Three ways to expand the licensing value of your brand

To best help you understand how to expand the licensing value of your brand, let's take a step back and reflect on why companies choose to brand their products in the first place.

Companies brand their products to differentiate them from their competitors'. For example, most consumers have no problem differentiating a Coke from a Pepsi. By giving their products a brand, companies can begin a dialogue with their consumers about their products attributes. Over time, a consumer learns he/she can rely on the brand to deliver a consistent and expected value. One of the best examples of this is the Tiffany brand. Whether or not you have every bought from Tiffany, you know the brand is synonymous with the highest level of quality, service and reliability in jewelry. In fact, Tiffany has consistently delivered on this promise for almost two hundred years. For this reason, a Tiffany consumer will not buy from any other jeweler. Moreover, if ever asked where her jewelry was purchased, most women enthusiastically proclaim the Tiffany name.

When consumers are delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand's reputation. In fact, consumers will often purchase a brand for the first time because of its reputation. The brand, therefore, adds value and certainty to an otherwise unknown product. The stronger a brand's reputation, the higher the value of the brand and the greater revenue it will drive for its owner. Prospective licensees want to license brands with the strongest reputation as these are the brands consumers demand and retailers prefer most. The stronger the brand, the higher likelihood that the licensed products will sell in and sell through.

Brand loyalists and advocates look to their preferred brands to deliver more and better products year after year. When this occurs, the brand gains “permission” to extend into categories that compliment its original offering. For example, the Mr. Clean brand, owned by P&G, was launched in 1963 as the first household liquid cleaner. Over time, the brand gained a strong reputation for its ability to clean effectively on a variety of surfaces. By delighting its consumers, Mr. Clean built significant brand loyalty and allegiance. When asked, consumers told the Mr. Clean brand team that they expected the Mr. Clean brand to offer additional products that simplified and enhanced the household cleaning experience. To satisfy these consumers, Mr. Clean developed a line of branded mops, brooms, and brushes. These products were met with enthusiasm and over time, consumers demanded even simpler and more effective ways to clean their homes. Today, the Mr. Clean brand can be found on an expansive list of products including scrubbing tub and shower pads, Magic Eraser cleaning pads, autodry car wash systems, multi-surface disinfecting wipes, rubber gloves and many other products. In fact, many of these Mr. Clean products are licensed. By owning a brand that can be extended into numerous categories, companies are able to attract and retain multiple prospective licensees. Using licensing to compliment internal resources actually accelerates a company's overall time to market.

The licensing industry exists today because brands cannot be created over night. In fact, it takes years and millions of dollars to create brands that are trusted and valued. Companies which own these brands are therefore naturally protective of them, and rightfully so. A brand's reputation can be easily tarnished when it fails to deliver on its brand promise. When this happens, consumer loyalty can erode quickly resulting in lost sales. As such, many brand owners would rather choose not to enter a category through licensing than risk damaging their brand. However, successful companies know that a well run licensing program can strengthen their brands and provide a substantial increase in profitability. Companies with successful licensing programs select best in class companies to license their brands.

Consider the Walt Disney Company. They furnish their licensees with clear guidelines on how the brand's standards are to implemented and provide a straight forward approvals process that enables the licensee to get their licensed products into market quickly and at a fair profit. These licensees, in turn, deliver world class innovative products that over deliver on the Disney brand promise thereby strengthening its brands. With a well run licensing program not only is the brand well protected, but licensees can quickly commercialize best in class branded products.

This not only strengthens the brand's overall reputation, but increases the licensing program's overall value.

In summary, three ways to expand the licensing value of your brand include:

• Strengthening your brand's reputation

• Increasing your brand's extendability

• Delivering a best-in-class licensing program

Pete Canalichio

Consumers Cut Back Further on Credit

Despite a rise in the Consumer Confidence index over the last several months, consumer borrowing in the United States fell a record $21.6 billion in July from the previous month (NY Times, September 8, 2009). This was the largest decrease in borrowing since 1943 despite the oversold and highly popular Cash-for-Clunkers program which began in July. The cutbacks which affected all areas of consumer borrowing – revolving and non-revolving (not including mortgages) – significantly exceeded analysts predictions of $4 billion. With this drop, the annual pace of change has gone from -4.2% in May to -7.4% in June to -10.4% in July.

Like businesses, families across America are continuing to get their personal balance sheets in order. Less and smarter debt means more security and personal freedom. Families want to feel confident that they can continue to stay in their homes and put food on the table. For the majority, this requires they spend within their means, reduce debt and finally begin to save. Wherever and whenever possible, families are making do with what they have. Credit cards and bank lines of credit which in the past were rationalized to take that family vacation or buy a new car because “we deserve it” are now seen as emergency funds for when things get worse.

For businesses which thrive on consumer spending this suggests a much slower albeit more sustainable recovery. As a result unemployment in the US will likely continue to drift higher over the next six months before it peaks suggesting a slow and perhaps erratic rate of decline over the next several years. In this environment, consumers will only buy when they feel they have to or when they see tremendous value. Businesses which desire to succeed in this market must determine:

• Where globally there exists demand which they can satisfy
• Which businesses and brands are thriving in this economy and more importantly why
• How they can deliver more value to consumers at a better price

Conventional methods and sacred cows must give way to new thinking. Companies must begin asking themselves provoking questions such as:

• Are there competitors who should also be our partners?
• Can we source or license our products instead of manufacturing them?
• Should we reinvent ourselves?

It is clear that consumers' buying habits have changed and their appetite for debt has decreased
dramatically, permanently changing the economic landscape. With it, businesses which desire to thrive must also make dramatic and permanent changes in the way they operate.

Pete Canalichio