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Branding and Merchandising. 6.02 Discuss Product Licensing. Licensing. Permission to copy name, logo, or trademark of a league, athlete, sports team, entertainer, film, television show, or character for a fee, also called royalties. Licensing (con’t).

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branding and merchandising

Branding and Merchandising

6.02 Discuss Product Licensing

licensing
Licensing
  • Permission to copy name, logo, or trademark of a league, athlete, sports team, entertainer, film, television show, or character for a fee, also called royalties
licensing con t
Licensing (con’t)
  • A licensor is the rights-holder of the name, logo, or trademark
  • A licensee is company paying for permission to use the name, logo, or trademark
    • Licensees include Nike, Reebok, Adidas, Sony, Nintendo, and Sega
licensing con t1
Licensing (con’t)
  • Licensed products are manufactured by licensees under an agreement with a licensor
  • Licensees can have a significant impact on a licensor’s perception among consumers
licensing con t2
Licensing (con’t)
  • A license is issued to another company that will manufacture, market, and sell the licensed products
licensing con t3
Licensing (con’t)
  • Licensing provides greater profit , promotion, and legal protection for the licensor
licensor
Licensor
  • The licensor approves the product and collects the licensing fees and royalties
  • For example, WB will give permission to Electronic Arts to use the Harry Potter character
licensor con t
Licensor (con’t)
  • Companies typically pay between 5 and 10 percent of wholesales in the form of royalties
character versus corporate licensing
Character Versus Corporate Licensing
  • A sports or entertainment entity permits a licensee to use their image, name or character for a fee.
character versus corporate licensing con t
Character Versus Corporate Licensing (con’t)
  • For example, LucasArts licenses a manufacturer to use the images of the characters from Star Wars: Attack of the Clones
character versus corporate licensing con t1
Character Versus Corporate Licensing (con’t)
  • A corporation permits a licensee to use the corporate image of name for a fee
  • For example, Coca-Cola licenses a manufacturer to use their corporate logo on a baseball cap
advantages of licensing
Advantages of Licensing
  • Advantages for Licensor

a. Enhanced company image and publicity

b. Increased profit from royalties.

c. Increased brand awareness or recognition

d. Increased opportunity for penetrating new markets

e. Limited manufacturing costs or risks

advantages of licensing con t
Advantages of Licensing (con’t)
  • Advantages for Licensee

a. Existing brand awareness or recognition

b. Lower advertising and promotional costs

c. Increased possibility of success and profitability

d. Connection with an athlete, sports team, entertainer, or corporation

disadvantages of licensing
Disadvantages of Licensing
  • Disadvantage for licensor

a. Potential for poor quality of a licensee’s manufactured products

b. Partial relinquishment of control over the marketing mix of the brand

disadvantages of licensing con t
Disadvantages of Licensing (con’t)
  • Disadvantages for licensee:

a. Athlete, entertainer, or corporation may lose popularity.

b. Sports teams may suffer losing seasons

c. Change in styles, trends, and consumer preferences

disdvantages of licensing con t
Disdvantages of Licensing (con’t)

d. Royalties and licensing fees can be expensive

e. Manufacturing costs and risks

f. Competition can drive up costs associated with fees and royalties

g. Competition can cause a negative impact on market share

impact of licensing on consumers
Impact of Licensing on Consumers
  • Increased opportunity to associate with an athlete, sports team, entertainer, or corporation
  • Increased supply of available products
  • Competition can result in lower prices, new products and better quality.
bootlegging
Bootlegging
  • Bootlegging is the unauthorized use of a name, logo, or trademark of a league, athlete, sports team, entertainer, film, TV show or character
  • Reduces the profits of the licensors and legitimate licensees
  • Can result in poor quality products for consumers, which will decrease brand loyalty