Every time you step into your vehicle, you’re a one-person marketing machine; you wear your innermost self on your sleeve during that otherwise uneventful trip to the supermarket or gas station.
That’s because our automobiles directly reflect who we are: our personalities, our political affiliations, our desires, our fashion sense, even our hygiene. And this distinct truth is not lost on the marketing world, which has made the automotive realm a likely extension of brand recognition and image development through the almighty license agreement.
Whether it’s wearing an automotive brand on a T-shirt, using car wash soap with an age-old household name or buying a floor mat festooned with a favorite cartoon character, licensing pervades the consciousness of the aftermarket, creating boundless opportunities that retailers, distributors and manufacturers may be unaware of. And new avenues for revenue can be a breath of fresh air amid this time of tight budgets and thin profit margins, even if it means selling a video game featuring the new Dodge Viper or featuring die-cast NASCAR replicas in a prominent location in your store.
Distributors say licensed items don’t make a big difference on their end, but at the retail level, consumers are likely to be more selective about these “lifestyle” choices. This consumer relationship is centered around trust, which is something we all know must be earned — a commodity that no amount of money can buy.
Nonetheless, companies are continually embarking on license agreements in the aftermarket, like the recent news that finds Vector Manufacturing teaming up with Black & Decker to use the trademark tool name on battery chargers and power inverters. Vector has also recently joined up with Rubbermaid to make a unique line of automotive thermoelectric warmers and coolers.
Tenneco Automotive has reported success in regards to its agreement with DuPontTM, and Orange County Choppers, the site of the hit TV show “American Choppers,” has signed a licensing agreement with NAPA Auto Parts for national media promotions and co-branded products and merchandise, representing a cultural trend that finds dozens of automotive and motorcycle reality shows on the airwaves.
Some success stories are as simple as featuring cultural icons on air fresheners, but with modern twists, yet other agreements are more unique and indicative of our rapidly evolving culture and our timeless obsession with automobiles.
This is seen perhaps foremost in the recent redesign of the automobile itself. Many automakers are tossing aside a conservative, pragmatic look in favor of designs that hearken back to the “golden age” of cars — the ’50s and ’60s, points out Dale Buss on Brandchannel.com, in an article titled, “Design shifts drive auto brands.” This design renaissance in both the car’s interior and exterior has offered consumers countless ways to select automobiles that resonate with their personalities, writes Buss. (Brandchannel.com is an online branding exchange posted by global brand consultant Interbrand.)
Many drivers consider their vehicles a lifestyle, with accessories and peripheral items serving as likely extensions of these lifestyle-driven choices. The tuner market, where style, looks and image are everything, is a prime example. Among the young sports compact enthusiasts, a name is as important as a product’s function.
More than just money
As counterintuitive as it may sound, license agreements are not typically forged just for revenue, says David Milch, owner of New York-based Perpetual Licensing. Rather, the goal is three-fold.
The first goal is brand-building, with the intent to increase brand awareness and what marketers call “mind share,” says Milch, who has worked with such brands as Ford, Jaguar, Land Rover and MTV.
The second reason for licensing is to protect trademark, he says. “If people are infringing on a trademark, the best way to go after those guys is to put a legal product out there.” For example, he adds, if a company makes a Corvette-style knockoff license plate frame, the best thing for the Corvette manufacturer to do is have its own licensed frame manufactured, which would offer consumers a better and more obvious choice. Many of our buying choices have been swayed by the “officially licensed” language printed on NFL or NASCAR memorabilia.
The third goal of licensing, imparts Milch, is the predictable aim of revenue generation — not necessarily increasing the revenue of the licensed product, but boosting sales of the core product, whether it’s sales of the automobile itself or increasing race viewership in the case of NASCAR.
For automotive companies, licensing is indeed lucrative, but a small fraction of the bottom line when compared to the core product if that core product is an automobile, describes Milch, whose current clientele is about 80-percent automotive.
But as we’ll see, there is much more to licensing than just spreading the name of automakers.
What’s in a name?
Automotive manufacturers clearly represent the most conventional and prolific means of licensing agreements in this industry.
