Being Famous Pays in Licensing Game : Scores of Companies Move to Capitalize On Well-Known Names, Logos, Images

Vivien Roth sat in her London flat recently, her attention riveted to an episode of “Dallas” on her telly. But the show’s plot is not what held her spellbound. It was Sly, secretary to the show’s lead character, oil tycoon-cum-villain J. R. Ewing. More specifically, it was the secretary’s dress, a blue and black polyester number that Roth says took her “breath away.”

“I wanted that outfit so I went out and bought it,” said Roth, a 40-year-old secretary who last week paid 90 pounds--about $130--for the dress, part of the “Dallas” clothes collection just introduced. “It makes me feel glamorous, feminine. Even if I don’t look as good in it as the woman on TV, I get looks when I wear it.”

Lorimar, the Culver City company that produces the TV show “Dallas,” has licensed the show’s name and symbols to dozens of manufacturers who are introducing Dallas-inspired goods ranging from high-fashion clothing to perfumes, chandeliers and--perhaps eventually--even automobiles.

The clothes, already available in Europe, soon will be sold in stores throughout the United States. If fans prove willing to dig into their pockets to indulge fantasies of being rich and powerful like the make-believe oil family, Lorimar will have struck riches in one of the hottest fields of consumer marketing: the licensing of company, product and celebrity names.

“Licensing works for toys because children like to fantasize that they are involved in a cartoon or movie plot. Adults, frankly, are not much different,” says Joe Whitaker, president of Lorimar Licensing, a division formed two years ago. “We think ‘Dallas’ fans want to hobnob with wealthy people for more than the one hour they watch the show.”

Lorimar is hardly a pioneer prospector. Scores of companies are cashing in on the sale of names, logos and images for use on goods made by others.

Typically, a company or person selling a name gets a lump-sum payment up front and then a 3% to 10% royalty on every item a manufacturer sells bearing its trademark. The goal is to boost profits by expanding into new products at little or no start-up cost. Similarly, those buying the trademark hope that a new product sporting a well-known name will grab consumers’ attention fast and without the need of heavy advertising.

The idea is catching on. Coca-Cola’s name now appears on a line of sportswear. The Greyhound Bus Co. has put its name on a new dog food, and 20th Century Fox has licensed the name of its “MASH” TV show for use on a line of vodka, beer and teddy bears.

Licensing arrangements enable consumers to don Elvis Presley ear muffs and James Dean sunglasses, leather coats and boots. Or puff on Porsche pipes and Yves Saint Laurent cigarettes, relax in armchairs by clothes and fabric designer Laura Ashley and read by the light of a 1500-pound chandelier, from the “Dynasty” TV-series collection, that retails for as much as $74,000.

The current licensing bonanza differs significantly from a longtime practice of emblazoning famous names or faces on T-shirts, handbags, or other items geared to tourists, rock concert-goers or trend-setters.

Unlike the sale of most novelty items, the newest niche in image peddling offers products that are of high quality and linked subtly and--name sellers hope--tastefully to the name of people or companies whose popularity is unlikely to disappear overnight.

“We’ve been around for 85 years,” said Harley Davidson’s John Heiman, adding that consumers have eagerly snapped up 14-karat-gold rings and other expensive goods to associate with the motorcycle maker’s name. “We’ll be around for 85 more. We’re not a fad like ‘E .T.’ or Michael Jackson.”

Marketers say established names and trademarks work well on new products because they catch the eye and evoke positive associations. They say, for example, that shoppers are likely to assume that the quality of a Hershey’s chocolate bar also can be found in a carton of chocolate milk bearing the Hershey name. Consumers may be slower to link the attributes of soft drinks with clothing or of Harley-Davidson motorcycles with pig-shaped cookie jars, but as far as Madison Avenue is concerned, the same principles are at work.

