Posted by Pete Canalichio on Mon, Aug 02, 2010 @ 03:14 PM
Whether your brand licensing practice is decades old or just starting out, optimizing it is critical to the long-term health and vibrancy of your brand. A fully optimized program ensures that all licensed products reinforce the brand’s positioning, that consumers have access to the licensed products through designated retail channels authorized in each licensees’ contract and that the net sales and royalty revenue growth are balanced across retailers and Stock Keeping Units (SKUs). Unless a brand licensing program has a systematic approach to measuring its level of optimization, the quality and success of the program can be both unpredictable and harmful to the brand. The only thing worse than a program conditional on the decision making whims of one retailer is a program that is selling millions of branded products annually in the wrong categories, reinforcing the incorrect brand attributes or eroding brand equity. So, let me ask you brand managers, marketing directors and CEOs out there, “How optimized is your brand licensing portfolio? “
Determining the level of optimization of a brand licensing program is relatively straight forward if you know what questions to ask. Outlined below are eight categories to help you determine your program’s degree of optimization so that you can begin to identify gaps. Before we get to them, let’s dig a little deeper into why brand owners should pay particular attention to this topic. After all, a program may be growing steadily in net sales and royalty revenue. It may even be adding terrific licensees and exceeding plan year after year. With positive indicators like these, brand owners have good reason to believe their licensing program is on the right track. However, without a detailed understanding of how the program is achieving its sales and royalty growth, companies may be at risk of losing a substantial portion of sales and royalties if their top licensee’s largest program does not get renewed, or if there is a safety recall on the program’s highest selling SKU. Some savy brand owners realize that diversification is important and have chosen to sign a large number of licensees to avoid dependence on a limited number of licensees or SKUs. However, programs with a large number of licensees may become administratively overburdened. If your program has many licensees, when was the last time you had the chance to meet with each of them face to face? And when you did meet, did you take the time to inquire about the state and health of their overall business?
If you don’t know your brand licensing program’s level of optimization or if you are concerned that it may be out of balance, it may be time for a brand licensing audit. A brand licensing audit allows you to dig into your program to assess its current level of optimization and begin to identify gaps so you can close them. Here are eight categories to consider when assessing your brand licensing program’s level of optimization:
1. Portfolio Balance
- Is the overall brand licensing portfolio balanced?
- How many licenses does the program have?
- What percentage of the licenses comprises 80% of the net sales?
2. Category Alignment
- Is your program licensed in the right categories?
- Does the brand have permission to extend into the existing licensed categories? (internal/brand research – consumer focused)
- If so, are there category positioning statements written for each category?
3. Licensee Search and Suitability
- How are you prospecting licensees to ensure you are finding the best suited to support your program?
- Where do you look for information when prospecting licensees?
- What parameters are used to shortlist licensees from the universe?
4. Licensee Health
- What is the overall health of your licensees? Times are tight, are your licensees as stable as they were when you signed the license?
- When was the last time you checked their audited financial statements?
- Do they have any current or pending law suits that could seriously impact their business?
5. Category Management
- How often are reviews conducted with each licensee to ensure they are meeting their objectives? Annually? Quarterly? Monthly?
- What questions are being asked in the review?
- Who from the licensees’ side is attending the reviews?
6. Licensee Orientation and Alignment
- Is there a robust orientation program in place?
- If so, who attends the orientation and when does it take place?
- How often do you meet with the licensees individually and collectively?
7. Business Planning
- Is there an existing business planning process in place?
- Is there a licensee summit to review the planning process?
- How often do you discuss the plan with the licensees?
8. Contract Quality and Accuracy
- How robust are the contracts you currently have in place?
- Do they accurately reflect the deal terms and procedures being practiced?
- When do your contracts expire? Is there proper succession planning?
Posted by Pete Canalichio on Mon, Jun 28, 2010 @ 02:03 PM
A workshop designed to enhance speed to market and profitability
Few companies use Brand licensing to extend their brands into new categories. Those that do, including Coleman, Newell Rubbermaid and P&G, have successfully delivered millions of products a year into the marketplace by leveraging the competencies, resources and distribution networks of hundreds of manufacturers throughout the globe. Up until now licensing has been a nice to have tactic for companies to extend their brands. With the recent recession and dynamic changes in the retail landscape, it is now an economic necessity for companies who plan to grow profitably in the 21st century.
Before any successful licensor like P&G enters a new category with their brand, they go through a disciplined and systematic process to determine the categories in which their brand should play and what approach - manufacturing, sourcing, acquisition or licensing - they should employ to enter the marketplace. Of course, brands owned by Coleman, Newell Rubbermaid and P&G are rich in brand equity, making them desirable by consumers and manufacturers alike, a prerequisite before launching any brand licensing program.
