June 8, 2011

Million Dollar Baby

It's a fairly simple business tool, but a complex co-venture between two entities that bring together their strengths to leverage a consumer engagement through an established brand relationship. Nanette D'Sa gives her opinion on this complex co-venture.A decade or so ago, the concept of licensing was not just alien...

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It’s a fairly simple business tool, but a complex co-venture between two entities that bring together their strengths to leverage a consumer engagement through an established brand relationship. Nanette D’Sa gives her opinion on this complex co-venture.

A decade or so ago, the concept of licensing was not just alien to most of us in India, but was, in fact, construed to be the opposite of what it is. If I, as a marketer of pencils, agreed to use a character on my product, I expected the company that owned the character to pay me, since I was doing them a favour! Cut to 2008, where brand licensing has become a profitable option for the licensor. Having a Brand Licensing Conference and a publication is a giant step for licensing in India.

Licensing of intellectual property involves, branding, content, characters, copyrights, logos, trademarks, category management, retail, promotions, product, packaging, everything you can think of and more. Entertainment, sports, brand and celebrity licensing are the opportunities that have gained momentum and are poised to see immense growth. Using the brand in product (T-shirts, stationery, publishing, toys, home products, etc.), interactive (mobile, internet, gaming) and promotional licensing, is what would be typically covered under licensing, as different from franchising.

What is the potential of licensing in India? Why has it not taken off as it has in the West not even like it has in Asia? The potential of licensing in Asia and the size of the Asian licensing market as measured by the retail sales of licensed products and according to an industry report there was $10 billion in 2001. Japan, alone, accounted for $8.8 billion of the total. Excluding Japan, the Asian licensing market was worth $1.2 billion in 2001 and China is estimated to be $600 mn (Rs 2700 crore).

What we see is what we want. Television and film, entertainment and character licensing are undeniably the largest opportunity– 90 mn television homes and over 1,000 movie properties–lot of content to power the licensing industry. And smart young marketing professionals have brought a lot of imagination and work. It is thus not surprising that a lot of licensing starts as marketing activation and since several television and film properties have done well, anyone tracking the space would agree that the product has found consumer acceptance.

Licensing of kids’ television properties has seen tremendous activity and has been very successful — all of us remember the Shakalaka Boom Boom Magic Pencil topper a single piece of merchandise that sold millions of pieces, or the Beyblade tops that kids could not get enough of and the Pokemon craze to name the ones that are top of mind. There is no doubt about the potential of licensed merchandise, especially for kids, with several international players having offices and teams in place in India.

Typically, international content has been extended into licensing programs. A lot of it has targeted the top end of the market. The penetration of television throws up exciting opportunities for mass India.

A lot has been done in the area of brand licensing of several international and local brands — Tommy Hilfiger, on the one hand, and Spykar, Levi’s, Madura brands, Puma — have several product extensions of the core business franchise they built. Several international brands are signing on partners to launch their brands in India. There is clearly merit in companies using partner expertise to extend their brand presence from a single category, say apparel to include accessories such as belts, caps, bags, deodorants, perfumes, etc. Leveraging the brand extension to other categories, if done correctly, is effective in building a larger brand relationship with the target consumer and leverages the advertising spend to cover additional cross sell opportunities, uses the partners’ expertise including distribution and financial resources to augment the additional category opportunities and delivers a royalty income.

Inspite of so much that has been done, why, you would ask is the industry size just Rs 350 crore? Whilst a lot has been attempted, a lot remains to be done. The partnership between the licensee and the licensor needs to be extended to retailers and through retailers to consumers through integrated licensing promotional programs. Retailers are ready; an example as explained by Kishore Biyani in ‘It happened in India’, talks about his first movie Na Tum Jano Na Hum (NTJNH), in 2002, ‘being one of the first movies to be merchandised’. From notebooks, folders, pens to mouse pads, the enterprise launched quite a series of movie specific merchandise at the stores. A soft toy named “Tutu” that featured prominently in the film became very popular and they sold thousands of those in various sizes at the Pantaloon stores. A range of men’s and women’s apparel was launched with the tag “From the sets of NTJNH”. Kishore Biyani continues to believe in the power of content licensing and was one of our early partners for the Star Parivaar line. Commenting on the association, Kishore Biyani says, “The Indian woman has been an enigma, Big Bazaar has partnered with Star for her everyday needs. We do not see a better partnership than with Star to enrich her life with fashion and style but with our motto of doing so, at realistic and affordable pricing”. For Star as the Licensor, Uday Shankar, CEO Star India says, “We have been able to make available, with this association, the one experience that viewers have time and again asked for in every consumer research that we have conducted that of having access to the fashion and lifestyle they experience through our entertainment platform.” What started out as a consumer aspiration uncovered through research of the woman wanting to belong to the world of Star and the icons of the Star soaps now, becomes a reality.

The industry is growing and there are marketing professionals looking at careers in licensing, brand managers looking at partnership programs to get a bigger bang for the buck, retailers looking at increasing footfalls and inventory turns, with the power of licensed brands, programs have found consumer resonance with kids, youth and adults with active participation in the aspiration of wearing and adopting the brands they identify with, across categories, relying on the brand to fulfill their needs. It’s up to us, as an industry, to make this the Million Dollar Baby!

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