It refers to leasing or renting a brand of a company for a certain period in which the company pays a royalty fee
Not all marketers or entrepreneurs are familiar with Brand Licensing, I will start off by defining Brand Licensing according to the book description of Mr Michael Stone entitled “ The Power of licensing: Harnessing Brand Equity.“ It is leasing or renting a brand of a company for a certain period in which the company pays a royalty fee. How does one company study brand licensing in its portfolio? Review your brand portfolio and brand architecture which is very important. Brand architecture addresses how a company can best structure and communicate its portfolio of brands.
For Wellmade Manufacturing Company, which has been in the homecare segment for over 40 years. To enter a new category or industry will entail huge brand investment to build credibility and awareness. This is why we have pursued a brand licensing approach to enter a new category. Our core brand is Speed detergent and our intention to enter the auto care category will indeed need investments in launching a new brand. After scanning the competitive landscape and current local, imported brands in the market. We have narrowed the selection to one US brand that we are considering licensing. We validated the brand strength and product concept via focus group discussion and we are happy that – 9 out of 10 individuals will definitely purchase the products using the licensed brand.
Through Brand Licensing, Wellmade was able to create a new business via a licensing agreement of Goodyear brand for the auto care segment. Goodyear is one of the world’s largest tire companies. It employs approximately 64,000 people and manufactures its products in 48 facilities in 22 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. Strong Brand heritage in the Philippine market and a strong US equity. Borrowing the strong Brand equity of Goodyear, Wellmade was able to launch in the car shampoo segment and create an independent new business from their portfolio of brands.
In Summary
Brand licensing may also create new segments like Asia Brewery Disney licensing in launching a kiddie SKU, promoting safe water drinking for kids which generated incremental sales in the portfolio. Brand Licensing may also aid in reinforcing the brand position of an exiting brand like – Hapee toothpaste of Lamoiyan Corporation. Launch of Hapee Kids toothpaste with its Disney partnership and entry to baby care toothpaste segment. Brand Licensing will also expand the company portfolio by entering categories with dominant players. Asia Brewery growth on the RTD iced tea segment via brand licensing of Nestle Nestea Brand.
But simply doing brand licensing with a well-established brand does not automatically guarantee success in the category. In my previous article entitled, -New Brand or Brand Extension, I gave examples of established brands whose brand image did not work in its new product extension, because the brand image did not fit that category. In addition, the good execution of a sound business plan is key in making brand licensing successful in your company. Leverage on the brand power but the company must do its share in making sure the marketing mix and promotions of the brand are being supported by the stakeholders. In my career, I have seen big global licensed brands fail in the company due to a lack of support and investment in resources. Just like any partnership or relationship, both parties must give 100 % commitment and support to make the partnership work.
