The Brand Licensing Process - Step 1: Identify Where To Play

1. The Brand Licensing Process step 1: Identify where to play PETE CANALICHIO Brand licensing can be very beneficial for both brands and licensees if done in a step-by-step manner. Figure 2 below will give you a timeline of each of the processes listed in Figure 1. Licensees and licensors should not miss crucial deadlines as delays are costly. Step 3: Prospect Licensees Step 2: Determine How to Win Step 1: Identify Where to Play Step 4: Perform Due Diligence Step 5: Step 6: Negotiate Contract Define Licensing Opportunity Step 7: Conduct Orientation Step 8: Establish Business Plan Fig. 1 The Brand Licensing Process How TO Win Lincensees Deal Terms Determine Negotiate Prospect Define Licensing Opportunity Agree to Deal Terms Identify Where To Pay Due Diligence Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Y E A R 1 Commercialization Orientation PO Issued Prototype Approval Contract Review Signed Concept Development with Samples Line Production & Shipping Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Y E A R 2 Fig. 2. Product Commercialization Timeline Consumers bond emotionally with the brand when delighted by a particular brand experience. Buying the brand more often and recommending it to others serves to build the brand’s reputation. Consumers will often purchase a brand for the first time because of its reputation. The brand adds value and certainty to an otherwise unknown product. The brand’s reputation affects the value of the brand and the revenue it will drive for its owner. Prospective licensees want to license brands with the strongest reputation or their preferred use by consumers. A popular brand gains permission to extend into categories that complement its original offering as brand extension. By delighting its consumers, Mr. Clean built significant brand loyalty and allegiance. To further satisfy consumers, Mr. Clean developed a line of branded mops, brooms, and brushes. Today, the Mr. Clean brand can be found on an expansive list of products, many of them licensed. Using licensing to augment internal resources actually accelerates a company’s overall time to market. How can you determine your brand’s extendibility and identify what product categories it can sell in? It takes understanding your brand’s vision, architecture and positioning and the value that the brand provides. Kodak is a well-known company in the camera business; what would be a natural extension for them from cameras? 1. Let’s look at their brand architecture first. In the diagram, you will see how selling photography paper fits in so perfectly with the brand’s architecture and positioning. High Order Brand Identity Immortality Emotional Benefits Captures Precious Moments Functional Benefits Long-Lasting Image Product Attributes High Quality Paper Figure 3: Kodak brand architecture 2. Brand owners should conduct market research on suitability of different categories before extending their brand.. Each category should be evaluated on the prominence of brand associations favorability of associations and uniqueness of association from the new category. 3. After trimming the list of possible extensions, brand owners should then conduct an industry and competitive analysis of the category. Research includes the size of the market, current competitors, industry growth rate, and competitive nature. Techniques to use include Strengths – Weaknesses – Opportunities – Threats (SWOT) analysis or a Porter’s Five Forces analysis. These methods are helpful in evaluating a business or a project from a strategic point of view. Strengths Weakness Advantages Capabilities Resources, assets, people Marketing reach, distribution awareness Disadvantages Gaps in capabilities Reputation Financials Reliability Processes, systems Strengths Strengths Opportunities Weakness Market developments Industry trends Technological developments Global influences Tactics Political Legislative Economic Technological Competitor intentions Vital contracts Financial backing Figure 4: SWOT Analysis Threat of New Enfants Barriers to entry Economies of scale Capital requirements Switching costs Government policies Supplier Power Rivalry Buyer Power Supplier concentration Product differentiation Switching cost to another input Threat of backward or forward integration Number of competitors Size of competitors Industry growth rate Product differentiation Exit barriers Number of buyers relatives to sellers Product differentiaion Switching cost to another product Buyer’s margins Threat of backward or forward integration Threat of Subsitutes Price of Substitutes Quality of Substitutes Switching cost to buyers Figure 5: Porter’s Five Forces Analysis Grab V aluable Resources from Brand Licensing Experts for 100% Free Today Are you interested in extending your brand’s influence, strengthening consumer relationships, and generating unlimited revenue from guaranteed royalty payments? Get Your FREE Membership Today PeteCanalichio.com/fast-track PETE CANALICHIO