Licensing is the process whereby a person or firm that owns or controls a legally protected intellectual property grants to others the right (called a “license”) to use such property on products or services. “Intellectual Property” could be in the form of a trademark; a logo; a graphic; a name; a title; a likeness; a signature; a character or personality; a design; a symbol, a patent or a copyrighted work (such as a book, play, movie, television series, etc.). The license is granted for specific products or services for a fixed period of time, for a defined geographic territory and channel of distribution in return for an agreed upon payment.
– Gary Caplan
Welcome To A $250+ Billion Business
Retail sales of licensed products has grown to over $251.7 billion worldwide.
The U.S. and Canada, which together accounted for 57.7% of the worldwide total, saw retail sales of licensed merchandise grow 3.9% to $145.5 billion in 2015.
The sheer size of the business is enticement enough for those who are entering or investigating the industry. With this kind of sales volume, it’s no wonder that licensing has become a critical component of the marketing equation for manufacturers, developers, creators, and retailers alike.
The business is divided into eighteen “product categories.” Some examples include: Apparel; domestics; electronics; food beverage; home furnishings; health and beauty; housewares; publishing; sporting goods; and toys and games.
There are eleven licensing “property types.” Some examples include: Art; celebrities/estates; fashion; music; non-profit; publishing; sports; trademarks/brands; and toys/games.
The licensing business has continued to grow at a remarkable rate, a trend that has held steady over the last several years. In 2015 the industry realized a gain of 4.2%, with Royalty revenue jumping 7.8%.
Charles Riotto, President of LIMA, commented, “The 2016 survey showcases the resonance that licensed intellectual properties continue to have among consumers around the world. The size of the Global Licensing Market is on the rise, and is showing strength as our industry expands into new corners of the world.”
Benefits for a Manufacturer
For a manufacturer, licensing can be a great marketing tool. Just a few examples of the potential benefits manufacturers can realize if licensing is used to its best advantage:
- If executed and managed properly, licensing can help generate additional sales, gain new customers, and enter new channels and markets.
- Not only can a licensed product sell on its own merits, it can help sell the rest of a manufacturer’s line by using marketing and merchandising leverage.
- Many times, margins can be improved with licensed goods, even with a royalty tacked on.
- Licensing can create additional awareness and recognition for a company and its product line.
- Licensing offers a manufacturer a way to clearly differentiate their products from that of their competition.
- Licensing can help enhance a company’s image by being selected as a licensee of a prestigious brand or icon.
- Increased marketing opportunities are made possible by licensors, and also often come from working with fellow licensees.
- Manufacturers can use licensing to bring excitement into the marketplace and to create an “event.”
Licensing may not be for everyone, and not every licensed property is right for every manufacturer’s product line, and vice versa. But, the fact is, it is difficult to disregard or underestimate the powerful marketing and sales tool that licensing has become.
Want to know more?
ASK THE COACH
Since 1984, Gary Caplan has helped hundreds of marketing executives, manufacturers, brands, rights holders, retailers, and entrepreneurs – from seasoned industry experts to novices just entering the industry – navigate the complex world of licensing. Thus, over the years, he has become known as ‘The Licensing Coach ®’.
Have a question? Gary loves to help when he can. Fill out the form below and Gary will do his best to answer your question, or at least get you pointed in the right direction.