How Risky are Brand Licensing Strategies in View of Customer Perceptions and Reactions?

Abstract

While brand licensing is becoming increasingly popular, the consequences of this particular form of brand extension are not well researched to date. Advantages and disadvantages have been extensively discussed from the perspective of brand licensors and licensees. What is currently missing, however, is an understanding of customer perceptions and reactions when customers realise that a product and/or service is provided by a company that has simply bought the right to use the brand name and logo rather than provided by the original brand owner. This paper presents the first empirical study on specific effects of brand licensing by analysing the effects of prior brand licensing knowledge on customer brand evaluation and product evaluation. The results show no major evidence of specific brand licensing effects with regard to ordinary cases. More risks might be associated in specific brand licensing cases – these are also briefly discussed.