How Can Brand Licensee Business in India Witness Robust Growth?
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Brand licensing in India is witnessing robust growth, especially in electronics. Brand licensing is not new, as from past many years. We have seen many collaborations taking place and brands entering the Indian market through such licensees, with a sustainable growth plan. Many of them are still in place with an ongoing, long partnership of over 10-15 years.
Basis the current scenario for brand licensees in India, there are a large number of players, who follow the thought process of procuring a brand license and launching it in the online market space, irrespective of the road ahead to success. It is very important for a brand licensee to have experience and product knowledge along with the required infrastructure. The combination of the preceding is basic hygiene to start a brand licensing business.
It is very important to be aware of the ecosystem of selling in India and consumer behavior to compliment it. If you are into the trading sector, then your BOM cost will be higher which may hit your margin and profits as the Indian market is very price sensitive in terms of electronics.
Brand licensees, who don’t endorse the ‘Make in India initiative’, should have a good supplier from where they could import the product by prioritizing the product quality. Especially in electronics, one needs to have service team & service centers with a defined SLA, it matters the most with respect to after-sales service. This enables strong marketing via word of mouth, ratings & review, after selling a product.
The biggest difference to have/own a licensed brand is the brand equity of that product, which is the reason why many brands have been in existence for the past 50-90 years. One has to be selective of the brand they are willing to launch, the category in which it will be launched and most importantly its link with the category. If there is no connection, it becomes challenging to convince customers.
The advantage one gains out of the license is “the brand equity”. If the customers are aware of the brand, the main focus remains on the sales rather than branding. The biggest positive aspect is, one spending more on sales with offering better pricing. This results in zero or no cost spent on marketing, as people are already aware of the brand. All that is required is the right kind of marketing and ROI.
The biggest challenge is faced by a new brand which requires heavy investment in terms of branding. There is a very thin line between the ROI and the kind of expenditure a brand does. After a certain point, a brand doesn’t receive the kind of return even after spending a huge amount on its marketing, and the brand starts losing somewhere. Another major factor is longevity, the right kind of a product and strategically planned launches is what is required on a brand’s road map to make it the perfect one. To keep pace with the market, one has to keep coming up with new technology products. In Kodak’s case, it started with non-smart TVs, then moved to smart TV’s with 4.4 software. Today, it has a 7.1 software & Official Android televisions in Thomson.
The biggest strength for electronics is the fast movement of technology. With the movement shift, one cannot expect to have more stocks of certain models, as older versions are left unsold, impacting the TV category. Servicing also plays an important role, as all products need quality checks. For the same, global standards are being followed as well as all the checks along with a good after sales. Also, there is a lot of backward integration that one has to undertake. It can become a very challenging job, especially when selling in the online market space.
Now, top brands have launched an exclusive range of televisions on Flipkart. For example, the earlier price of a particular model was between INR 60,000-65,000 which today is priced Rs 40,000. However, the BOM cost of a particular model has increased, so one can see the margin of top 3-4 brands earning, which is now being reduced. To add, Indian customers have really changed, they understand that brands are just adding to the brand margin by paying more. Whereas before, these brands were getting the same technology by paying less. As a result, one has seen a drastic market share shift in the past two years. Also, in the next 5 years, one will definitely see two or more affordable brands amongst the top 4 brands in India.
This concludes to an understanding of licensing of brands getting seen and robust in terms of its growth.