With increasing competition in the retail sector, it is licensing that can get both the licensor and the licensee an extra edge in scripting a successful business story while also taking care of the many pitfalls that may come their way. Consider this: the sale of licensed merchandise has transcended to USD 280 billion globally, indicating that brand licensing has come out of its niche cocoon and is rapidly transforming into a full-fledged segment. In fact, it is today the most efficient growth strategy for both the licensor and the licensee, given the nature of investment and rate of returns. In the due course of its expansion, the magnitude of opportunities it has to offer is enormous. Brand licensing is now integrative of entertainment and character icons, sports, fashion, and corporate. Ruling the ranks when it comes to market-share in India is fashion with an estimated USD 594 million, followed by entertainment and character icons at USD 406 million. Sport follows with USD 30 million. In this context, Indian brands only contribute about 10% to licensing and merchandising activity in the country with a majority of the market-share commanded by Hollywood and US pop culture. But, with indigenous intellectual properties (IPs) in tow, the Indian market may soon be on the sunny side of the hemisphere. Brand licensing brings in its wake several perks for both parties. Therefore, it is imperative for a brand manager to understand the full context of the segment. Let’s discuss in detail what brand licensing has in store for licensors and licensees.
The Licensors Market
Revenue generation is the primary goal of every organisation and the correlation between investment and rate of return determines the risk and success parameters. Licensing yields dual returns in the form of sales and royalty. Apart from the quantitative aspects, licensing also helps in protecting a trademark and increases brand awareness. There are several benefits to brand licensing, some of which are:
The Licensee Market
Licensing is one tool that has the potential of quadrupling your market-share and increasing incremental revenue. With careful execution, it will be your gateway to competitive superiority. And it will significantly change people’s perception about your products. The benefits of licensing include:
In conclusion, it can be said that with proper marketing strategies and licensing development programme in check, there’s no stopping your products from finding a position in the limelight. Licensing corroborates for a win-win situation for both, the licensor and the licensee, if developed in accordance with each of their demands.