This week’s Freaky Friday: Ten benefits of Brand Licensing! But before heading to benefits, lets understand what is brand licensing!
Brand licensing is a well-established business, both in the area of patents and trademarks.Trademark licensing has a rich history in business, largely beginning with the rise of mass entertainment such as the movies, comics and later television.
This process speeded up as movies and later television became a staple of American business. The rise of brand licensing did not begin until much later when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them.
The brand licensing / brand extensions marketplace became much more lucrative as companies realised that they could make real money renting out their equity to manufacturers in return of royalty.
Instead of spending lots of money to create a new brand, companies are willing to pay a royalty on net sales of their products to rent the product of an established brand name.
There are ten key benefits of licensing your brand:
1.Brand managers to extend their brands with minimal investment
By way of a licensing arrangement, third party manufacturers are responsible for everything from product development to inventory management to store replenishment.
2. The brand to obtain supplementary marketing support
For the right to use the brand in his category, the manufacturer must agree to spend a percentage of his net sales on marketing. This marketing commitment, not only supports the category licensed, but can be significant to the overall brand.
3. Trademark protection in the category
For a brand to benefit from trademark protection in a particular category, it must be actively sold in that category. If the category lies vacant, others may claim rights to use the mark. Extending a brand into a category via licensing helps brand owners meet the commerce standard.
4. Increased consumer connections and insights in the categories being licensed. 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.
5. A brand to gain incremental shelf space
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.
6. Entry into new distribution channels
By licensing the brand to a manufacturer which currently sells into a retail channel where the brand currently does not have a presence, the brand can gain access to that channel via the licensing relationship.
7. The brand to enter new regions
Similar to new channel access, a brand can gain entrée into new regions via a manufacturer which has a presence in regions where the brand is currently not sold.
8. Access to patented technology
Many companies which choose to license brands offer proprietary innovation to the brand owner. When the patented technology reinforces the brand’s position, the new product offered can be met with tremendous consumer appreciation and pent up demand.
9. Knowledge transfer from the manufacturing partners who license the brand.
A licensing arrangement provides the opportunity for the brand owner and the manufacturer to share insights and knowledge across multiple disciplines including product development, marketing, R&D and sales.
10. 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.