But not all marketers are brand licensing experts. Many companies struggle with implementing effective licensing programs. Here are a few key questions worth examining closely to ensure your licensing strategy is set up for success.
Who is your brand?
First and foremost, what does your brand represent? From straight-forward descriptors such as “luxury” or “mass,” to the more prescriptive attributes that define a brand personality — wholesome, adventurous, polished, etc. — your brand DNA should be crystal clear.
Beyond that, you’ve got to answer the more abstract question of what it stands for. Brands such as Toms, Patagonia and Everlane are excellent examples of companies that have built authentic brand stories, backed by real action — something millennials and particularly Gen Z really value.
Finally, and most crucially, what emotions does your brand evoke among consumers? Does it make them feel stylish and sophisticated, smart and informed or free and uninhibited? The list is endless. But the value of any brand at its core is what it means to a targeted set of consumers. Before you can effectively formulate and launch a licensing effort, you’ve got to make sure you’re clear about what it stands for and can define it for potential licensing partners.
What’s your goal? (Be specific!)
What’s your main objective? As with any sound strategy, you’ve got to have a clear picture of your objectives. Those objectives might change over time, but you’ve got to start with a firm idea of what you’re trying to achieve. Brand licensing in its many forms can achieve a variety of objectives: driving revenue, extending the brand to new categories or age groups and gaining new retail distribution, among others. Any single deal may be aimed at achieving one or more of these goals; it’s important to create a hierarchy of desired outcomes. Here are a few possibilities.
Driving Revenue: Sometimes it’s all or mostly about sales dollars (or euros or yen). But even with a blockbuster movie franchise, a broad line of licensed merchandise at retail that generates hundreds of millions of dollars in sales (and tens of millions in royalties) also helps promote the film itself by its very presence on store shelves or e-commerce sites.
Brand Extension: Licensing can also extend your name into new and different product categories. For example, Stanley is a well-known brand of power tools but moved into such categories as work gloves and ladders via licensing.
The Halo Effect: One way of elevating a brand’s stature is to have it appear in upscale product classifications or distribution channels. Images of Mickey Mouse and the Peanuts characters helped lend a fun air to the runway show of United Colors of Benetton in Milan this spring, but it also elevated those characters and Disney and Peanuts into the better fashion world — a classic win-win proposition.
New Market Exploration: Licensing is also a way for a brand owner to explore potential new businesses without the financial commitment of setting up its own manufacturing. Find a licensee, learn the business and determine whether it’s something you want to get into yourself.
It’s Not Just Merchandise: Should you be widening your horizons about how your brand can be applied? One of the fastest-growing sectors of the licensing business is the service and location-based business. Brand owners should look beyond retail for opportunities.
What are you looking for in a partner?
Who is the right partner for your brand? This question maps directly to your key objective, as specific partners can achieve specific goals. Important factors to consider are the partner’s expertise in their field, the quality of their products and services, the breadth and depth of their distribution and their level of commitment. A brand licensing deal should bring benefits to both parties -- it’s extremely important to make sure that the licensor and licensee are aligned on the program goals.
In today’s hyper-competitive, constantly evolving business environment, savvy marketers will look to licensing to help generate revenue, extend a brand’s reach and increase its relevance. Knowing your brand inside and out, having a clear and specific objective and appropriately vetting potential partners for the right fit will set you on the right track to brand licensing success.
