Neil Siskind’s “Brand” Advice For Manufacturers
Manufacturers license a trademark when they believe that the trademark will allow for greater sales than their product would realize without such trademark on it. Thus, the manufacturer believes that the trademark has “brand equity” or “brand loyalty”. This means that the manufacturer believes that customers will be more inclined to buy their product with the trademark then they would be without it. Likewise, in the case where the product is sold through retail stores (as opposed to over the Internet), “brand equity” or “brand loyalty” means to a manufacturer that retailers will be more inclined to buy the product from the manufacturer where retailers also believe that the trademark has “goodwill” that will cause product to sell-through at retail.
For a manufacturer to determine if it’s financially worthwhile to license a trademark for use on its products, the first step is to evaluate the level of “brand equity” or “good will” attached to the trademark. These days, everyone refers to their company or their trademark as a “brand”. The word is overused. A name is only a “brand” when it acts like a brand, which means that it entices people to act (meaning to buy) just by its mere existence. A “brand” is a name that when seen or heard, moves people to an emotional reaction. Consumers should become happy, positive, uplifted or experience feelings of trust when they see or hear the trademark name (or its related logo). If a name arouses any of these feelings in consumers, it may move the consumer to purchase a product based on seeing such name attached to the product. This is a “brand”. But if a name does not arouse these emotions, such that mere viewing or hearing of the name does not, alone, encourage people to act, then it is not a brand. In other words, it lacks “brand equity” or “brand loyalty” and is simply a trademark that generates revenues, but lacks significant “goodwill”.
A manufacturer has to be sure to understand the difference between a trademark and a trademark that is a “brand” before it agrees to license such trademark. A trademark that by its mere attachment to a product does not encourage purchases, may have no more value to a consumer, and, thus, to a manufacturer, than any other name being placed on a product. In such case, the payment of upfront fees, sharing of income toward royalties and setting up manufacturing to allow for the licensed trademark to be placed on products could be a complete waste of time, money and resources.
There are many manufacturers that sell product directly to the consumer over the Internet or in catalogs (or even by infomerical). A true “brand”, a brand that has mass appeal or mass goodwill, would likely be too costly to license in such situations unless the manufacturer has a large enough customer base to make the costs of a brand license worthwhile. Having that level of scale with manufacturer-direct-to-consumer sales and bypassing distributors and/or brick and mortar stores, is rare. Also, in this type of sales model, products are sold one item at a time. It would be difficult to project the point in time when the break-even point or a profit could be reached. (Catalog companies having their own proprietary trademarks are a separate matter since no upfront payments and sales royalties are paid to a third-party.)
Niche products for niche markets could provide an exception. Historically, a trademark became valuable as a license-able property once the core product(s) under the trademark reached sales of about $100,000,000.00. In the case of niche markets, however, which can be more easily reached in terms of marketing and sales because of the Internet, lower revenue numbers may still permit a trademark to be worthwhile to a licensee as a “niche” brand. Due to email, the Internet and social media, a company can bombard its target market with consistent messaging. Before the Internet and social media, the only way to do this, en masse, was through television and print, which, for smaller companies is cost prohibitive. But, when handled properly, the Internet makes brand messaging and communication with customers, en masse, cost-effective. Using television ads to reach a specific market is not financially sound. But using social media and email to do so can be. Thus, a highly-exposed niche “property” with lower revenues may present a financially-sound licensing opportunity for a manufacturer that is targeting a niche market, because the trademark owner’s marketing costs are low, allowing for licensing fees and rates to be affordable, while the trademark is ever-present to its customers. It still would not necessarily work for brick and mortar retailers, who need to attract a wide customer base, as opposed to a niche base. But for manufacturer-direct sales online, profits through licensing under this model are possible.
Manufacturers need to know their customer and distribution channel intimately to determine if a product name has “brand equity” or “brand loyalty” with such customer base such that a license of the trademark for placement on products would be likely to result in significantly more sales than could be achieved by selling the product with their own proprietary trademark attached.
New York Lawyer, Neil Siskind
By: Neil Siskind, New York Lawyer http://www.siskindlawfirm.com
Neil Siskind is the Founder of The Fatherhood Assignment
Learn more at: http://www.neil-siskind-the-fatherhood-assignment.org/
Review Neil Siskind’s personal and professional references at: http://siskindlawfirm.com/neil-siskind-bio/
Volunteer, Pro Bono, and Government Background:
Learn about how we try to give back http://www.neilsiskindsupports.com
Neil Siskind’s Volunteer Work: Volunteer, Memorial Sloan Kettering Cancer Center
Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving
Help Neil Siskind make sick children’s wishes come true: Neil-Siskind/Help-Make-A-Child-Smile.htm
Neil Siskind’s Pro Bono Work: Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com
Champion Children – The Siskind Law Firm We seek to inspire people with stories of children who have overcome challenges: http://siskindlawfirm.com/champion-children/
FreeStart Business – The Siskind Law Firm We seek to help put war veterans and senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/neil-siskind-free-start-business/
Neil Siskind’s Philanthropic Work:
-Hudson Riverfront Land Preservation
-Founder, The Fatherhood Assignment: A think tank to educate the public about, and advocate for the children of absentee fathers. http://www.neil-siskind-the-fatherhood-assignment.org/
Neil Siskind’s Government Work:
Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
Hartford County Department of Probation, Hartford, CT, 1991, Intern
Neil Siskind’s Community Assistance:
Established and operated a temporary legal clinic offering inexpensive legal services to struggling Long Islanders during the recession to help clients resolve debt, plan estate matters, organize finances, start small businesses and obtain governmental assistance such as Medicaid.
Neil Siskind’s linkedin URL: http://www.linkedin.com/profile/
Currculum Vitae: http://neilsiskind.com/
Neil S. Siskind
Attorney at Law