The effective use of licensing in brand strategy

Abstract

Brand licensing is now an important strategic tool for companies of all sizes in marketing their products. The risks/rewards surrounding any licensing endeavour are many, and should be carefully considered by any brand owner before entering into retail licensing contracts. The potential enhancements include increasing the value of the brand, extending the brand’s reach into new channels of distribution, achieving greater interaction with the consumer and, not inconsiderably, enhancing revenues. But brand licensing is also a highly specialised endeavour, and companies jumping into it without adequate preparation and knowledge risk inviting disaster. These can include devaluing the brand’s equity, alienating consumers and protracted expenditure of internal and external resources on unfortunate deals. The paper seeks to explain how brand licensing works, lay out some of its advantages to brand owners and outline both potential pitfalls to watch for and remedies for avoiding these sorts of mistakes.