“The Right Fit”

How often do we hear this term in life.   IS it the right fit?   Well never has a term meant more to success in Brand Licensing than “The Right Fit”.  The marriage of the right brand with the right product category with the right Licensee in the right channels at the right price. All must be “right” to achieve a successful licensed product entry for your brand.  But how do you as a brand owner insure that all is “right” with the world for your licensed property.  One word:  RESEARCH.

If you want to have a successful licensing program one where your brand is the right fit for every product category you enter, you need to take the time, have the discipline and invest the money to conduct both primary and secondary market research on the product categories that you are considering licensing your brand into.  You also need to invest in brand perception research upfront to understand what your brand means to target customers through the attributes it elicits and the awareness it has.  

Once you understand what your brand attributes are, you can engage in fielding Brand Extension Research to understand if the people in the market to purchase in a prospective product category give your brand “permission” to enter that category.  By that I mean that your research needs to uncover whether the target customer would 1) consider your brand when purchasing a product in the category and 2) actually purchase your brand over the competitive brands in that category.    By checking in with the actual “in-market” customers through research, you gain an understanding of whether your brand will “fit” well in that prospective licensing category.

Once you answer the brand fit question, you can use the many sources out there of secondary industry research to answer questions like market size & growth rate, royalty rates and market share to prioritize what licensing categories and what licensees to go after first and how to negotiate the best royalty rates and minimums possible.  And your research results will also help you sell the best potential licensees out there on why they want your brand on their product.  Why? Because you can prove it fits!

If you are unsure of how to tackle either primary or secondary market research in product extension categories, then consider getting help from a reasonably priced brand licensing firm like mine,  Brandar Consulting, LLC

Insure your success by spending the time and money to do the research to find the RIGHT FIT for your brand in a licensed product category.  The cost of this research will pay itself back ten-fold by drastically increasing your probability of success.  You get only one chance to build a great licensing program; don’t squander it.  

Mike Slusar

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

email: mike@brandar.com

http://www.brandar.com/

copyright © 2014 Brandar Consulting, LLC  All Rights Reserved

Commitment

Happy New Year.  My first post of 2014 has to do with that big “C” word Commitment.   We often hear about the fear of commitment, but I want to talk today about the lack of commitment and how that impacts brand licensing.    More and more I have been finding that the biggest difference between long term licensing success and failure is a lack of 100% commitment by the Licensor to their licensing program.   Everyone loves the idea of licensing their brand, building more and new brand equity and, of course, making more money off their trademark.   But taking the idea from concept to actual business success takes more than just deciding that your firm wants to license its brand marks.  Even if you make the effort to hire an agent and start prospecting for licensees, are you committed to brand licensing?    If you find some prospects and sign some licensing deals, are you committed to brand licensing?   If you create an annual licensing plan every year and sign a few more licensees, are you committed to brand licensing? 

 

True Brand Licensing success resides in 100% commitment to your Brand Licensing Program over a sustained period of time.    I have seen clients say they want to start or revive a faltering licensing program, spend tens of thousands of dollars on research and planning and then fail to get management commitment to pull the trigger on a new licensing program.    Worse yet, I have also seen Brand Licensing Directors succeed in getting approval for their new licensing programs from upper management, only to find out that that support was just lukewarm and that their management had no intent of actually signing deals, let alone supporting licensing agreements once they were signed.    IF YOUR ORGANIZATION WANTS TO BE SUCCESSFUL AT BRAND LICENSING, YOU NEED 100% COMMITMENT FROM THE ENTIRE ORGANIZATION TO YOUR LICENSING PROGRAM OVER THE LONG TERM.

 

What is 100% commitment?  It is a commitment to the discipline needed to be successful at Brand Licensing.  You have to be committed to doing an annual licensing plan and soliciting an annual budget.  You need to be committed to getting new deals signed in a timely fashion once they are brought to you.  You then need to be committed to having the right organization in place at all times to support your deals.  Once deals are signed you have to be committed to supporting and managing the Licensees to success every step of the way: from timely product development approvals, product approvals, marketing approvals to ongoing quality control inspections.   You must align your entire company around delivering this.  You have to be committed to integrating your licensee with the rest of your licensing program and your core business, particularly at retailers.  You need to be committed to gaining the commitment of your core business towards supporting your licensing program.  You need to be focused on getting your core business managers and your licensees working together on cross marketing all branded products.   You need to be committed to reselling the merits of your licensing program internally at your company every year, every month, every day, every minute because that is how often the winds of change occur in corporate environments.    Commitment to Brand Licensing has to be earned every day from your Upper Management no matter who they are and it is your job as Brand Licensing Director to make that happen with your planning, with your effort and with your actions.  Brand Licensing can’t be a side show to your organization because it runs the risk of being a passing fancy.  Put simply, there must be organizational commitment to Brand Licensing as a major initiative in your firm’s Brand Management Mix on an ongoing basis. Embrace making the Commitment happen and if you need help in making this happen consider contacting my firm Brandar Consulting.

