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Rubber firms extend brands to gain customers, revenue

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Rubber companies are among those manufacturers finding that brand extensions can bring in royalties and, more important, new customers for their core products.

Groupe Michelin and Goodyear have each launched brand extension programs in recent years. Among many other items, both companies are involved in athletic shoes, an extension that David Gaglione, associate director of branding consultancy Landor Associates' naming and strategy team, sees as logical.

"It's not unbelievable to see them partner with a shoe company," Gaglione said. "It's where there's no clear connection when a company has to be careful. You want to extend the brand, not break the brand."

Michelin in 2002 began operating U.K.-based Michelin Lifestyle to extend the company's brand into new consumer markets worldwide.

"The Michelin brand is considered a great brand," said Chris Dawes, Michelin Lifestyle managing director. "We made a name for ourselves producing the best tires in the world. With that technology and brand strength, we felt it could be extended further."

Michelin, which works with The Licensing Co., groups its brand extension lines into three categories: automotive and cycle-related products; footwear, apparel, accessories and equipment for work, sport and leisure; and personal accessories, gifts and collectibles promoting Michelin's heritage and culture, with an emphasis on Bibendum (aka the "Michelin Man").

"Each item in the program is a stylish, high-quality product that offers genuine points of difference," Dawes said. "This is much more than putting a logo on an existing product."

To date, Michelin has done the most business with the automotive accessories, such as inflation- and pressure-monitoring goods, air compressors and air tools, wiper blades, wheel- and tire-changing products, wheel and tire care goods, and automotive floor mats. However, Dawes said the work, sport and leisure category has the long-range potential to overtake the auto accessories line.

In August, Michelin and French company Babolat made a big splash with the U.S. debut of the high-performance Babolat Team All Court tennis shoe. The shoe features a sole developed using Michelin technology.

"That's a natural fit for us," Dawes said. "We can use our technological expertise to develop the sole of a shoe."

Goodyear started its structured licensing program in 2003. It followed the success the company had for a number of years in licensing rubber shoe soles and heels for use in brands such as Red Wing, Dexter, Puma, Prince and, most recently, adidas.

Goodyear protects its name

Bob Paciulan, Goodyear manager of licensed products, said that generally a company approaches Goodyear and asks to use its trademark. Goodyear then does due diligence and a series of tests to make sure the product lives up to the Akron, Ohio-based company's quality standards before entering into a licensing agreement. "One objective is to ensure the quality of the product to protect our good name," Paciulan said.

Like Michelin, Goodyear has a category of products closely aligned to the automotive industry, including tools used for auto repair and jack stands sold through warehouse clubs.

But it too has branched into other areas, such as mechanics' gloves, a line of cleaning wipes for windows and upholstery and a Goodyear-brand garden hose nozzle being sold in Home Depot stores. "Home Depot came to us," Paciulan said. "That shows the power of the Goodyear brand."

Paciulan said Goodyear has three objectives in its brand extension program: increase brand awareness, generate royalties and produce other intangible benefits, including having other companies looking to protect Goodyear's trademark.

It's difficult to track how well the company is meeting these objectives, but he did say Goodyear made License magazine's Top 100 list of licensors after just one full year of its licensing program.

Michelin sees its licensing program as a long-term venture, with the main objective to have a positive impact on its core tire line. Its auto accessories are being sold at 17,500 outlets in 35 to 40 nations.

"We feel the brand extension market is $110 billion," Dawes said. "We feel it's not out of range to get 1% of that market over the next five years, or $1 billion or so in sales. Certainly we are on target with where we think a company like ours can be."

--Bruce Meyer is managing editor of Rubber and Plastics News, a BtoB sibling publication.

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