International Licensing - License Magazine - Date: December 2004
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Licensing - State of Affairs
was once thought to be an interesting growth strategy for developing
new products and establishing a foothold in the marketplace. Today
it is considered absolutely critical— not only for top brands, but
also for retailers, manufacturers and licensees.
to licensing industry reports, after a down year in 2001, the licensing
industry rebounded strongly in 2002, posting a $225 million increase
in U.S. revenues. Manufacturers paid more than $5.8 billion in royalties
for licensed products. In 2003 licensed products generated retail
sales of $71.4 billion in the U.S. and Canada. The largest and fastest-growing
segment of the industry is corporate brands and trademarks, which
produced 25% of that $71.4 billion.
licensing supports new products in a wide array of categories such
as food and beverage products, apparel, accessories, house wares
and publishing among others. And while the aforementioned figure
serves as testament to US dominance, the evolution of markets in
China and South America suggest this bias could be addressed in
acknowledged by a myriad of properties in market places throughout
the globe, there are numerous global commonalities and conflicts.
Some brands use licensing to develop as many consumer products as
possible; others use it to develop the most unique consumer products
licensing has become a strategy for retailers to gain even more
power and control in the sales of consumer products. Examples of
retailer licensed brands can be found in a growing number of categories:
Wal-Mart's GE-branded housewares; Target's Phillips small appliances;
and Home Depot's Scott's outdoor power equipment. K-Mart also had
tremendous success last year selling over $1 billion of Martha Stewart
US based consumer product brands there is every conceivable approach
to licensing - from "merchandise-based" or "equity-based"
approaches to licensing. These two key approaches are adopted widely
on a local scale, serving as an important first step in developing
a successful licensing program.
licensing programs of Coke and M&M's exemplify the local climate
of merchandise-based approaches. Coke offers licensees different
"looks" to use each season, looks that relate only indirectly
to its own products and advertising. Similarly, M&M's will allow
its candy characters to appear in almost any position and attitude
to fit the distribution or usage of a licensed product.
the concept of global brand licensing, recent research by specialist
AC Nielsen observed over 200 consumer packaged goods (CPG) brands
from more than 50 global manufacturers. The research initiated
a new category, deemed the global mega brand franchise.
key finding of the ACNeilsen report in the context of licensing
was that by licensing a brand name to manufacturers outside of the
corporate expertise, manufacturers are able to use the expertise
of others to extend their brand name into alternative product categories
to ACNeilsen boundaries, In order to be a mega brand franchise,
a brand had to have products that were marketed under the same brand
name in at least three different categories (based on ACNielsen’s
category definitions). The brand also had to meet the brand franchise
criteria in at least three of the five geographical regions. In
addition, the brand had to be sold in at least 15 of the 50 countries
key finding of the study is that there are more global mega brand
franchises in Personal Care than in Food, Beverages & Confectionery.
Over 50 percent of the 62 global mega brand franchises were found
within the Personal Care & Cosmetics categories…32 brands from
Food, Beverages & Confectionery manufacturers ranked second,
with 23 of the 62 brand franchises. Seventeen manufacturers marketed
these 23 brands. Interestingly, 15 of the 23 brand franchises on
the list were based on some derivative of the manufacturer’s current
within north American spheres, the recent Licensing 2004 International
trade show, hosted in NYC showed a surprising lack of video game
licenses, yet Japanese influences were everywhere. Among all the
various trends, toys and t-shirts, four major themes dominated among
the hottest new licenses:
preschoolers; the attention given to the childhood obesity epidemic
in the US has paved the way for a slew of preschool properties dedicated
to getting the little ones off the couch. Properties include Nick
Jr.’s Lazy Town, Discovery’s Hi-5, and PBS’s Boobah
revival: Gen X and Gen Y classics, such as Strawberry Shortcake,
Transformers, Cabbage Patch Kids, Weebles, and My Little Pony had
major presences. Mattel debuted a Barbie-branded clothing line for
women. And thanks to an appearance on The O.C., Care Bears
are hot once again.
merchandise:licensed film merchandise dominated the show
this year. Expected biggies include Peter Jackson’s King Kong
remake, The Pink Panther, Fantastic Four, Curious George, Lemony
Snicket’s A Series of Unfortunate Events, and Batman Begins.
