How Small Manufacturers Can Benefit from Brand Licensing

India has emerged as one of the prime retail markets all over the world, not just for brands, but for entertainment properties also. These properties are foraying into Indian landscapes and creating a scenario where there is an increasing, push towards organized business than before. But somehow this push has affected the small manufacturers, who have been following the unorganized business mode right from the small T-Shirt manufacturers to the toy manufacturers.  The need here is to first get into the mainstream retail, and then remodel the retail channels. In such a scenario brand licensing is the way out for these small manufacturers. It not only helps them shifting towards the organized side of retail, but also addressing the challenge of visibility. If a manufacturer chooses to get rights of brand licensing via licensing, it gains tremendous exposure in its category in every retail store the product is sold. When sold into major chain retailers, the brand can gain thousands of additional feet of brand exposure in each category.

Samir Jain, COO Green Gold Animation, said, “A lot of small toy manufacturers are entering the brand licensing market, this is good for us and for the industry, This way the unorganized market is getting into organized mode by taking licenses and upgrading themselves from being unorganized toy businesses.” “We in-fact have many licensees who are first timers and have moved out of the unorganized sector. This is helping the industry in growing and also benefitting the licensing fraternity.” Jain added, who has on boarded a plethora of licensees for Green Gold’s iconic property Chhota Bheem. 

Vikram Goel, the owner of Infotech Resources, said, “Often manufacturers, find it difficult to enter large retail chains like Shoppers Stop, Crossword, Hamleys, etc. But when they approach with licensed products, it attracts the larger chains, and often helps them make a break through.” BY licensing the brand to manufacturer, which currently sells into a retail channel where the brand does not have a presence, the brand can gain access to that channel via the licensing relationship. Also, akin to new channel access, a manufacturer can gain entrée into new regions via brand licensing and improve his scalability.

Anand Singh, Director – South Asia, Cartoon Network Enterprise, said , The more independent the licensing business becomes, the more it will deduce the dependence on import, and it is better for the economy, license and for the local market.” Too much dependence on Chinese imports, fluctuating currency sometimes can make the licensees run for cover because they may be planning a range when the dollar was at 64, and then suddenly it goes to 50 leaving everything go haywire. 

The credits goes to the small manufacturers getting into the brand licensing business, a lot of things have changed in the past two or three years. For instance, three years ago bicycles were imported 100 percent. There was no licensed bicycle made locally, but today the entire licensed bicycle industry has shifted to Ludhiana including global brands like ‘Hero’ and ‘Avon’, and the market has become much localized. 

That has helped not only the licensees, but also benefitted the retailers to control their timelines, price points and deduced stock-outs. Hence brand licensing has elevated economy from its slow moving pace towards boom.

Why Licensing Companies?

The usage of licensing as the brand extension tool and marketing has boomed over the last three decades. When skillfully executed, an adept licensing association brings profits to all parties to the deal – be it the property owners and their mediators, licensees and their colleagues, retailers and, eventually, end users. Each of those affiliates has its own aims and goals that finally adding value to the final service or product.

To maximize the outcome, each member in the licensing development has definite accountabilities to fulfill. Every contract between the licensing parties is exceptional in its particulars, so even these duties vary to some degree.

 Licensors

There are several aims for an intellectual property (IP) owner to permit a license. The most obvious one is to make profits from the guarantee and royalty payments. But licensing also can cater a number of other purposes. In some cases, those “supplementary” reasons to license might in fact be more significant to the licensor than the sheer amount that is earned. Ponder the following amongst them:

Marketing support for the core business in many ways like a movie, television show, sports franchise or simply children’s merchandise that the retail display and propagation of these and other licensed products not only generate commodity sales but also helps promoting  the core property. Say for instance that any toy or apparel linked to a movie benefits movie promotion whereas sports fan wearing any sweatshirt with their favourite team logo expressing their passion for the team, in turn promoting the sports, team or league to by-passers.

Ranging a corporate brand into different classifications, locations of a store, or into novel stores overall. Licensing signifies a way to move a brand into new businesses without making a foremost investment in new manufacturing developments, machinery or facilities eventually reaping the benefit in royalties, but also in exposure in new channels or store aisles.

Retaining control over an original creation Licensing signifies a way for artists and designers to payback from their innovative efforts, while keeping up control over how they are used. For brand owners mainly those doing business in the universal marketplace, licensing and registering the brands in numerous markets are a way to safeguard the brand from being used by others without approval.

Licensees                      

Licensees lease the rights to a definite property for incorporation into their produce, but conventionally they do not share proprietorship in it. However, licensing provides a number of essential functions to them. Acquiring the consumer awareness and marketing profits of a well-known brand, character, logo, design, etc. The most noticeable advantage to a manufacturer or service provider the licenses a brand, character, design or other portion of intellectual property is the marketing influence it brings to the product.

Agents and Consultants

Licensors often retain licensing representatives or licensing firms to accomplish their licensing programs. These agents undertake duties for their clients such as agreement negotiations or the product endorsement processes. In return the experts receive a certain percentage of all royalty revenues. For the licensor the benefit of engaging licensing professionals involves their expertise and network of connections. The licensor also evaluates the cost of the advisor against the cost and time require in building up an in-house licensing division to handle business.

Manufacturers, on the other hand, may employ a licensing specialist whose duties are corresponding from the other side to those of the licensing representative. The licensing expert backs up the manufacturers who are mainly associated in licensing, but who do not have internal work forces to handle the business. It is the professional’s accountability to signify manufacturers in their licensing activities, comprising the assessment of properties, the inspection of their availability or the expansion and implementation of licensing policies. The terms under which licensing companies are paid vary comprehensively, but the foremost percentage is paid in commissions derived from product sales.