In today’s world of rapid technological change, new technologies are the key to economic growth. Today, many products have very short life cycles and are readily replaced in the marketplace by new technology. If a company wants to survive, it needs to continually add new products to replace declining products. If a brand owner chooses to extend a brand via licensing into a new category, the brand gains tremendous additional exposure in those categories in every retail store the product is sold. When sold into major chain retailers, the brand can gain thousands of additional feet of brand exposure in each category. Brand licensing is a way for brand owners to increase their current fan base and move into new businesses categories without major investment in new manufacturing processes. It allows retailers and manufacturers to stand out from the competition and offer consumers the best brands as well as drive sales. Here, are few reasons why brands should explore licensing:
Enter new regions
By partnering with a third-party manufacturer or service provider, a brand owner can try new businesses, or move itself into new countries with a smaller upfront investment than by building and staffing its own operations. Since the product manufacturing and distribution are handled by the licensee — the company with the product expertise — there is very little licensor engagement with the product and there is no inventory commitment. For example- It was in early 2015 that Marie Claire entered into licensing agreement with Bradford License India to extend its brand in India.
As many licensees are experts in their own right, they offer the licensor access to intangibles such as intellectual property (through licensing inbound), product design and marketing expertise, supply chain management, new customer relationships and strategic alliances. As true partners, a licensor and a licensee can hold forums to exchange ideas that not only grow the licensed category, but also improve other areas of both companies’ businesses.
Expanding the overall marketing support
In many cases, the licensee will be needed to provide marketing funds to back the licensed category. This marketing commitment, in turn, provides supplementary support to the brand presence. For instance, if a licensee markets its product in a regular circular and gains access to
an end-aisle display, the marketing doesn’t only augment product sales but also advocates the core property. For example- MANCITY FOOTBALL CLUB – which is one of the fastest growing football club in India is adding new fans in India with merchandise licensing with the help of
Bradford License India.
Achieve a competitive strike
For licensors who know their brand can enter into a category that is controlled by their competitor, licensing can be a smart and effective way to combat a rival in a category core to their business. By taking the offensive, the licensor will in turn take the competitor’s eye off of their own core business. For example, what if Adidas licensed a shoe manufacturer to compete directly against
Cole Haan shoes with Nike AirTM?
Increased consumer connections and insights
Extending a brand via licensing offers thousands of incremental opportunities to connect with consumers. By inserting a survey inside the licensed package or a toll free number on the exterior, a brand owner can gain many additional insights about the brand.
Collect royalty revenue for the right to use the brand
The brand owner to capture royalty revenue through the manufacturer’s sales of licensed product. This symbiotic relationship helps to create new products for the marketplace that consumers crave. For every dollar in revenue generated by the manufacturer, the brand owner receives a percentage in royalty payments, most of which go straight to the bottom line.
Brand Extension is a risky business. Even the most high-profile brands have burnt their fingers trying to get into new product categories as they chase new markets and new consumers. Smart brand owners have used licensing partnerships to enter new areas and have been able to also do away with the overheads and learning curve associated with launching a new product from scratch. Licensing is a low-risk tool for brand owners to extend their product lines into areas where they do not have product development capabilities, manufacturing infrastructure or existing distribution channels. Licensees with expertise and infrastructure relevant to the new categories would be far better equipped to manage the brand extension while the brand owner
continues to focus on growing the core business.
Expand the overall marketing support of core business
Licensing strategy is a powerful marketing tool that consolidates the brand’s image. Precisely, it does so by targeting segments that have previously been out of the brand’s reach. The new segments become available for the upon expansion of its product range and integration of its equity with the new products. There are certain risks associated with choosing the right product categories to match with the intellectual properties selected for licensing. Nevertheless, licensing
helps brand owners to determine the direction in which they can expand their brands to maximise these effects. It helps brand owners to notice areas of improvement, guide investment and maximise value growth. Intangible assets work together to multiply business value by
increasing revenue, finding cost efficiencies and reducing risk, and mapping those interactions helps.