scene:We’ve already seen the success of lines from Mary
Kate and Ashley Olsen and Hilary Duff, and the "tween lifestyle
brand" category is expanding even more. Nickelodeon’s everGirl
(everGirl TC) debuted here, as did Trollz, a new lifestyle
and entertainment brand based on the popular fuzzy-haired creatures.
to Kirk Martensen, President of Goldmarks Company, a Chicago-based
consultancy that specializes in brand extension, licensing represents
a favorable option for companies seeking to acquire strong brands
as it is the lower risk option and an alternative to high purchase
two recent brand acquisitions: Salton, Inc.'s $137 million purchase
of the George Foreman name and Disney Co.'s $350 million outlay
for rights to Winnie the Pooh characters. Companies that can't afford
to invest or risk that kind of capital often use licensing to secure
the exclusive rights to a brand," says Martensen.
Martensen believes major retailers are using brand licensing to
invigorate mature products. "As retailers secure the rights to powerful
brands and extend them into new products, it is a major shift in
leverage and serious threat to the existing brands in those categories,"
key to success for brand licensors says Martensen is to be cautious
and extend the brand only into product categories where the brand
has relevance and appeal to consumers. "Retailers need to work closely
with licensors and licensees to ensure that new brand extension
products are consistent in product quality-value, packaging-communications,
and wherever possible, features-benefits. Licensors must also weigh
the pros and cons of entering into retail licenses, and carefully
analyze the dynamics and trends of new product categories since
these decisions can have a major impact on their core business."
"Not surprisingly, brands are playing an increasingly important
role in the trademark licensing business. Going forward, brand licensing
should become even more prevalent as a strategy used by manufacturers
and retailers. The market leverage and power will continue to reside
in brand owners; the question is, will it be manufacturers or retailers
that own the brands of the future?" Martensen said.
Asked by License Magazine about the current retail climate Jordan
Sollitto Executive Vice President, Worldwide Marketing for
Warner Bros underscored the competitive nature of the marketplace.
"It is astoundingly competitive, both internationally and nationally.
Nowadays we are far more mindful of the significance of our retailers
and their baring on the marketplace.
about the differences between entertainment brands and specific
properties, Sollittosays Entertainment properties such as
Warners derive their essence from the TV shows or movies that are
produced under their banner, whereas brands create their own reason
for being, taking cues from the media and society at large.
create their own stance and their own point of view. Entertainment
properties can on the other hand cross over this barrier and become
their own self sustaining brands," Sollitto adds.
her differentiation, Ashley A. Lee Coordinator, Marketing and Business
Development for The Beanstalk Group says Entertainment licensing
is directly inspired by the characters and themes of the property,
while brand licensing is inspired by a brand's equities and the
unique positioning it enjoys in the minds of consumers."
brand can stand for a lifestyle or function as a seal of approval.
Successful brand licensing must tap into the brand's unique point
of difference and translate it into high quality products in strategic
categories that are close to the core of the brand. For a brand
to be licensable, it must be well-known and widely used by the public,"
differences are the target demographic audiences and "Hot"
vs "Classic" properties says Rita Rubin Senior Vice President,
International Licensing, United Media Licensing. " Most movie properties
are a quick hit and run, while the tv and character brands have a
longer life." Additionally, Rubin adds, "the international
markets are behind the US when it comes to brands, although they are
selling much better now than a few years ago. The markets around
the world all need to have exposure, whether tv, publishing or other
media, in order to make a successful licensing program."
Senior Vice President of Global Licensing Everlast Worldwide Inc.
cites the differences between entertainment brands and specific
properties. "A character is only a character, ever. A new
name on the market cannot be a brand until it becomes famous, and
a brand is only present when two factors exist: 1. The
consumer recognizes the name based on its fame. 2. The
consumer has a quality connotation of the name. Without a
quality connotation, the property merely remains and can never be
"It is tiring that
our industry so values brands that they are prepared to license and
market every type of property as a brand. It is most erroneous.