Marketers say that licensing sells luxury items such as chandeliers and silk blouses by inducing identifications between buyer and product. They say that items connected with famous names and faces fulfill secret yearnings to be powerful, beautiful and charismatic, or, in many cases, reinforce inflated self-images. It feeds feelings “of being ‘with it,’ of being popular,” said Danny Simon, vice president of Lorimar’s licensing division.

“These are life style products,” Simon said. “Why not decorate your home in early Ewing?”

Shift in Focus

A shift in business focus has contributed to licensing’s popularity among executives. The acquisition mania of the 1960s has given way in the 1980s to divestiture of non-essential operations as many corporations decide to focus on their basic businesses. As a result, companies are hawking trademarks to garner extra profits instead of buying up new ventures in areas where they lack expertise.

Joseph A. Seagram & Sons, for example, recently expanded into such non-alcoholic mixers as tonic and Seltzer waters by selling its name to a bottler who pays it a royalty. The arrangement has an added benefit: It gets the Seagram name broadcast into millions of TV homes on items closely associated with alcoholic beverages, thus circumventing rules banning liquor ads on TV.

Similarly, Coke didn’t enter the retail apparel market by paying out millions of dollars to buy a clothing maker. Instead, it made money by selling the right to use its logo to Mohan B. Murjani, a marketing whiz that built Gloria Vanderbilt’s clothing line into a $600-million-a-year revenue producer.

But consumers can be a finicky bunch, and no one can guarantee they will swallow the idea of Coke clothes. After all, they didn’t much care for chocolates sold under the label of fashion designer Bill Blass. Even so, marketers say, the risk of a licensing failure falls mostly to the manufacturer of the product, not to the company selling its name.

In the case of Coke’s expansion into sportswear, for example, Murjani would have to absorb the cost should the clothes fizzle, leaving the soft-drink giant to suffer little more than a slight bruise to its famous logo.

Works in Reverse

Licensing has long been popular with toy makers, who for decades have used it to cash in on the popularity of movies, TV shows and cartoon characters. The marketing technique has worked so well with tots, in fact, that on occasion it works in reverse: Names and characters for many children’s shows are purchased from the makers of popular toys--as was done with Hasbro’s G. I. Joe.

Just as the licensing industry has gravitated toward the adult market, so some of its time-honored favorites have graduated from children’s wear and toys. Now characters such as Mickey Mouse show up as a tiny insignia on a silk blouse or as the star of a cashmere sweater.

It has only been in the last five years that licensing has been used on a grand scale with grown-ups. Along the way marketers have discovered that the potential profit is no kid stuff, either. In 1973, retail sales on licensed merchandise were $3 billion; about half of that was from toys and games. Last year, the market soared to an estimated $43 billion, with only 19% from that category. Arnold Bolka, publisher of the Licensing Letter, a trade publication out of Scottsdale, Ariz., predicts that sales will reach $75 billion by 1990, largely from the sale of products aimed at people 18 years and older.

By playing to the adult market, though, companies also side-step the controversy inherent in the children’s sector. Parents and consumer groups, citing commercial successes as Strawberry Shortcake and the Smurfs, complain that many movies and cartoon shows essentially amount to long commercials for bicycles, cereals and the host of other products bearing licensed names and images.

Ultimate Endorsement

“In a sense,” said marketing consultant Weston Anson of Marketing/Trademark Consultants Inc. in La Jolla, “licensing is the ultimate endorsement that goes one step beyond commercials.” Thanks to licensing, for example, fans of model Brooke Shields no longer have to settle for such products as sheets from Cannon Mills Co., in whose commercials she merely appears. Rather, they can slip into a full line of sportswear made under the Princeton student’s label.

Cynics wonder that a sane adult would spend twice as much for a lamp, scarf or pen just because it bears the name of a certain company, movie star or TV show--no matter how much glamour, money, power or excitement the name connotes. But marketing mavens from Manhattan to Hollywood attest that there’s money to be made on real people who want to imitate pop art.

