Not as easy as it looks

Sir Stelios' battle with easyJet highlights the potential pitfalls of brand licensing.

The ongoing battle between easyJet and its founder, Sir Stelios Haji-Ioannou, may be amusing to rivals and industry observers alike, but it raises serious questions about the viability of such a brand licensing model.

As revealed in Marketing last week (21 July), Haji-Ioannou is setting up three online travel brands - easyHolidays.co.uk, easyFlights.co.uk and easyAir-tours.com - that will directly compete with services launched by easyJet over the past few years.

Alongside an ongoing court dispute about whether easyJet has breached its contract, which stipulates that 75% of all revenues must derive from aviation, Haji-Ioannou is also threatening to strip the carrier of the 'easy' brand due to its allegedly poor punctuality, much to the delight of archrival Ryanair.

The recent travails of easyGroup call into question whether it is possible to successfully operate a brand licensing model when the only valuable asset - the brand - is at the mercy of those marketing it on a day-to-day basis.

Stretching the limits

Eliot Schreiber, global president of branding agency Elmwood, believes this to be a deceptively tricky way of operating. 'It's one of the more challenging business models, in that it requires a thorough understanding of one's brand, its rational and emotional dimensions, as well as a clear definition of what's appropriate in terms of brand stretch,' he says.

Schreiber cites Virgin as among the most 'deft' when it comes to licensing, and praises Ralph Lauren for its ability to stretch from apparel to home furnishings and restaurants. The model favoured by Haji-Ioannou is largely faithful to that pioneered by Virgin's founder, Sir Richard Branson, who has pushed the brand into almost all available sectors, from aviation and travel to broadcasting and beverages.

Virgin has always peddled the 'challenger brand' position, squaring up to institutionalised organisations such as British Airways, BT and the BBC. However, according to Futurebrand chief growth officer Simon Williams, Virgin has failed whenever it has attempted to license outside the sphere of its brand promise.

'This has always worked best in "David vs Goliath" situations, such as in airlines against BA, but less so where there has not been an obvious single "Goliath" to fight,' he says. 'Take Virgin Cola - consumers were happy with the existing choice.'

In theory, 'easy' has a far more flexible brand concept: simplicity. The arrival of easyJet revolutionised the airline industry, offering a valid alternative to consumers who did not desire the full trimmings of traditional carriers. That minimal approach to service ought to be applicable to a multitude of industries.

Yet many of its sub-brands, such as male cosmetics range easy4men and easyMobile, have failed to capture the imagination in the manner that easyJet did in the 90s. In travel, easyGroup's most lucrative market, the planned addition of the online services threatens to muddy the waters. Haji-Ioannou insists that he 'always anticipated' overlap and competition between those licensing the brand, but how will consumers respond to the existence of both easyJetHolidays and easyHolidays?

The dangers of brand licensing and the potential impact of a crisis in one of the franchisee businesses are all the more acute in the social-media age, when Twitter and Facebook can spread the ire of consumers at a lightning pace.

'The tempting idea is that of gaining critical mass, awareness and reach, and it can be seductive,' says Dom Boyd, strategy director at DDB UK, which handles the ad account for Virgin Media. 'But the dangers of handing over the crown jewels have increased in the social world, where reputation and equity spreads more quickly.'

When a brand becomes phenomenally successful, brand licensing can provide a way to gain traction fast. Yet the difficulties in maintaining that brand image across all fronts, and with other people in charge of the brand, can be legion. Just ask Stelios.

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