This is probably because character licensing has more perceived risks
than brand licensing, so it is an attempt to remove licensing sales
barriers," Worsham adds. "So many licensors wake up in the
morning and decide they are going to launch a new "brand". They
give this a name, apply for trademark registration, and then go around
licensing this new "brand". Another example: any new character
that is introduced seems to have a licensing program built around
that same characters "brand". In neither of these cases is a
brand present," Worsham said.
Asked about the current retail climate Ashley A. Lee Coordinator,
Marketing and Business Development, The Beanstalk Groupsays
itis highly competitive with a shrinking number of retailers
and limited shelf space. "Increasingly, retailers are using licensed
brands to differentiate themselves and attract consumers. Brick
and mortar retailers face the challenge of competing with online
retailers, and will need to create a more entertaining, experiential
environment to lure consumers out of their homes."
"The current retail climate internationally continues to be challenging,"
says Maura Regan Vice President, International Licensing and New
Business Development, International Television Distribution division
of Sesame Workshop.
"Retail sales are soft and there is much competition for limited
shelf space. We do, however, see growth opportunities for
Sesame Street as we develop programs that are retail specific
and provide turn-key marketing and promotional opportunities," Regan
"As many industry leaders would admit, children's programming
time slots continue to decrease. In addition, the market place
is quite saturated. Another challenge is securing financing
for a global market with locally relevant content. It's a
delicate balance, but the good news is that broadcasters still recognize
there is a great need for highly engaging educational programs and
will dedicate the timeslots, albeit limited, for them,". Regan said.
Hal Worsham Senior Vice President of Global Licensing Everlast Worldwide
Inc offered his definition of the climate, "this has been said a million
times, but the consolidation of retailers continues to provide challenges.
There are less retailer groups to sell, so the competition is even
fiercer at those that remain. If you have a good, unique product
to offer any market, there are fine growth opportunities."
On strategy, Hal Worsham Senior Vice President of Global Licensing
for Everlast Worldwide Inc added, "these days it is very popular
to license a brand directly to a retailer. If the brand is
strong this strategy should not be followed, as it will limit the
distribution of products and it will tie the brand image to that
of the retailer. The shop-in-shop concept is catching-on in more
countries around the world, so we see good opportunities for brands
to present their stories in a growing number of markets."
Recounting some successful retail strategies she has observed,
Ashley A. Lee Coordinator, Marketing and Business Development
The Beanstalk Group cited a strategy devised between Beanstalk
and client Dualstar Entertainment, seeing development of the mary-kate
and ashley program with one exclusive retailer who could support
the program with dedicated space, signage, promotions, etc.
"Wal-Mart was selected and launched the program in the U.S. in
early 2000 with nine core categories targeted at tween girls.
Based on the success of the Wal-Mart U.S. program, Beanstalk has
coordinated international expansion," Lee said.
The brand now features over 2,500 SKUs in over 50 categories including
fashion apparel, accessories, footwear, home décor, cosmetics, fragrances,
liquid hair products, fashion dolls and accessories, television
programs, videos/DVDs, books, and music. Through a strategy of controlled
distribution country by country, the brand is available at 2,800
Wal-Mart U.S. stores as well as at Wal-Mart and Shoppers Drug Mart
in Canada, ASDA, Littlewoods catalog and Boots in the U.K., Target
in Australia, Suburbia in Mexico, The Warehouse in New Zealand,
Auchan in France, Wal-Mart and Otto Versand catalog in Germany,
and Seiyu in Japan.
Also, working with Toys "R" Us and licensee Mattel, Beanstalk
created the Harley-Davidson Barbie as a limited edition collectible
for Toys "R" Us. The product sold out and the velocity of
the Harley Barbie sales demonstrated the power of the brand in collectibles
and in products for women. As a result, TRU then agreed to
carry the Harley-Davidson toy line, which has achieved tremendous
Also on the topic of successful strategies, Jordan SollittoExecutive
Vice President, Worldwide Marketing for Warner Bros believes successful
retail strategies are those that partner with retailers in order to
build their licensing and marketing dynamic. "This is propagated via
successful communication with marketers and effective research between
these parties, ultimately leading to better understanding overall."
