Business of Licensing

licensing simplified

'A legally protected property' 'Specific time' - duration of the license agreement 'purpose' - the type of product to be marketed 'defined geographic area' - where the license is valid.

how to find property

1. Trade shows 2. License brokers/agents 3. Industry contacts

haute couture and licensing

Christian Dior understood the middle market was the future of luxury fashion He saw licensing as a way to extend a luxury brand to a wider audience He sold his ideas and name to other companies He began with stockings By 1951 he had licensees for handbags, men's shirts, gloves Scarves, hats, knitwear, sportswear, lingerie, and eyewear

co branding, cross licensing, sub branding

Co-Branding - linking 2 properties on the same product. Nike and Apple Cross Licensing = combining more than 1 property on a product. Sub-branding - Ipod Shuffle

long term properties

Different strategy Too much merchandise early can damage image - over exposure Emphasis on long-term brand management Sales tend to be relatively stable

creating licensing strategy

Distribution - where? Products - what? Timing - when? Promotional support Design strategy - 'logo slapping'

commisions

How much does a Licensing Agent charge? Commissions for licensing agents generally average between 30% to 40% of gross licensing revenue, and may run as high as 50%. In addition, some agents require the licensor to pay part or all of certain expenses incurred by the agent in representing the licensor. These expenses may include trade show costs, costs of creating promotional packages and display and solicitation materials, travel costs and legal fees.

benefits of licensing agents

Industry know-how Contract negotiation Licensing strategy Selecting partners

brand extension

Leveraging brand value by introduction of new product categories Product Innovation to surpass consumer expectation Increases brand awareness Increased profitability

licensor, licensing agent, licensee

Licensor - person/entity who owns the 'property' Licensee - person/entity renting the rights to the 'property' Licensing Agent - a person/entity that matches potential licensors with potential licensees

licensing strategy

Licensor will try to position their properties as a classic franchise to try and convince licensees of their longevity Media vehicles (TV, Movies, computer games) help sell potential licensees Some properties can survive post-peak

short term properties

Life span of 3-5 years Sales reach their apex in the first 2 years Licensor usually opts to maximize sales early Movies can have a lifespan of only 6 weeks TV shows - 6 months to a year

joint responsibility

Marketing Store presentations

license in house or not?`

Necessary investment Know-how Marketing clout

criteria to evaluate property

Past sales history The popularity of the property Brand recognition Product positioning Availability of art and design

financial implications

Payment Structure Advances and Guarantees Margins Volume Required investment

why brand

People have too many choices and too little time Most offerings have similar quality and features We tend to base our buying choices on trust

what do we need once license signed

Product approval staff Financial management Legal management of the property.

product extension

Product extensions - different/new versions of the same parent company They serve a different segment of the target market and increase the variety of a product offering.

criteria licensing partners

Product line compatibility Licensee's track record & reputation in the industry Licensee's manufacturing capabilities Licensee's distribution network Marketing plans Financial strength of the licensee Reporting abilities. Systems

advantages to retail licenses

Retailer Opportunity to upgrade image by adding a brand Better margins due to no middle-man Exclusive sales options Opportunity to license brand into other products Brand Existing distribution channel/exposure Can tailor their product to meet customer needs $$$$$$$$ - hopefully

what is licensing?

The process of leasing the rights to a legally protected "property" for a specific time, purpose, and for a defined geographic area against a predetermined remuneration.

defining the property

The property's brand attributes Size of the target market Demographics and psychographics of the target market Competition

risks of licensing

Transfer of Responsibility Dilution of brand image "Guilty by association" Over-saturation

fragrance

Typically one of the first areas for fashion brands Complicated to make Chanel #5 has over 80 ingredients 4 companies are responsible for over 50% of the worlds fragrance production

when are brand extensions appropriate

When Prior Brand Equity exists Consumer must see some 'connection' between the proposed extension and the parent brand. The proposed extension contributes to and reinforces the overall brand equity of the parent brand

a brand is not

just a logo an identity not just a product

pyramid model

made to order ready to wear licensed fragrances and accessories

what is a brand

A BRAND IS A PERSON'S GUT FEELING ABOUT A PRODUCT, SERVICE, OR ORGANIZATION.

what is licensing

A discipline followed by brands to unlock their "latent value/goodwill" by venturing into new "non-core" product categories. Appoint business partners who are "experts" in the development and marketing of those "non core" products `

international licensing

Apply for legal protection of the copyright or trademark Devise a global strategy that leads to a consistent brand image worldwide Create country specific solutions that meets corporate objectives and ensures successful entry into the specific market

brand terminology

Brand Extension - A firm uses an established brand name to introduce a new product. Tommy Hilfiger perfume, watches, home accessories Sub-Brand - A new brand is combined with an existing Brand Dockers from Levi

benefits of licensing

Fame by association Strength by association Buying the audience Design for "free" New distribution channels

financial RISK OF LICENSOR

Fixed cost Guarantees Development costs Marketing costs Less margin (compared to non-licensed product) Advance? Inventory control Risk by association

foreign licensing

Foreign licensing: Organization (licensor) granting a foreign firm (licensee) the rights to produce and market products and/or to use its trademark in a defined geographical area Allows licensor to expand internationally at low cost See example on next slide

licensing agents

Functions include identifying potential licensees for the licensor's property, representing the property at appropriate trade shows, presenting the property and licensing proposals to potential licensees, and negotiating license agreements. Some agents may also help the licensor develop and position its properties so that they will be suitable and attractive candidates for licensing.

responsibilities of licensor

Brand creation and management Legal protection of the property Licensing guide Consistency in image between licensees Approvals Anti-infringement and counterfeiting actions Design and manufacturing Sales and distribution Inventory ......but not always - there are exceptions

advantages of brand extension

Enhance the Parent brand Convey broader brand meaning to consumers Clarify core benefits and business definition of the company Bring in new customers Increase the probability of gaining distribution by brands reputation `

areas of licensing

entertainment and character sports fashion toy and game Music publishing non profit celebrity

trust

equals reliability plus delight trust comes from meeting and beating customer expectations