We are piggybacking off of yesterday’s post and the remarkable $7.15 billion dollar figure Nestle is paying Starbucks for what is primarily a trademark license. One fact reported by Bloomberg was that according to BrandZ Starbucks is the second-most-valuable brand in fast food, which is estimated to be worth $44 billion. This leads us to the topic for today, which is how does a brand acquire enough strength to some day be worth billions of dollars? The following five factors have a an impact on trademark strength and a bearing on reaching that level:
- It starts with conceptual strength. The conceptual strength of a mark is measured on a spectrum with marks classified on the right possessing the most conceptual strength possible and the marks on the left possessing no strength at all. The type of mark you select whether it is a made up word or a word that describes your goods and services will dictate where on the spectrum your mark will land.
- Increasing annual sales and annual marketing expenses. It is common sense that high annual sales suggests a stronger mark. Although, sales volume must be considered as well. And while significant marketing expenses are also indicative of a strong mark, ideally the historical, annual marketing spend should resemble a bell curve. The more well-known a mark becomes, the less is required to promote it.
- Unsolicited, third-party publicity. Well-known marks receive publicity from other sources because those sources want to be associated with popular brands. You can build these sources more easily through social media for young companies. But having a consistent brand image is important to achieving a strong following.
- Preventing infringement. The more third parties allowed to use confusingly similar marks for related goods or services dilutes the strength of your mark. This does not mean that a trademark owner needs to take on all comers. An enforcement campaign must be thoughtful and measured, but some form of enforcement must occur for a brand to grow in strength. Imitation is the sincerest form of flattery, except when you are talking about trademark rights.
- Product and service line expansion. By giving consumers more opportunity to encounter your mark, you increase the association of your mark with your company. How consumers perceive your mark after all is the ultimate test of strength.