In times of Crisis, Great Brands can still turn to Brand Licensing

Happy Holidays 2012.  I just had an email from one of my Blog readers that has prompted me to include the topic of his question in my latest post.  At times a great Brand can hit a crossroads in its life and become “defunct”.  It may be because of a bankruptcy, a patent expiring, product substitutes, fads ending or years of business mismanagement.  The result is that a Brand that has built up tremendous brand equity over a lifetime is no longer viable for its own core business.  There are plenty of examples of such “defunct” brands like Sharper Image, Xerox, Polaroid, Linens N Things, Op, and Starter.  When a crisis hits a brand, Brand Licensing should strongly be considered as a viable option to leverage the huge and expensive brand equity that has been built up over the brand’s lifespan.   It would be a shame to simply walk away from this equity.  Indeed, companies like Hilco Streambank,  Authentic Brands and Iconix have made a business model out of buying up such brands and re-launching them to the market via licensing.   The important point is that owners of Corporate Trademarks in crisis mode can use Brand Licensing to keep their defunct brands alive in the hearts and minds of consumers and make money off the equity they have built via royalties.

And the best place to start is to work with a company like mine, Brandar Consulting, so you can take measure of your Brand’s equity through market research;  finding out  what your Brand’s current awareness, opinion and preference numbers look like in the consumer’s mind today.   If your Brand does indeed remain strong in awareness and equity , you can also use market research to determine what product categories that customers give your Brand “permission” to extend into via Licensing.  The output from your research can then be turned around and used to put together a “Brand Selling” presentation to sell prospective manufacturers on licensing your brand into new product categories.

There is tension in success here though.   As you build out your program, you will hopefully find some very successful licensees who are going to do better a job than you would yourself  with your brand if you entered the same product category. This is part of the reason you license your brand. You find someone with much more core competency in a product category than your  own company could ever hope to have.  If a Licensee is very successful in a product category it becomes a new brand building experience for your  “defunct” Brand.  This is the holy grail of licensing.  It is what you hope for.  The partnership thrives because you benefit from new brand equity and royalty revenues and your Licensees benefit from borrowing your Brand name because it is too expensive for them to build a Brand on their own.  While the licensee's operational excellence is a big part of the success of your licensed products, your brand is also playing a large role in their success; even if the mother company is now doing very little to build your own brand.   Remember, companies license the brand equity you have already built through many long years of brand investment, not the brand equity you are going to build.   Here’s where the tension creeps in; I have seen licensees start to feel like they are doing more to build the Licensor’s brand than the Licensor actually is.  Over time, this can lead to Licensees deciding they can be a success without the licensed brand and they part ways and enter the product category with their own brand or a new licensed brand.   The problem with this scenario is that you the Licensor can always turn around and re-enter the category with a new Licensee.  A good example of this type of scenario is the company Avenues parting ways with the Wenger Swiss Gear brand license in the Cases and Backpacks segment.

The best bet to avoid this scenario as a Licensor of a “defunct” Brand is to reinvest some of your royalty revenue back into the Brand you are licensing and be very vocal with your Licensees about what you are doing to support the Brand they are licensing.  The other thing you can do is build a broad-based Stable of licensees across  product categories that are supporting each other at retail, so the rising tide of your Brand’s licensing program can lift all boats.   Brand Licensing needs to always be treated as a two-way street.   If you maintain this partnership mentality within your program, even if you start with a “defunct” brand, you will be successful in the long term.

Mike Slusar

Managing Director & Owner
Brandar Consulting, LLC
“Helping Brands Reach for The Stars”

email: mike@brandar.com

http://www.brandar.com/

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