The Benefits of Brand Licensing: Quickly Explained
November 1, 2012
As advertising is faced with a rapidly changing environment, brand owners and brand managers are looking for smart and new ways to reach consumers and grow their businesses. Traditional channels of communication alone are no longer enough to reach consumers effectively and ensure growth.
“Retail-tainment” and “experiential marketing” more and more offer the consumer unexpected ways to interact with and use a brand. Often consumers are more permissive and open to this unexpected interaction. They are willing to spend money to give this brand a new role and expand its presence in their lives. In purchasing the new consumer product, they in fact are confirming the brand’s meaningful role in their lives.
Brand owners are beginning to recognize the urgency of addressing the following needs:
- To increase brand awareness with existing and new customers.
- To increase brand excitement by taking their products to new aisles in the retail environment
- To respond to competitive factors
Meaningful benefits, however, can accrue to brand owners who discover brand extension licensing.
Marketing Benefits of Brand Licensing
- Reinforcing and enhancing the equity and value of the established brand with consumers.
- Improving brand awareness with existing and new consumers.
- Targeting consumers in new places and new ways – this is increasingly important as brand managers recognize the increasing ineffectiveness of traditional advertising and the importance of experiential/indirect/buzz marketing.
- Supplementing already-stretched marketing budgets.
- Expanding a brand’s retail presence across categories and channels.
- Improving competitive strength. When a brand’s competitors are using new consumer products to fill store shelves and consumer needs, licensing may become a necessity. Further, the biggest brands have used ancillary consumer products to broaden their overall role in consumers’ lives and become “lifestyle” brands.
Financial Benefits of Brand Licensing
- Direct financial benefits: revenue royalty increases the financial return (and overall profitability) from a mature brand in its own category.
- Indirect financial benefits: new branded products are a successful marketing tool that will support and grow the brand owner’s core business as well.
Reaping the Benefits of Brand Licensing
The benefits of licensing a well-known brand have become too great to ignore, but also difficult to manage. In an age when brands are built wherever they interact with consumers, the vital question to ask about licensing is not “If” but “When?” If you’re looking to