As I make calls to manufacturers, I’ve been thinking about the many benefits of licensing, and specifically those for artists and manufacturers in the industry (who are commonly referred to as the licensor and licensee, respectively). I suggest that your understanding licensing benefits from the perspectives of the Licensor (Artist, Brand/Trademark Owner, Cartoonist, Designer, etc.), Licensee (Manufacturer, Retailer, etc.) and Agent (Representing the Licensor) is important when it comes to developing marketing plans, making sales calls, managing your trade show booth and negotiating contracts, to name a few instances.
Let’s start with the Licensee, since many of my readers are Licensors and might not have analyzed this subject from the manufacturer’s’ point-of-view.
For a Licensee, licensing can:
1. Generate incremental income from the sales of licensed products.
2. Create additional product lines by borrowing brand equity from various properties and artists.
3. Provide credibility to the manufacturer’s product line through the licensing of high profile brands and properties.
4. Expand awareness of all products in a manufacturer’s line and attract new customers.
5. Target more audiences through the use of different licenses.
6. Help build a competitive advantage when you have a variety of lines making up your product mix, and even offering exclusive properties (brands, artists, etc.) that your competition doesn’t have.
7. Develop more product lines without adding more expense or work load to the creative department.
8. Find HOT talent and trends.
9. Increase market share, which is the percentage of total sales volume in a specific product market (bedding, craft kits, tea towels, etc.) captured by one manufacturer or brand.
10. Create efficiency. Manufacturers with their own production facilities or factories gain efficiency, and more profit, when operating at an optimum level. Often manufacturers start off producing basic products and then add licensed properties so they can run their plant 24/7 and take advantage of economies of scale. Likewise, manufacturer/wholesalers gain purchasing power with suppliers by increasing quantities on production orders and building better relationships with their factories, thus obtaining lower prices and reducing their costs per unit.
11. Open new channels of distribution by offering product designs and styles which require different retail options, such as mass market, specialty stores, home shopping networks, catalogs, internet, dollar stores and deep discounters.
12. Increase a manufacturer’s retail shelf space with a broader, as well as stronger, product mix.
For a Licensor and their Agent, licensing can:
1. Generate revenue or an additional income stream based on the intellectual property (IP) rights (art, cartoon, designs, etc.) you own.
2. Leverage the equity you have built through your brand.
3. Enhance brand positioning through product design and messaging (website, advertising, catalogs, product, packaging).
4. Strategically grow the value of the brand via product (and artist’s) exposure and sales.
5. Generate product without an up-front investment.
6. Help find partners with important production expertise to create relevant brand extensions.
7. Help find partners with existing and well-targeted distribution channels.
8. Protect your intellectual property. When you register and use your trademark, such as through licensed product sales, you then have the right to use legal action in claims against fraudulent use.
9. Promote stronger relationships with existing customers and find new customers for your brand.
10. Build a competitive advantage though exclusive licensing opportunities.
Put this list on your wall or somewhere you can access it and review it over time. Perhaps when you are making a call to a potential manufacturer you can ask yourself, “Why do I want to license my art to them?” And more importantly, “Why would they want to license art from me?” Being able to understand the benefits of licensing to both the Licensor and Licensee is crucial to developing those answers.