sales. And although Nike still owned the top 3 spots of endorsed shoe sales in 2017, Curry and Under Armour claimed the 4^th spot. As a result of all its success on the back of the 2-time MVP, Under Armour has signed Curry to an extension through 2024 in a deal that includes equity in the company. Following in the footsteps of Under Armour’s success, companies like Puma, Adidas, and New Balance have recently ramped up their endorsement efforts in the basketball world.

Endorsements as a Tool for Brand Revitalization

Companies like Under Armour, State Farm, Heineken, Capital One, and many more, use endorsements to grow their already healthy brands to new heights. But what about brands that have fallen from grace? How can brand managers revitalize a brand and return it to its former glory? In a previous post, I discussed how Levi’s leveraged stadium branding as a key component of its revitalization efforts; however, that is just one of many tools available. In fact, endorsements can also be an extremely effective strategy in rebuilding brand equity. While Under Armour is busy fortifying and growing its position in the shoe business, competitor New Balance is kicking off its comeback via an endorsement deal with NBA star Kawhi Leonard. The company hit its peak in the basketball world in the 1980s with its high profile partnership with James Worthy, but hasn’t released a performance basketball shoe model in about a decade. Even within the same industry and sector, we are witnessing endorsements being used as a multi-tool.

But the power of endorsements is not limited to the shoe business. Today, we are seeing another revitalization attempt from a brand that once defined the mobile category. Palm, the maker of the undeniably iconic Palm Pilot of the ‘90s, will lend its name to a new line of devices that recently launched. According to a recent Bloomberg article, two former Samsung employees launched Palm Ventures and licensed the Palm name from a Chinese manufacturer that now owns the brand (and also owns the BlackBerry brand). For Palm, there are 2 main obstacles to its revitalization efforts: 1) it must reintroduce itself as a player in the mobile device and/or wearable market, and 2) the brand managers need to sufficiently differentiate Palm from the immovable incumbents, such as Apple and Samsung. To make a splash with its relaunch, Palm has secured an endorsement deal with NBA icon (and Palm investor)… Stephen Curry. The Steph Curry endorsement is a great move towards achieving the brand reintroduction, particularly given his positioning in the Bay Area. His marketing efforts have the potential of creating brand awareness among one of the top target markets for mobile devices.

Palm originally found success as a mobile device for the business traveler, one of the first to offer reliable email service on the road. With Apple and Samsung now controlling most of the personal mobile device market, the new Palm phone is being marketed as a “companion device” to your existing smartphone. The tiny device is being positioned as a replacement for smartphones in certain situations where carrying a large device might be cumbersome – going to the gym or going out to dinner for example. Through this repositioning, the company is attempting to leverage its original brand equity as a mobile device pioneer, while laying the groundwork for new sources of brand equity as a companion device.

The revival of a brand shares many strategies and tactics with the accumulation of Brand Equity for an entirely new brand; however, certain nuances exist that can supplement the efforts for a once iconic brand. As someone with a vivid recollection of the desire to own a Palm Pilot (and someone who appreciates the art of the 3-pointer), I am rooting for the success of Palm. To this point, Palm has not been able to leverage its Curry endorsement quite like Under Armour, but a 4^th NBA championship might just turn the tides. Only time will tell if I’ll be checking my iPhone or my Palm underneath the table at future dinners.

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.