Brand Extension
How to Deal with Challenges as You Begin or Advance Your Brand Licensing Program

By: Allan Feldman, Founder & CEO of LMCA

Do not over promise and under deliver
Too many CEOs have heard that a competitor is successful with licensing and they want the same or better and quickly! Expectations and timing need to be managed. Emphasize the strategic side of licensing and do some upfront homework on competitor programs; there are few overnight licensing successes. Ensure that all interested and relevant departments and personalities are aligned and involved in setting the foundation for licensing. Good relevant case studies are a great way to illustrate the possibilities and potential pitfalls. Set program goals and tactics that are deep rooted in the brand’s core business that cannot be easily washed away with a change in strategy, organization or company ownership. Choose initial extension targets carefully and do not be rushed into signing the first few licensees. Solid success with the first three to four licenses will always beat out deals that were done in half the time but are shaky or controversial.

Avoid using trainees to put together a program
Even if the company has been smart and successful in other areas, licensing is not the place to learn on the job. If the company’s workforce does not already have solid experience and contacts, then hire someone that does. A good licensing agency can go a long way to building some early successes and can help to demonstrate what is required to take over and grow the program.

Invest in developing a solid strategy before launching
A solid strategy should cover product, market positioning, consumer strategy, retail strategy and licensee targeting strategy. These strategies should be tested via research with consumers, retailers and in turn, prospective licensees. They must be validated and, if possible, quantified. When competing with other entrenched and licensed brands, market success is far from assured. Brands delving into licensing need the best licensee partners available.

Take care when choosing licensees
Steer clear of licensing to professional licensees; it is best to opt for someone who offers serious attention and a dedicated effort. At the same time, the biggest prospective licensee partner is not always the best. Big companies can be slow, bureaucratic, subject to sudden management changes and the size of the license may not be all that important to their overall business. Think carefully and creatively and remember licensing professionals should be able to provide the necessary resources, contacts, know-how and experience. Success in a given category is the result of a good licensee.

Build long-term working relationships between licensors and licensees
This relationship should not be based around quick transactions. This means balanced business terms (ie, contract length, royalty rate, guarantees and performance minimums), effective communication, mutual goals and ongoing support. In addition, conduct regular licensee and licensor summit meetings. Alignment is essential in licensing, as is having a clear and consistent strategy across all licensees. Understand that there are two areas of leverage in licensing. One is about extending the awareness and appeal of a brand. The other is about leveraging the relationships, resources, strengths and cooperation between members of the licensee family and the licensor. Synergy between licensor and licensee and among licensees can make or break a licensing program.




To learn more about the ways in which strategic licensing can help your brand grow, visit our Solutions Page.

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