Rita Rubin Senior Vice President, International Licensing United
Media Licensing recalls her company’s successful DTR strategy, active
in Europe. "This has allowed us to develop many product lines across
varying categories without cannibalizing our other programs. The
same strategy holds true in Japan, where our Snoopy Town Shops continue
to grow in numbers without negatively affecting our program throughout
The common verdict regards the topic of growth territories amongst
interviewees hinged on Latin America, India and new free markets
such as China and eastern Europe. Smaller but meaningful territories
like Turkey, Israel, and Korea rate a mention, while North America
is still regarded as the strongest market. Beanstalk - China and
India, as well as some
Maura Regan Vice President, International Licensing and New Business
Development, International Television Distribution division of Sesame
Workshop reveals, " We are actually finalizing negotiations
in both India and China and are confident these markets will provide
long-term growth opportunities for Sesame Street. We are also
actively engaged in business in Russia and believe that Russia and
Poland will provide significant opportunities for us over the next
Rita Rubin Senior Vice President, International Licensing United Media
Licensing adds, " We have been building a program in China for the
past 6 years and have had exponential growth. As stated, it is still
a relatively new licensing territory and offers great growth opportunities
as the second tier cities develop their infrastructures." While
we have our Peanuts comic strip syndicated in India for many years,
we have not pursued a fuller licensing program because of the difficult
retail environment and the lack of national infrastructure. We are
intending to start researching the potential of licensing in India
in early '05," Rubin said.
Hal Worsham Senior Vice President of Global Licensing Everlast
Worldwide Inc says, "I consider almost every market an area of growth,
given that one signs the right licensees that offer unique products
to the market place. Right now, we are putting a very heavy
emphasis on developing our Asian business, with the highest concentration
in China. We believe that China is perfectly situated to adopt
Western brands, while the consumers are very brand conscious."
"Add this to an affluent group of consumers that can afford to
buy products, which number 300 million, and you have the keys to
great success. We are also considering licensing in Argentina, as
we believe that the market is recovering to the point at which consumers
will be buying more branded products," Worsham says.
Quizzed about what sets international apart from national in terms
of product,licensing, merchandising and other retail strategies, Rita
Rubin Senior Vice President, International Licensing United Media
Licensing said, "International licensing is based upon local cultural
tastes, traditions and customs. What works in one country, whether
it be colors, packaging, advertising campaigns, does not necessarily
work in another."
"It takes more resources to put together
programs internationally due to increased legal requirements for registrations
and defense of copyright and trademarks. There are cross country
opportunities in some regions, but most of the time each of the collateral
materials has to be localized for language and other cultural distinctions."
According to Maura Regan Vice President, International Licensing
and New Business Development Products and International Television
Distribution,"Sesame Workshop products that might work in one country
will not in another due to pricing, design, or general style of product.
"The retail landscape may not be as diverse as the US or distribution
may not be as established," she says "With regards to Sesame
Street specifically, the challenge is that while we are a global
brand, we are also very local and have local adaptations with their
own logos and in many cases, different Muppet characters. This
presents challenges in working with one retailer or licensee that
has pan-European, for example, distribution," Regan said.
"Successful international licensing programs need to be mindful
of, and plan for, local consumer tastes and local retail environments,"
says Ashley A. Lee;
Coordinator, Marketing and Business Development The Beanstalk Group.
"To meet the needs of Beanstalk’s European clients, The Beanstalk
Group UK was founded. The London office serves as the hub of European
operations, executing territory-specific programs on a country-by-country,
regional or pan-European basis."
"International licensing is very different from US licensing.
For us at Everlast," adds Hal Worsham Senior Vice President of Global
Licensing Everlast Worldwide Inc. "We have a brand position as "upper
moderate" in the US. However, outside the US we have a brand
image of "high end". We like to keep this same imagery in all non-US
countries to have a great consistency around the world. So,
you will find us at such tony stores as Collette and Galleries Lafayette
in France, and at similar stores globally." This requires that we
make our product approvals and quality control at high levels.
We work very hard with our licensees to make sure that they have merchantable
product, but at the same time keep the image at a consistently high
level." We really listen to what licensees say, as they are
experts in their own markets. They have knowledge that we cannot
have. That is why we take such great care in selecting the "best
of the best" licensees. This is our method of working "locally"
to meet local demand."
Written by Craig Stephens
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