Some say it’s because consumers want to liven up otherwise dull lives that leads them to pay through the nose to wear and identify with well-known trademarks, famous faces or much-loved movie characters. Others chalk it up to a desire for heroes and to renewed feelings of nostalgia and patriotism. Such emotions have repopularized romantic images that symbolize Yankee ingenuity and rugged individualism, as demand for products connected with James Dean, Harley-Davidson and Coke attest.

But Bolka, whose newsletter is one of five trade magazines spawned by the licensing phenomenon since 1979, said the credo of licensing executives is that of any marketer: If consumers are willing to pay extra for what they perceive as added value in a product, who is to say they are not getting their money’s worth?

Broad Range of Goods

In some cases, it’s an odd match of product and name that has succeeded in capturing the consumer’s fancy. For instance, Harley-Davidson and beer-maker Anheuser-Busch each has made millions of dollars during the last five years in royalties--on products that run the gamut from gold jewelry to wine coolers. Soon Harley-Davidson will add a cologne to its line. Most likely it will be called Black Leather. “And it won’t smell like stale beer or grease either,” said Heiman, who established and heads the Milwaukee company’s 3-year-old trademark and licensing division.

Harley-Davidson says that it entered the licensing market as a defensive step to control the misuse of its trademark and protect it from appearing on items associated too strongly with motorcycle gangs--an association the company felt was keeping many middle-class consumers from buying their product. The venture proved so successful, however, that the company now views licensing as an aggressive marketing tool that allows it to maintain a quality image while earning extra money.

Quality is the thrust of the Lorimar strategy, too, with company executives stressing that all products using “Dallas” trademarks will be “upscale” items with concealed tags bearing the name of the Ewing family ranch, Southfork. That way, said Lorimar’s Whitaker, “consumers can sit at a business lunch and fantasize discreetly” without anyone knowing the clothes they wear were inspired by TV’s prime-time Texans.

Companies’ increasing desire to make sure that trademarks are used properly--and that royalties are paid--has created a growing market for licensing agents who advise corporations on how to sell and protect their names. Marketing consultants, for example, help estates of deceased idols such as Elvis Presley and James Dean limit the use of the stars’ name exclusively to estate-approved, high-quality goods. That, they say, ensures that the image will not become tarnished, and therefore less profitable, from use on cheap items.

Insist on Protection

“A quality baseball bat company isn’t going to license a name like Babe Ruth unless it knows that name is going to be aggressively protected from unauthorized use,” says Mark A. Roesler, president of Curtis Licensing Corp., a 3-year-old subsidiary of Curtis Publishing, which published the Saturday Evening Post. “Besides, you can’t use a name like (Ruth’s) on a schlocky product.”

Licensing of high-quality insignia has become so popular that Ocean Pacific Sunwear of Tustin, which started as a clothing manufacturer 12 years ago, quit making its own products in 1980. The company felt it would function more efficiently and grow more quickly by concentrating solely on selling its name.

“Licensing permits you to bring in experts in each kind of line--men’s pants are very different than men’s shirts,” said Jerry Crosby, executive vice president of marketing at Ocean Pacific. “I don’t think consumers understand that more than one company is manufacturing our goods, and, frankly, it’s not important for them to understand that. It’s our responsibility, in fact, to make sure the product lines are of comparable quality and work together and don’t confuse the consumer.”

Another Los Angeles company, L. A. Gear, has gone a step further by creating a name and image purely with licensing in mind. “We wanted a name with a Southern California sound,” said Robert Greenberg, who started the company in 1983. “Something simple.”

Greenberg said that, after creating the name, he decided to make a line of aerobics shoes for men, women and children to bolster the image. It worked. L. A. Gear has expanded into 15 other lines solely through licensing. This year it expects $70 million worth of products bearing its name to be sold wholesale, and Greenberg said there is no end in sight.

“Consumers and brand names are inseparable,” he said. “Licensing is here for a long time. Someone will always have a hot name and need someone else to sell it on a new product for a fee.”