Brand Licensing

Brands that Make Products Come Alive

Brand licensing strategy has been used globally to breathe the right brand experience into innovative lines
Brands that Make Products Come Alive
Image credit: Entrepreneur Magazine
Entrepreneur Staff
Senior Correspondent, Entrepreneur India
6 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Today India is on an anvil where start-ups and SMEs are bringing disruptive product lines in sectors like food, automotive, fashion, FMCG, hygiene etc. The disruption, however, is not paired with good distribution that can effectively get these products come in purchase ambit of consumers. The challenge is to develop consumer packaging that will evoke buying interest and can take long time and heavy investment. Brand licensing strategy has been used globally to breathe the right brand experience into innovative lines. Entrepreneur Media was a part of India’s first ever licensing show to figure out the possibilities and how far our imaginations can stretch.

To give you a perspective, the size of the domestic licensing industry is about $600 million or INR 4000 crore (as compared to the global industry that is $250 billion), of which 80 per cent is dominated by characters and entertainment segment. If the rights steps are taken, this industry has the potential to double itself in no time.

Bullishness

When it comes to the Indian market, Maura Regan, Executive Vice-president, Licensing Industry Merchandiser’s Association (LIMA) had been bullish for about two decades. Calling herself a gambler, she said, “Perhaps, I was too bullish without understanding the intricacies of the market that prohibited the licensing business. Today, I maintain the same strategy even though the market conditions are vastly different. The growing reach of e-commerce and the social media has lessened the barriers of entry.” It is not just Regan, even Pete Canalichio, Managing Partner at Licensing Brand, Inc., feels Indian businesses are hungry to understand it.

So What is in For Entrepreneurs?

Brand licensing as an industry is not a very crowded market space. In simple words, it is about monetizing intellectual property; and for entrepreneurs it’s a low risk and maximum return model. “I don’t understand why more companies don’t do licensing. It allows you, as a manufacturer, to explore categories which wouldn’t have been possible otherwise. For a country like India, with a deep manufacturing base, I think licensing it a great model,” Regan added. Many consider brand licensing an expensive affair, but it is otherwise. Chitra S Johri, Director, Bradford License India, explained that the model directly relates to the dynamics of retail and its potential, keeping it fair for all parties involved. It is a magical strategy of becoming a brand overnight.

“With limited bandwidth in retail of any format, be it e-commerce or offline, the game of survival becomes less challenging as the product becomes branded,” she added.

Unexplored Territories

One of the key issues with the domestic licensing industry is that it has restricted itself to the kid’s segment or entertainment. Of the $600 million, sports and corporate brands contribute 5 per cent each while fashion segments chips in 3 per cent and arts about 7 per cent. There is a lot of scope beyond these segments, like religion or politics or licensing for dead celebrities. With icons like Elvis Presley and Michael Jackson, whose licensing is managed by Bradford, the market for dead celebrity licensing is huge in the West. And while exploring this segment, one need not restrict himself/herself to entertainment but can even explore politics or science.

And like the experts say, the best part about dead celebrities is that they cannot make a mistake that can mess up the business. Or the other way, the entrepreneurs can master the industry is by building their business based on the popularity of one celebrity and his values. With time, add more brands or celebrities, who can associate with the values. This way, you will not be restricted to a brand instead focus will be on the values.

One Size Doesn't Fit All

The industry hasn’t picked up much also because they are trying to replicate the tried and tested solutions. For example, in Hollywood, most of the franchisee movies come under a production house and there is deadline which the industry adheres too. In Bollywood, where licensing is considered more as marketing tool, there are multiple producers involved and hardly any deadlines are met. FIFA u-17 2017 World Cup project director Joy Bhattacharjya said, “We need to start localising. Have you ever seen a merchandise t-shirt printed in Devanagari or any other script? I haven’t.”

A great example of localising the products is SK Brands, which represents Chef Sanjeev Kapoor. “We market steel-blended crockery, instead of clay or plastic. Tea is served in cutting chai glasses. This is our way of inculcating chef’s values in our products,” said Vishal Sinha, Business Head.

One size doesn’t fit all, this logic should be applied to your portfolios as well. Furthermore, it's time when licensees should understand, in this era of Internet of Things, a customer is more interested in experiences than product. For example, there is a platform called Majorly Gaming. In a small arena, they organize video games tourneys and invite people to watch the players compete.

“So now, games are not only been designed to play but to be watched as well. Licensees can do similar things around music or travel,” added Canalichio.

Even though conventional licensing dominates the model consumption across licensing segments – be it character, entertainment, sports, corporate, celebrity, etc Johri added, India has started seeing experiential hybrid concepts in licensing now with Kingdom of Chota Bheem FEC, Cartoon Network Funky Island FEC, MTV Flip Cafe format, FTV Residential.

Money Matters

Entrepreneurs, who are planning to consider this business model, need not restrict them to bootstrapping or bank loans. There is a lot scope of private investment in this industry. However, one should remember that investors scout for a long-term and sustainable model. So while planning to sign a contract with licensors should ask for long-term commitments. Another method of raising funds is through a model where there is joint participation in brand building, a relationship beyond the financial transactions. The brand has equal ownership between the licensor and the licensee, adds Jiggy George, Head of LIMA India and Founder of Dream Theatre.

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#Five Tips For Entrepreneurs Who Are Keen To Start A Licensing Business