You may think there is no real connection between aftermarket companies and the automaker — other than one that’s adversarial — but license agreements have bred scores of items trademarked by OEs that can lead to profits throughout the many aftermarket channels.
“Automotive licensing is a much bigger business than most people have realized,” says Brad Horn, vice president of Brand Sense Marketing, which facilitates license agreements for Dodge, whose $400 million annual sales from retail licensing represents double-digit growth over the past couple of years.
“When it comes to corporate brand licenses, Daimler-Chrysler is the third largest (automotive) licensor,” says Horn. “There are over 150 current Dodge licensees: (for) any product you can possibly think of, there is a Dodge manufacturer.”
This translates into millions of Dodge-branded products at the retail level, points out Horn. These range from die-cast toys, shirts, hats and collectibles to barbecue grills and desk accessories; the company also has plans to roll out Dodge-branded power tools this spring.
“These products give Dodge fanatics a way to tell the world they’re part of that Dodge club.”
And Dodge enthusiasts are a loyal bunch, says Horn, who adds the company’s branded merchandise helps develop these core consumers who will one day seek out vehicles like the Hemi pickup, which depicts outdoor and rugged lifestyles. These future consumers could be a seven-year-old playing with a Dodge toy or a 16-year-old operating a Viper in a video game, he adds.
“When you choose your vehicle, you become extremely attached to that brand,” continues Horn. “It becomes a reflection of who you are as a person.”
One thing that helps Dodge maintain its integrity is that every item it approves for licensing reflects on the core product. For example, Dodge hats are made with durable material and strong rivets to give consumers a consistency with the brand’s rugged image.
Horn thinks it’s amazing that retailers and distributors don’t take more advantage of branded products such as these.
Another prominent vehicle brand is Jeep, which also pulls in about $400 million in annual sales. Jeep licenses everything from bicycles, footwear and electronics to luggage, wheelbarrows and pet products.
Automotive brands appear to be tried and true names to license. Laurie Stevens, group product manager of accessories for Auto ExpressionsTM, a division of Shell Lubricants, considers the Ford and Chevy automotive brands to be “evergreen” licenses.
“If I had to take away all my licenses and hold onto two, it would be Ford and Chevy,” she admits.
Some licensees serve dual roles, making similar products for both their licensors and the OEs, says Milch.
Who lives in a pineapple under the sea?
An illustrative example of “lifestyle” licensing is the cultural phenomenon that takes the form of a manic, childish sea sponge.
Accessories featuring children’s TV star SpongeBob® SquarePants are turning out to be a great growth category for the aforementioned Auto Expressions.
With items such as air fresheners, floor mats and seat covers, SpongeBob is one of the many brands making a splash in the aftermarket, according to Randy Wright, operations manager for Shell Lubricant’s accessories division.
“SpongeBob has had longer legs than we thought,” mentions Stevens, who adds the recently released animated movie should propel even more sales.
Another hot seller for Auto Expressions is the Hello Kitty® line, a dominating force in its category thanks to its popularity among female customers.
These types of items are significant to the consumer beyond their actual function, says Wright. “It takes a product from a need to more of a want. ‘Am I a passionate consumer of SpongeBob?’ If so, I may well buy a product just because of the affinity to the property.”
Adds Wright: “It’s a customer loyalty to a property and it’s fun for a retailer.”
Stevens echoes this sentiment: “You can’t take a seat cover very seriously. It’s all for fun and expressing yourself.”
Auto Expressions, a combination of Axius® and MEDO®, has a line of more than 1,000 automotive accessories. The company has managed to reinvent the traditional cardboard air freshener with three-dimensional fresheners, time-released gels and air fresheners that snap onto a car’s vent so the scent is regulated through the ventilation system.
Company literature touts Auto Expressions’ knack for serving as a “social barometer,” referring to past license agreements with Mr. T and the California Raisins® when the division operated under the MEDO moniker.
Wright says another profitable license is Mossy OakTM, popular with hunters and camping enthusiasts.
