Case Study

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In addition to such brand extensions, Zippo revisited its licensing efforts. The company was no stranger to licensing -- but it was almost always as a canvas for other brands, such as the NFL, Harley-Davidson, and Jim Beam. This time, things would be different. Booth hired Nancy Bailey & Associates, a licensing agent with clients such as Crayola, Hostess, and Mr. Clean, to create a broad licensing strategy. After a year of pounding the pavement at trade shows, the agency's strategy was in place.

In 2005, a new generation of Zippo licensed products will debut, these ones founded on consumer research rather than family wisdom. The licensing program sticks close to Zippo's core brand image as a reliable flame and will feature grills and outdoor accessories -- such as Tiki torches and patio heaters. If all goes well, those will be followed by camping equipment and other outdoor gear. More traditional licensed products, such as watches and fashion items, will be focused primarily in international markets. Here in the U.S., Zippo hopes eventually to provide retailers with in-store boutique "flame centers," featuring the entire array of Zippo products. "We think the brand can go far, but we want to take it one step at a time," says Duke. "We'll crawl before we run."

Finally, Zippo is hard at work addressing its aging boomer problem. Ever see the lighter salute at a rock concert? Zippo hopes tapping into that time-honored tradition will help attract younger fans. This year, it is sponsoring a rock band competition, the Zippo Hot Tour, with nightclub performances at 72 events across the country. Using a dedicated website, bands are invited to submit their work; online fans will determine who advances to the live performances. When the site went live in June, so many fans logged on in the first hour that the server crashed. Says Paup: "I got a voice-mail message from our CFO. He said, 'Well, you certainly got someone's attention,'" says Paup. Zippo is also courting younger consumers by developing new products, including a sleeker, high-tech version of its trademark lighter, code-named Blue Flame.

Booth has big dreams for his brand extension program: double company revenue -- currently estimated at about $200 million -- by 2010, with half coming from nonsmoking-related products. Already this year, sales are trending upward, Duke says. That makes him confident that the company he passes on to his sons, now 12 and 14, will be a sophisticated, marketing-driven enterprise rather than the old-style manufacturer he inherited. "Zippo will be a lifestyle," Duke predicts.

The Experts Weigh In: Can Zippo license its way to growth?

Zippo's bid for younger consumers has potential. The secret to success -- as a product and as a brand -- lies in knowing what Generation Y (22 and younger) wants and how they want it. They want marketing to reflect their real-life experiences. Zippo has keyed into this by sponsoring music tours. Of course, concertgoers pull out their lighters at key moments as part of the happening. But it is critical for Zippo to reach Gen Y's early. Brand names are important to this generation.

Ann A. Fishman
President, Generational-Targeted Marketing Corp., New Orleans

It's a good idea to move on from collectibles. But whether or not licensing is a good bet depends not just on the brand equity, but on whether the equity is leveraged into a product that is unique and meaningful to the consumer. It is also dependent upon good execution. There are lots of venerable classic brand names. Zippo clearly has equity; however, any foray into additional product lines will require that the brand have a point of difference that is meaningful to the consumer.

Jeffrey Himmel
Chairman, The Himmel Group

There are two ways to go with any licensing program. The stupid way is to sell your brand to as many people for as much money as you can. The smart way is to license your brand in categories that reflect your brand's strengths. It appears Zippo is taking the smart path. Zippo is about ruggedness and durability. It could give Coleman a major run for its money in the camping category. But if Zippo starts putting its brand on a nightgown or fashion jeans, it's over.

Rob Frankel
Author, The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else