 

 

 

The Best Story Never Told - Part 2

A few years ago, I wrote a blog entry on the Best Story Never Told .   The story centered on taking the time to build an effective Brand Selling Presentation for your brand to use with outside partners.   Never assume that a retailer, brand partner or licensee has any pre-conceived knowledge about your brand before you meet them.   Don’t assume your brand sells itself.   My first blog post on this topic was admittedly a bit light on the most vital part of your Brand Selling Story: conducting primary Market Research to measure your brand’s awareness, equity, and extendibility.

 

When trying to sell any outside party on your brand, it is very important that you present them with real customer data from a statistically significant market research study that is conducted by an unbiased third party vendor.    Your main job above all else is to demonstrate your brand’s strength against its competitive set.    The typical brand health measures you want to discuss are unaided and aided awareness, brand purchase consideration, brand share, net promoter score and brand purchase intent in new product extension categories.   It is very important that you contract with a market research vendor that has both extensive experience in the branding industry and the market research discipline; a firm like my company, Brandar Consulting, LLC, is an example of one such firm.

 

Prior to starting your research project, you will need to work with your Brand team to “brandstorm” what you believe your brand stands for and the product categories you think your brand can extend into.  You then need to use your Brand Research to validate your perceived brand attributes, purchase drivers and extension categories.   I call this conducting Brand Permission research; it is research to determine whether your customer target gives your brand permission to extend into a new product category – whether that be through brand licensing, manufacturing it yourself or sourcing product.   

 

Once you conclude your Brand Equity & Extension Research, you next need to work with your research vendor to effectively package the results into Brand Selling Slides so that you can tell the story of your brand’s equity and extendibility through your customer’s eyes and not your own.   While you are paid to be your brand’s biggest disciple, your customer target is your brand’s true fortune teller.   Their feedback through your research study is what matters most to a potential brand partner looking to leverage your brand.   So take the time and expense to solicit your customer target’s opinions so they can tell the best story possible about your brand.

Sizable Guarantees or No Guarantees? Long Term Success May Depend on the Answer

I recently read The Licensing Letter’s Annual Business Survey results article in their March Issue.  The headline was “Royalties Steady, But Licensors and Licensees seek Greater Flexibility in Total Licensing Payment Packages”.  The gist of the study was that the continued increased willingness to negotiate the terms of licensing deals was affecting guarantees and advances much more than royalty rates.   Nothing has put more pressure on the size of guarantees/advances as the poor economy of the last 5 years.    Licensees have continually pummeled Licensors with the point that in this economy they bare such increased business risk in just investing in a new licensed product line, why should they increase their risk further by having to pay an advance and/or minimum guarantees if they are not successful.  I even had one Licensee client of mine who was arguing hard over minimum guarantees and sales volume projections say to one Agent, “here is how much guarantee I am willing to pay, you make up the product sales projections you need to share with your Licensor client  ‘cause I really don’t care what that number is.”  A quote from an agent in the Licensing Letter article also stated, “Long gone are the days of licensees’ willingness to provide significant advances and guarantees.”

I decided after reading this article and given my own recent experiences that this would make a good subject for my first blog post of 2013.  The tension that exists on the topic of royalty guarantees and advances is very acute right now. However, it is a battle that goes to the heart of long term success of the consummated deal.   Guarantees exist for extremely good reason; they were originally developed to protect the Licensor from “burying” the license grant with a Licensee who is not really committed to the long term success of the license.   Guarantees must be sizable enough as to create a vested interest on the part of the Licensee to make the license deal successful over the long term.    So to give too far on guarantees threatens the long run success of the Licensing deal and long term royalty flows are really the Holy Grail of brand licensing.   It is where the most wealth is created for all parties concerned.   Guarantees are historically calculated as a % of the Licensee’s annual sales projections over the life of the licensing deal.   What that % needs to be is where the art of negotiating comes in and why you hire firms like Brandar Consulting to assist you. 

