Like a plane achieving liftoff, licensing enables companies who have high preference to unlock a brand's latent value and satisfy pent up demand created by brand buzz. As a licensing veteran, I've helped a wide variety of companies grow their revenue and brand reach exponentially by creating strategic partnerships with manufacturers.
If you're a business owner looking to extend your brand into new market sectors, you'll want to first consider the three E's: elasticity, equity, and environment.
1. Is Your Brand Elastic Enough?
Elasticity--meaning the ability to stretch from one offering to another--is derived from the perceived image of your brand. Elasticity is key to licensing. Brands built around a concept, such as a luxurious or healthy lifestyle, can stretch into a variety of product categories.
Conversely, brands that are built on specific functions, such as social media or tax prep, will have limited ability to extend into new products (read: new functions).
Duraflame is a great example of a brand that was able to break out of a very specific image through brand extension. Through licensing, the longtime leader in fireplace logs expanded its brand to include indoor electric heaters, space heaters and stoves. The key here was in helping Duraflame reframe its brand values to communicate not just logs, but more importantly, the idea of warmth. This concept could then extend to more product offerings.
How far would consumers like to see your brand stretch? At Global Icons we always start with measuring a brand's elasticity by considering financial performance, the role of brand, and the brand strength relative to competition.
2. Do You Have Enough Brand Equity?
Another licensing factor to consider is equity, which takes into account the tangible and intangible qualities your product conveys to a consumer. Companies with a well-known name are already well positioned in this regard to consider moving into new product territory via manufacturers, because they have already established consumer trust.
Coca-Cola is an instantly recognizable brand that conveys joy, refreshment, simple fun and optimism. These positive values translate into their many successful brand extensions, from apparel to artwork.
3. What Environments Should You Extend Into?
Brands should look to extend into environments that make sense for the lifestyle of their existing customers. You also want to consider which distribution channels make the most sense. Is it logical for your brand to extend into mass market retailers, department stores, supermarkets, dealers, or some other channel?
Think of the IRONMAN triathlon brand. Athletes who participate in these intense races commit to a healthy lifestyle in training for competition, and having access to IRONMAN licensed sports apparel, water bottles, and other gear is a logical extension. By having sports apparel manufacturers selling logoed products through their website, IRONMAN extends its distribution channels and increases brand awareness.
BMW is another good example. BMW sells cars primarily through dealerships, but through licensing they also sell strollers, luggage, watches, apparel and more. By extending these products into various distribution channels in popular retail stores like Neiman Marcus, Harrods, Printemps, and licensed mono branded stores in China, BMW has created closer relationships with its consumers while making billions in the process.
So Should You License?
Licensing is a great way to stand out from the competition by creating a line of products to boost brand recognition while communicating value and reputation--things that take a lot of time and investment to build from scratch.
When thinking about licensing, you need to create a solid brand roadmap that aligns the goals of the brand with those of potential licensees. You want to think about promoting brand loyalty, generating new revenue, and connecting with consumers. If those goals align, your brand is ready to shift into the fast lane through licensing partnerships.