The once optional business opportunity for companies to expand their brand through brand licensing has today become an increasingly necessary instrument to survive in the market. The owner of a brand (Licensor) assigns the rights to use his brand for a particular product category to a company (Licensee), which, depending on the contract, takes care of the design, production, distribution and communication of the resulting products.
Brand Licensing is used as a way by brand owners to increase their current fan base and move into new business lines without major investment in new manufacturing processes. It is a value-addition to the marketing mix which allows retailers and manufacturers to stand out from competition and boost up their sales and hence, profit.
By licensing, the brand can expand its product portfolio without having much trouble. Depending on how intensively and extensively this strategy is applied, brands are grown to such extreme levels that it can influence the entire lifestyle of the target customer. In the long term, it helps in business expansion and building brand awareness which in turns give competitive advantage over customers.
So, brand licensing helps to keep the existing fans happy and satisfied along with conquering new fan base. Also, it has become a great technique for generating additional revenue stream for brand owners which they can re-invest into brand’s core development projects.