Many of the Auto Expressions items are available in ensembles, which include a themed group of merchandise: matching steering wheel covers, seat covers, license plate frames, CD organizers and floor mats — adorned with such themes as dragonflies, tree frogs, flames, exotic animals and tribal designs, among the dozens of choices offered by the company.
Auto Expressions also has license agreements with Scooby-Doo®, Looney Tunes® and Betty Boop®, among other entertainment icons. Another new property, says Wright, will be Curious George, timed with the release of a new movie. “We’re very excited about it, because we see this nostalgia trend being very strong in mass retailers as well as automotive chain stores.”
Mopping up the competition
Carrand Companies is banking on a more conventional icon to help move its line of car wash implements. The company, which recently announced a license agreement with Procter & Gamble to market the Mr. CleanTM brand, hopes the decades-old household icon can successfully expand its market reach.
The partnership was a likely extension of Mr. Clean’s AutoDryTM car wash system, says Randy Kingsbury, Carrand’s vice president of marketing.
“(Procter & Gamble) wanted their AutoDry system to be expanded and wanted to connect with a company like us that makes a washglove system, wheel brushes and tire brushes,” he says, adding Carrand was probably one of only two companies P&G spoke with when ironing out the Mr. Clean branding program.
Carrand will roll out 10 branded items to retailers for now, as P&G plans to have an active role in the product approval process to hold true to the brand’s identity, adds Kingsbury.
The benefits, he adds, are numerous. “We can use their existing market penetration that we don’t have, such as the grocery and drug (markets). It will give us that chance to grow our market.”
It’s this same market reach that will help Vector Manufacturing when it rolls out its line of branded chargers and inverters, says David Mayer, Vector’s chief operating officer.
“In the big box (retailers), there’s lots of opportunity for cross-marketing,” he says. For example, Vector can take advantage of Black & Decker’s familiar name and reach in hardware sections and, conversely, Black & Decker stands to benefit from Vector’s recognition among retail automotive departments and auto parts stores.
Tenneco Automotive has been “cleaning up” with its DuPont branded car care products, says Ric Alameddine, Tenneco’s vice president of marketing and engineering for the North American aftermarket.
The success of this program has hinged mostly on all of the value-added aspects of the agreement, says Alameddine, like full access to DuPont’s chemists and research and development.
“One of the keys to licensing is more than just the wholesale use of one’s logo,” he adds. “In DuPont’s example, the smallest thing we’ve got is the logo on the package.”
He adds that DuPont is selective about licensing its brand: “Very few times will you see that red oval on packages.”
In a reverse role as licensor, Tenneco is licensing its Monroe® line for use in undercar categories such as brakes, a proposition that has “handsomely” exceeded the licensee’s expectations and given a boost to Tenneco’s own Monroe line, Alameddine adds.
Other companies have embarked on license agreements by using two familiar aftermarket names. It’s been a year since Federal-Mogul Corporation and Champion Performance Brands, LLC announced a multi-year licensing deal that extends the “bow-tie” image to performance additives.
Champion, which has owned the name for its line of chemicals, now licenses the well-known logo, an image long associated with Americana, says Tom Minner, president of Champion Performance Products, a division of Champion Brands.
He says to successfully license a product, “you end up almost being a spokesperson for the brand.”
The relationship between Champion Performance and Federal-Mogul, the keepers of the brand, has been stellar, adds Minner.
“The real magic is the rhythm between the two companies. It’s rare that these deals take off with a rocket ship blast.”
Brian Tarnacki, director of brand marketing for Federal-Mogul, agrees. “There’s some commonality that we’re both marketing products tied to engine power.”
He says he’s amazed at how many people recognize the Champion logo, as the company has been contacted by video game manufacturers and Hollywood movie producers. He’s even seen famous performers wearing clothing bearing the Champion logo.
This deal for additives will help expand the brand’s reach even further, adds Tarnacki, with Champion chemical products being sold in such retail stores as Wal-Mart.
Still, Federal-Mogul has to approve packaging and advertising to ensure a consistent image is being depicted, to retain what’s taken decades of consumer trust to build.
“It’s important they portray the same image we’ve been portraying.”
