Consumer Goods Manufacturers Leveraging Licensing Strategies

MANUFACTURERS ALSO SEE BRAND ACQUISITION AS A SIGNIFICANT ECONOMIC DRIVER

Companies across consumer goods categories – shipping DTC, through 3rd party e-commerce, or via traditional wholesale, enjoy incremental benefits from licensed brands.  Yes, a royalty is paid.  But a beloved trademark can help add awareness to a new category or product.  The licensed brand can influence trade decision-making and SEO.  New trial, volume sales, and consumer loyalty may ensue for the manufacturer as well.

MANUFACTURERS CAN USE 3RD PARTY EQUITIES TO GROW THEIR OWN BRANDS

We hear it all the time.  Why would a company license another brand when trying to build its own?  For multiple reasons.  First, innovative new products frequently need a well-known trademark to help establish awareness.  Secondly – consumers frequently buy because they trust the legacy brand on the package – but they repeat with product excellence. 

Most importantly – when a company wins over consumers or trade buyers with licensed brands, there is a positive halo effect on non-licensed products.  Case studies abound of licensed product assortments that drive manufacturer loyalty among end-consumers, as well as merchants that seek to grow their business with a newly successful vendor.

Oftentimes a manufacturer cannot build a “lovemark” as treasured brands are affectionately known, quickly enough to convince consumers or merchants to try the new goods.  Even superior products that uniquely solve problems struggle to hit the radar.  Licensed equities can help accelerate those critical introductions for new consumer goods.

ARE LICENSEES REALLY BENEFITTING HERE?

Yep.  Product featuring licensed properties, across merchant categories, has shown consistent growth in during recent years:

On average, product categories have enjoyed over 25% growth in annual licensed product sales between 2015 and 2021.

THEN WHY ISN’T EVERYONE DOING THIS?

Acquiring licensed brands can be extremely effective in growing a business.  But success is never as easy as it seems.

The right strategy needs to be created, so the brands chosen match manufacturer core competencies and bona fide incremental business opportunity.  The brands chosen cannot just be strong “lovemarks” – they have to be collaborative partners, which do not always go hand in hand. The brands chosen must furthermore complement a manufacturer’s financial goals and margin boundaries. 

We have seen manufacturers find their brand partners do not have tenets to be strong licensors.  Or transitions take place within brand ownership that erodes the licensee investment.

THESE RISKS CAN BE MITIGATED.

A strategic licensing agency - with backgrounds in brand portfolio development, commercial terms structures, product development, and with a licensor network stretching decades - can route a manufacturer more quickly to success.  That agency can also help avoid common pitfalls that tax or cost new entrants to the space.