Certainly there can be a degree of flexibility and creativity as to how the guarantees are negotiated. Cross-collateralizing the guarantees across years is just one of my favorite ways to provide your licensee with needed flexibility.  Giving up on collecting an advance on royalties is another such tool.  To me the advance is a tool that was developed by the Licensing Agent community as a way to get an agent some commission $ to live off while waiting for the first royalty streams to materialize, which can be 18 months down the road.  While the agent may need the advance commission, the Licensor usually can easily afford to live without it.  The advance also immediately siphons off investment dollars that the licensee should be investing on launching your branded business.   Guarantees are a completely different matter; they are calculated and collected when the Licensee’s Sales projections say they should be.   For this very reason, relieving a licensee of the obligation to pay sizable guarantees is a mistake that I believe will not lead to licensing deals that perform in the long term.  The guarantee is the skin in the game for the Licensee over and above their business risk; which at times can only be a fraction of the guarantee.  Royalty guarantees can create an extra sense of commitment from your Licensee that may well mean the difference between success and failure.  

When I ran AT&T’s licensing program, we had an extremely large guarantee that we negotiated with our largest licensee on a 10-year deal.   Well the Licensee ran into business difficulties early on and if we did not have that sizable guarantee in place, they most certainly would have walked away from our agreement poisoning our most valuable licensing category likely in perpetuity.  Because the Licensee did not want to be on the hook for those sizable guarantees, they remained committed to making the licensed business a success.  Now we ultimately did lower the guarantees because they were clearly based on faulty Sales projections, but we still maintained the guarantees at a sizable enough level so as to maintain this Licensee’s commitment to our branded product line over their own.   This AT&T licensing relationship still exists today some 13 years later and it stands as a testament to the importance of substantive royalty guarantees in forging long term success in licensing contracts.

Mike Slusar

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

email: mike@brandar.com

http://www.brandar.com/

copyright © 2013 Brandar Consulting, LLC  All Rights Reserved

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/

copyright © 2012 Brandar Consulting, LLC  All Rights Reserved   

How Do You Define Success in Brand Licensing?

 

While attending Licensing Expo 2012 this year in Las Vegas,    I moderated a panel on “How to Work Effectively with Licensing Agents and Consultants?”    One of the questions from the audience was “How do you define Success in Brand Licensing.”   My answer may surprise you.  To me the ultimate signal of success is the number of long-term licensing partnerships an agent, consultant, licensor or licensee has.   Why do I say this and not the number of deals we signed this year or the amount of royalty revenue we are earning.  The reason I say this is because the real hard work in licensing starts after the deal is signed.   While finding a licensee, negotiating the deal terms and drafting a licensing contract seem like hard work, it pales in comparison to having the drive and expending the effort to make a licensing deal successful in the long term.   That’s where real brand-building occurs in your licensing program and making your licensing relationships build equity in your brand is the ultimate success in this business.  Too often people in our industry sign a deal and then are off chasing the next licensing deal vs. expending the hard effort of making their existing licensing deals long-term successes.  The real money to be earned in licensing is in cultivating long-tenured licensing success stories.

When I was running AT&T’s licensing program, one of the things I was most proud of is that our agent, The Beanstalk Group and our most valuable licensees (VTech for telephones and Citibank for the AT&T Universal Credit Card) were with us for the whole time I managed the program and all those relationships still exist today over a dozen years later.  Unfortunately, this is the rarity in the licensing industry.  But if you want to generate real value in trademark licensing you need balance your time in chasing new deals with expending the necessary energy to make your current deals long-term successes.

What’s the recipe for long-term success?  Well it starts with taking the time to give your licensee a brand immersion presentation so they come to learn the essence of your brand as well as you do and, most importantly, understand how to work within your brand management processes.   You see the only hope you have of achieving the ultimate goal in licensing, “the customer never ever suspecting that a licensed product is not coming from the mother company”, is to make sure your licensee understands your brand well enough to fully replicate your branded product experience.  What follows is a list of important steps to making a licensee a long-tenured successful partner.

·       Engage in brand immersion with your licensee

·       Participate in the licensee’s Product Development Process

·       Support your licensee’s Sales efforts with retailers

·       Assure that the licensee’s marketing materials and packaging are consistent with your style guides

·       Monitor the licensee’s customer service center to make sure the service experience is consistent with your brand and service metrics

·       Test and approve all products with a defined process before they are released in the marketplace

·       Continue to test products bought at retailers to make sure they are maintaining quality over time

·       Inspect the factories where the product is being made

·       Keep close tabs on the licensee’s Sales results over time

·       Cross-market licensee product with other licensees and your core business

·       Participate in your licensee’s annual product and market planning processes

If you work hard at all these things you will have a chance at having long-term successful licensing relationships.