Racing toward continued recognition
No one in the aftermarket likely knows branding as well as NASCAR, which has about 75 million loyal fans to underscore this point, says Blake Davidson, managing director, licensed products.
With 200 licensees, NASCAR pulls in about $2.1 billion in annual sales of licensed goods, says Davidson. “NASCAR is one of the most licensed brands in the marketplace.”
“Consumers are three times as likely to choose NASCAR licensed products (over nonlicensed items),” says Odis Lloyd, NASCAR’s managing director of automotive licensing.
Because the organization does not have one specific retail partner, NASCAR reaches across numerous retail companies, a definite distribution advantage, says Lloyd. As far as traditional licensing partners, there are about 31, he adds.
“With our traditionally licensed products, we try to be as careful as possible when choosing partners,” continues Lloyd. “In the chassis category, we have Moog; Exide on the battery side is the largest aftermarket player when it comes to batteries.”
This manufacturer relationship also has its benefits when racing technology and aftermarket technology merge. An example, says Lloyd, is Moog’s redesigned M2 chassis, originally made for the racing business.
The fans’ affinity for automobiles really comes into play when detailing NASCAR’s aftermarket success.
“NASCAR fans are car people,” says Dave Kobuszewski, senior manager of marketing and automotive licensing for NASCAR. “They drive more miles, they own more cars. They own older cars, which really makes them a prime target for automotive manufacturers. That’s really what makes it a unique audience.”
Beyond hard parts, NASCAR offers a plethora of apparel and ancillary racing-themed items. And many adoring fans are familiar with the NASCAR die-cast replicas, which Davidson refers to as “our football jerseys.”
NASCAR also is known to participate in “double licenses,” where an item will feature NASCAR’s likeness along with an additional brand, says Perpetual Licensing’s David Milch. In this case, the dual licensors typically split the royalty rates, he adds.
Is there really an impact?
At the distributor level, feelings are mixed as to whether licensed items create more of a demand than their nonlicensed counterparts as they relate to aftermarket auto parts.
A reason for this could be that licensing is more effective with aesthetic automobile items than with crucial aftermarket components. Or, it could indicate that even with a licensed brand, the selling point for vital hard parts (like brakes, exhaust systems and chassis) is just as likely to be the manufacturer’s name as it is the licensed name.
“I notice some difference but it doesn’t impact us in a major way,” says Cliff Hovis, president of Hovis Auto Supply, Inc., who admits that accessory items constitute a very small portion of his warehouse distribution business.
Ron Levene, president & CEO of Tier Parts Warehouse, agrees that licensed items don’t necessarily propagate an increased demand for automotive parts.
“I definitely view (licensing) as an enhancement but not a sole reason for someone to buy the product,” says Levene, whose business is mainly wholesale.
Technicians are not as swayed by licensed products as consumers, suggests David Segal, vice president of Automotive Supply Associates, Inc. “Does the installer purchase products just for the sake of a NASCAR logo? Absolutely not,” he says. Because the Automotive Distribution Network is a preferred NASCAR vendor, however, Segal says he distributes NASCAR licensed items to support the group’s membership.
Part of the success of selling licensed items is trying to impart the story behind the license agreement, he suggests. For example, why does Raybestos or SKF have an association with NASCAR?
What concerns Segal is how many people truly end up paying for a license agreement. “The thing that concerns me is some of our suppliers are public companies. How long can (the company) continue to invest in (licensing) until the public stakeholders start to see a definitive return on investment?”
On the retail end, licensing seems to be more of an attraction.
Whether licensed items are a hit depends on the category and the licensor, says Bill Furtkevic, senior director of marketing and advertising for Pep Boys.
“If the brand is hot, the license is going to be a popular item,” he says. For example: “Orange County Choppers are popular and well sought after by consumers.”
He also notes a strong recognition of the Mr. Clean brand.
Jamie Gerringer, manager of an AutoZone store in Burlington, N.C., says licensed items definitely sell better than nonlicensed goods.
He sees a high demand for NASCAR-related merchandise as well, especially those products featuring NASCAR drivers. Ultimately, though, Gerringer says the demand of certain licensed items also depends on the store’s location.
