March 26, 2018

The big business of licensing with corporate brands

Coca-Cola, the beverage brand that boasts of mammoth brand awareness, owes a substantial chunk of its annual revenue to sales driven from apparel and related accessories, credits to its licensing vertical. The licensing arm of the world’s largest beverage company sustained double-digit annual sales growth– includin...

By Licence India Bureau

Coca-Cola, the beverage brand that boasts of mammoth brand awareness, owes a substantial chunk of its annual revenue to sales driven from apparel and related accessories, credits to its licensing vertical. The licensing arm of the world’s largest beverage company sustained double-digit annual sales growth– including a 12 percent jump to $1.3 billion in sales in 2014. Apparel and related accessories make up 65 percent of the business.

This clearly indicates that even the most successful brands don’t stand still. Massive potential along with pressure to generate value is forcing the large corporate brands to look out for extensions beyond their core categories and thus making brand licensing an increasingly useful option in the toolkit of the brand.

In words of Maura J. Regan, EVP, LIMA, “Though at the level of approx half of character and entertainment licensing; corporate licensing is still a significant part of the overall global licensing industry and there are a lot of facets to it.”

In terms of global retail sales for licensing is a huge business, almost $ 263 billion. Of that industry, 45 per cent is coming from the character entertainment business which certainly is a lion’s share of the revenue on a worldwide basis. But an important and interesting thing to notice is that #2 from where the revenue is coming is corporate brand licensing. So it’s an equally lucrative area to go into in terms of driving significant revenue.

Polaroid is a great example of what corporate licensing can do for brands. Celebrating its 80th anniversary this year, the brand has close to 97 licensees across the world in various categories. Commenting on what licensing can do for corporate brands, Jason Sutton, Vice President – Licensing asserted, “We have almost 100 per cent brand awareness. We are generating close to a billion dollars in licensed product sales on annual basis.”

“Obviously building own brand is a bit of struggle that is where licensing helps. We ourselves bring our 80th anniversary this years and we have spend billions of dollars in last 80 years building the brand what it is, and by licensing the brand name you are able to capitalize on the last 80 years of history,” added Sutton.

Why Corporate brands over others?

Without any second though, character & entertainment brands are the option a potential licensee looks at. However, the kind of licensing complete depends on the brand’s strategy and the target audiences and more than anything; it is majorly the target group that drives the licensing model.

In words of Chitra S. Johri, Director, Bradford License India, “Corporate licensing always encourages licensees towards long term association. It also extends into multiple formats unlike character and entertainment licensing where one can induct multiple partners for same category.”

“Corporate licensing helps maintain sanctity by not chopping licenses between multiple licensee, thus offering exclusivity across formats in a territory,” adds Johri.

Structuring it right

“The core of licensing in general is finding the right partnering company. We look at what the brands stand for, different product categories that can benefit from the attribute and DNA in terms of the logical aspects as well as visual aspects that people associate with University of oxford,” asserted Chris Evans, MD, Oxford Ltd.

Globally, Oxford brand is licensed for merchandising across 80 countries and now the company Oxford Ltd. that runs Oxford Shops and manages the global brand licensing of the 800-year-old British University, is likely to add five new licensees partners this year to sell University of Oxford branded products in India.

Corporate licensing as a strategy is not just an opportunity to venture into new categories, but also new territories. There is a plethora of conglomerates that have marked their presence in India through licensing, for instance Aeropostale inked pact with Arvind Brands, Simon Carter forayed in India under licensing pact with Aditya Birla Fashion, and Coach made way with Reliance Brands.

Under corporate licensing, there is complete shift in the way people perceive and it is happening in every single way possible, starting from mobile phones to stationary, home décor to fragrances and apparel to accessories.

Not just the sales, but such licensing strategy can also help the licensor alter its perception like Caterpillar did. The brand underwent a successful vault from heavy machinery to the fashion business that took off in 1994 with retail sales of around $1 billion worldwide.

 

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