One of my mentors in the industry was down on Licensing as a profession when he retired.  He felt that licensing was just a “grand ruse” on the consumer;  deceiving them into believing that a licensed product was legitimately being produced by the branded company itself and that was really not a fun way to make a living in his mind.  I take a different view.  If you take the time to really do brand licensing well, you the licensor are actually providing a service to the licensed product consumer because you are extending your branded product experience to well-managed licensees delivering that same experience to the marketplace in wider product categories.   You see the Licensor’s core competency is really that branded product experience and successful licensing is all about extending your already popular branded product experience to your licensees’ products over the long term.   

Look out for my next post coming this Fall on:  Licensing: Brand Building or Brand Busting?

Mike Slusar

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

email: mike@brandar.com

http://www.brandar.com/

copyright © 2012 Brandar Consulting, LLC  All Rights Reserved
 

Getting 'em to Sign on the Line which is Dotted...

Welcome to my first post of 2012.  I want to return to the theme of closing deals and try to fulfill Alec Baldwin’s famous line from his cameo in Glengarry Glen Ross: “Because only one thing counts in this life: Get them to sign on the line which is dotted!”  

Well you or your licensing agent have done all the hard work: you’ve found a licensee in an attractive product category, you’ve negotiated great business terms,  done all your due diligence to qualify your licensee and you have written and negotiated the contract.   All that is left is getting your Senior Management to sign on the dotted line of the contract.   This is the easy part, right?  WRONG.    This can be the very hardest part of the licensing process.  It’s what puts gray hair on Licensing Agents’ heads.   This part of the process is very often taken for granted by Licensing Managers at Corporate Licensors.  Most assume that a licensing deal will just sell itself on its face and the process of getting Senior Management sign-off is just a formality.

Often Brand Licensing Managers/Directors don’t take the time to sell their key management stakeholders on the merits of a new licensing deal.  And what results is you and your agent’s worse nightmare; a fully negotiated licensing deal that never gets signed. The reason for this is what I call the “drop in the ocean effect”; the $ value of the royalties your new licensing deal will collect is a mere drop in the corporate ocean, hardly enough to cause a blip on the corporate revenue radar.  Very often your management’s  response can be: “you are licensing our company’s more valuable asset, our brand, to a no-name company for how much money?!”

How do you avoid this situation and get your Executive Management committed to your deal.   First off, you start the process by talking with your Senior Management long before they need to sign your deal.  You explain what it means to license your brand, the partnership you are seeking, and the product category you are targeting.  You may want to share the results of your Brand Extension market research showing that customers were very accepting of your brand entering this product category.  You should also explain why you are talking to certain business partners. Next check in periodically with your management apprising them of your progress in striking a deal.   By the time you get to the point where you are ready to ask for their signature on the contract, your management will hopefully have heard about your deal a few times already.  

When presenting the contract for signature, put the signature page upfront with a short 3-5 page presentation outlining the merits of the deal and the critical points contained in the contract.   Your overview should not only focus on the royalties the deal will generate, but also demonstrate how your licensing deal will cause a bigger wave in the corporate ocean through: 1) stretching your brand into a new product category whereby building new brand equity, and 2) creating new brand impressions from the retail distribution and advertising of your prospective licensee.  Typically these brand impressions will drive far more value to your brand than the royalties you generate.  Figure out a way to quantify the number of brand impressions that will be created and put a monetary value on it. When I ran AT&T’s licensing program, we were able to put a precise monetary value on our licensee brand impressions and they were 15 times more valuable to AT&T than the royalties we generated annually.  If you need help modeling your royalty revenue potential, running your Brand Extension market research, calculating the amount of brand impressions a new licensing deal will generate or valuing these brand impressions consider hiring my firm, Brandar Consulting, to assist you.


The key here is to prove the value of your licensing deal beyond the obvious royalty revenue and also to prove to your management that you’ve written your contract in such a way as to mitigate the brand risk to your firm so the upside deal potential clearly outweighs the downside brand risk. Doing all this will get you that signature on “the line which is dotted”  and enable you to “be a closer.”

Mike Slusar

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

email: mike@brandar.com

http://www.brandar.com/

copyright © 2012 Brandar Consulting, LLC  All Rights Reserved