“I think people vote for a name brand (over licensed items),” suggests Trapper Grover, manager of Auto Value of Greenville, Mich.
He adds that licensing may come into the forefront more on the advertising level as the items are marketed.
Stevens, from Auto Expressions, points out that the burden is on the retailer to really dictate the success of licensed products. Rather than bury unique items in the automotive aisles, she suggests taking full advantage of point-of-purchase displays and end caps, especially with the cartoons featured on Auto Expressions’ accessories.
“The retailer has to be enthusiastic about the license,” she says. “If they’re not behind and (don’t) promote it, it won’t do as well.”
A thorn in the licensing rosebush
Of course licensing will not always be a bed of fancy floor mats and cardboard roses that dangle from the rearview mirror.
Brands can lose their value over time if the licensor becomes too intent on profits and overexposes the name or image.
It’s for this reason that Harley-Davidson has protectively retained and so successfully controlled its marketing and branding efforts over the decades.
“Not everything’s going to work,” admits NASCAR’s Davidson. “Even products that you think have been well thought through.”
Regardless, NASCAR follows through on product research and evaluation for every item it licenses.
“We’ve got a pretty rigorous process starting with an extensive licensing application,” Davidson adds. “There’s an intensive quality control process that we go through. Any product that has our mark reflects positively or negatively on us and we take that very seriously.”
He says NASCAR is careful not to “overlicense,” or take up too many agreements to the point where it hinders its partners. “We don’t want to license against ourselves.”
“The industry has gotten a bad name for ‘logo slapping,’” says Horn from Brand Sense, referring to manufacturers slapping logos on items willy-nilly. “We’re really careful not to extend the brand outside of anything that makes sense.”
Tenneco’s Alameddine says it’s important to forge long-term agreements rather than a one- or two-year agreement, which can be suicide, strategically speaking.
He also warns against having a brand taken into segments that a company seeks to avoid, as well as always monitoring the quality of a product to avoid brand association with subpar items.
Another term used by marketing and brand executives is “overextension,” wherein the image or brand loses its power because it is used too much or on too many unrelated items that stray from the licensor’s intended message or image.
Shell’s Wright says stocking issues can be a problem with licensed items. He proposes that retailers pay close attention to inventory management to ensure the product is turning as it should.
Many licensing officials we interviewed were aghast at the number of retailers who don’t take full advantage of promoting recognizable brands.
Milch suggests retailers take on entire programs for some brands. He also suggests “soft touches” in the accessories storefronts to cater to the well-known surge of female customers.
Now’s the perfect time to market products with some dashing point-of-purchase displays and other innovative themes, as well as spring-themed displays that correlate to baseball or outdoor activities. NASCAR officials say a new employee has been hired just to offer retail support in marketing the NASCAR brand.
Auto Expressions also offers assistance with displays, and in many cases signage and merchandising materials can be purchased directly from the licensor.
What the future holds
Milch from Perpetual Licensing says he sees a real push for license agreements with high-profile customizers such as West Coast Customs (from “Pimp My Ride” fame) and the aforementioned Orange County Choppers, which will partner with NAPA.
Consumers are rabid for these branded items, he adds. “These people live and breathe these brands.”
NASCAR plans to continue its nontraditional branding and marketing ideas, like its Performance Network, which will compile a directory of repair shops and parts stores on its website (NASCAR.com) so racing fans can be referred to these NASCAR partners when looking for parts or service.
Additionally, NASCAR is extending its image by offering a new Ford F-150 that will be customized by American Specialty Trucks and sold by Ford with such amenities as custom paint jobs, two-tone leather seating and NASCAR logos throughout.
“We have a lot of research that supports the fact that NASCAR fans are interested in trucks,” says Davidson, who adds about 44 percent of racing fans own pickups.
Whatever the case, popular culture will never come to a standstill, and don’t expect a decline in license agreements, especially in the aftermarket, as style and image are as important to drivers as gas mileage and safety ratings.
Think about that the next time you drive your veritable “billboard” to the gas station or supermarket.