Licensing

Licensing is the process of leasing a legally protected (trademarked or copyrighted) entity known as ‘property’ which could be a name, likeness, logo, graphic, saying, signature, character or a combination of several of these elements, in conjunction with a product line. 

Product licensing has grown to a $108 billion a year industry worldwide and is used by a wide range of companies seeking value from intellectual property such as artwork, brands and characters.  It has become one of the most powerful contemporary forms of marketing and brand extension, and is being used in ever increasingly sophisticated ways.  This represents real profitability for companies who have branded their names, and have leveraged their intellectual properties with strategic licensing alliances.

The recognition that brands are a powerful yet underutilized asset is why trademark licensing has become a popular marketing strategy.  Because many brand owners don’t have the resources to pursue every viable business opportunity, they utilize trademark licensing to enter new markets beyond their core competencies.  For the brand owner (licensor), licensing provides royalty revenue and a variety of brand benefits.  For licensees, utilizing a strong brand can provide high consumer awareness and a clear, appealing image for their products.

Licensing also allows the licensee to offer “flanker brands,” a new brand introduced to the market by a company that already has an established brand in the same product category, thus protecting the core brand by targeting a different group of consumers.  This strategy, also called multi-branding, is used to achieve a larger total market share than one product could garner alone.  Companies who utilize flanker brands in a single product category typically have a premium brand (high quality/high price) and one or more value brands (lower quality or different set of benefits/lower price).  Flanker brands should attract customers from competing brands, minimizing cannibalization of the existing brand’s market share.

Today there are licensing opportunities that did not exist a little more than a decade ago.  The availability of licensed merchandise has proliferated over the last decade, and corporate America has finally recognized the value of its brand names developed over decades.  Now these invaluable, easily identified marks are licensed as a cost-effective means of brand extension.