4.
WHAT IS BRAND LICENSING? Once you’ve
built a strong brand you will want to extend the range of products you sell to
increase your share of the market in that category or move into other
associated categories where you have production capability, trusted suppliers
and distribution channels already established. Customers
already trust you in this product category so not only will they want to buy
from you for convenience but also because your expertise is assumed in this
area. Extending
the brand into new product categories is called Brand Extension and usually
refers to the extension into new product categories where the manufacturer
doesn’t already have production facilities set up or distribution and category
expertise. In this case the manufacturer licenses the brand out to another
manufacturer with those capabilities and expertise. This is called Brand
Licensing. The promise
between brand and consumer is sacrosanct and needs to be kept through constant
reinforcement which strengthens the brand and allows it to stretch into these new
areas. This is the
most widely used way to extend brands nowadays because it allows a brand to
achieve new product introductions without the expense of the manufacturing
costs. It is essential to
understand the essence of your brand in order to discover Brand Fit. Brand fit
is the extent to which the new product is consistent with the brand image. The
better the fit, the more consumers will carry forward the attributes of the
brand into the new product area. In a worst case scenario, a poor fit can
damage the brand image and reduce the value of the brand. Licensing is
essentially the practice of leasing a legally protected property (such as a
trademarked or copyrighted name, logo, likeness, character, phrase or design)
to another party in conjunction with a product, service or promotion. It is based
on a contractual agreement between the owner of the property (or its agent)
known as the licensor; and a licensee – normally a manufacturer or retailer. It
grants the licensee permission to use the property subject to specific terms
and conditions, which may include the purpose of use, a defined territory and a
defined time period. In exchange for this usage, the licensor receives
financial remuneration - normally in the form of a guaranteed fee and/or
royalty on a percentage of sales. Most
agreements are set out in a licensing agreement. PROPERTY SECTORS
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