Brand Licensing is a contractual partnership between a brand owner (Licensor), and a manufacturer or retailer (Licensee) who develops and distributes a product or service under the brand name in exchange for a fee (royalty).
Worldwide, the licensing industry is estimated at over $270 billion annually. Top 55 companies that are active in licensing (as licensors) generated retail sales of $1 billion or more in 2018 from licensing alone! Among these, some of the prominent corporate brands include General Motors, Electrolux, Caterpillar, Hershey’s, Ralph Lauren, Whirlpool, Ford, Stanley and Black & Decker.
While the US and Canada are the largest markets for licensed products and services, India, China / Hongkong, Japan and Brazil are regarded the fastest growing markets worldwide. India, in particular has witnessed an upsurge in brand licensing, owing to the emergence of organised retail and e-commerce.
A unique business model, licensing offers retailers and manufacturers (licensees) the ability to control the complete time-to-market process, by allowing them to choose the product line-up, regulate the product design, select a suitable manufacturer and control distribution / sales and marketing, in their territory.
BENEFITS OF LICENSING
A well-executed licensing partnership can be beneficial for all parties – brand owners, licensees, retailers and, ultimately, consumers.
Brand licensing has an impeccable track record of assisting brand owners maximize and extend their brands’ power and reach. It enables brands to go beyond their core businesses, reach new and existing consumers at new touchpoints, generate incremental revenue, protect their trademark and support brand messaging.
Expedite Entry Into
Easier Entry Into New Price Points Segments
Easier Entry Into New
Increased Sales &
Hence Market Share
Better Margins, Hence
Benefits for Manufacturers/Retailers
For manufacturers, distributors, private labelers and retail chains, brand licensing has emerged as the most effective way to jumpstart brand expansion or create product-line extensions. A growing number of innovative companies now consider brand licensing to introduce their products under the aegis of a more recognised brand in order to enter new price segments, expand retail penetration, gain access to more effective marketing, achieve higher profitability through better margins and ramp up sales and market share more quickly.