So, have you ever considered extending your brand via licensing? If you have, you may have considered the benefits of brand licensing and felt strongly about taking advantage of these benefits. After all, what brand owners would choose not to connect with their consumers faster than they could organically? Or, who wouldn't want to leverage a licensee's resources to market their brand? What about the opportunity to protect your brand's trademark in a particular category that would otherwise be at risk? That's important, too. Right? And, of course, the chance to earn royalty revenue to reinvest in marketing or to strengthen the company's operating income is compelling all by itself. But, how do you really know whether your brand is ready to be licensed before you commit the time and resources to launch a brand licensing program?
Based on our experience and industry knowledge having extended the world's greatest brands into new categories via licensing, we have developed a highly facilitated, day-long workshop designed to assist you in getting the clarity you need before moving forward. We start by determining what categories your brand is ready to be extended into and then utilizing our proprietary evaluation process, we assist you in selecting which of these categories is best suited to be extended via licensing. As success of any brand licensing program is contingent upon you, we have structured our program to gain consensus amongst your organization's management and marketing leadership. That way you can begin implementing your findings immediately.
Our workshop makes certain your brand's positioning, architecture and consumer perceptions are the focal point in making brand licensing decisions. We do this by:
- Determining the value of your brand from an awareness and perception perspective
- Identifying and or verifying categories your brand has permission to extend into
- Evaluating which of these categories should be extended through licensing
- Prioritizing the categories to ensure you are capitalizing on your best market opportunities
Specific research is a critical and necessary input to this workshop. Accordingly, we build the research into the workshop's pre-work phase so that the workshop can be utilized to build consensus and make key decisions. The research is designed to answer the following questions:
- What is the awareness level of the brand?
- What are the perceived strengths and weaknesses of the brand, by target segment?
- What new categories does the target segment want to see the brand in?
- What is the market attractiveness of these categories?
We include educational components throughout the day so that all participants are speaking a common language. For example, we make sure participants understand the brand's architecture and its components including: product attributes, functional benefits, emotional benefits and higher order brand identity. We also ensure participants are clear and aligned on their brand's positioning statement. Finally, we review:
The deliverable is a consensus on whether the brand is ready to be licensed into new categories and if so, provides a list of the top categories that represent the best opportunity to extend the brand through licensing.
That way you know how to extend your brand via licensing so you can take advantage of this critical go to market tactic. And, because the brand's vitality and essence are critical to its long-term health we work with the team throughout the workshop to ensure that every category selected by definition reinforces the brand's position. While the group can be larger, we generally plan for attendance by 8 to 10 key organization stakeholders, including the organization's leadership.
This workshop is lead by renowned brand licensing expert Pete Canalichio.
Please email me for more about how this workshop can benefit your brand.
Posted by Pete Canalichio on Mon, Jun 21, 2010 @ 01:27 PM
This week's posting was written by our guest author: Bill Jachthuber, an innovative and insightful marketing leader with over 26 years experience in developing business growth through strategic partnerships, innovative product platforms and marketing relationships with leading consumer and foodservice brands. As the leader of the licensing program for Cinnabon, Bill created over 70 innovative new products through strategic licensing partnerships which enhanced the Cinnabon equity with consumers across the United States. 
What separates successful food licensing programs from unsuccessful ventures?
A well thought out plan that considers the brand first before the product or category.
While there are lots of short term opportunities for brands to license their brand equity, the truly strategic, and well managed licensing opportunities are the ones that begin with a careful look at what the brand means to consumers and what the brand architecture will allow the brand to become for product extensions or category innovation.
So, how do brand owners begin to develop a robust licensing program? At Cinnabon, we began with a careful look at the Cinnabon brand architecture, evaluating the places that the brand could play by category, before we approached any licensees for business opportunities. We spent time talking with the current Cinnabon consumers, to see what they wanted from products with the Cinnabon brand. We also carefully crafted a positioning for the product and the category we were looking to enter. This avoided the situation that many brands find themselves in, creating products that undermine the brand and confuse the consumer, eroding many years of hard fought for consumer loyalty.
In this, we set up a strategic plan before the first deal was signed, and tried to thoroughly understand the implications for this franchised brand to enter into a food licensing agreement.
We asked the questions:
- What are potential categories that the brand should play in?
- Does this category have potential long term for growing the brand or
- Is this simply a short-lived trend that could spell disaster for products that enter the category?
Sadly, this careful analysis and research that is so essential for this stage is often either skipped, or done without qualified resources that have created licensed products for brands.
The process to research brand, understand consumer and marketplace, takes time and expertise. It also requires a commitment from the brand to be patient to thoroughly explore and analyze before signing the first program. It also requires control and discipline to manage the brand like the precious equity that it holds. Signing licensing programs with the right suppliers creating the right products in the right categories adds to brand equity, and attracts new consumers to the brand.