What makes a brand licensable (and why awareness doesn’t always equal guaranteed viability for extension)
When evaluating a brand’s viability for extension, one of the first things to consider is whether it enjoys high enough awareness across large enough customer groups and geographies. At the same time, many brand owners make the unfortunate mistake of thinking that a high level of awareness is enough for a new proposition to make sense in the minds of customers, but there are certainly instances where a brand can be incredibly well-known yet still lack other attributes that are critical to be viable for licensing.
A product or service must offer a unique selling point which is compelling to customers and differentiates the brand from competitors. For example, some categories are already quite saturated, so for a retailer to stock a brand’s licensed product, something already existing will have to come off the shelf. The new offer must reflect not only the brand’s core values and equities, but also be on-trend and satisfy an unmet need in the market. To put it simply, the brand extension ought to offer something new and feel like a natural and seamless fit with the core or else risk a negative rather than brand building effect with consumers.
When considering extension under licensing, it is also crucial to consider whether a new offer makes sense from both an equity building and financial standpoint, and carefully evaluating categories is an imperative step in that process. Some questions to consider: are the dynamics in this business sector favourable to the licensing model? Is it realistic for the brand to achieve relevant market share in the category? Will the extension of the brand, either under license or another model, lead to incremental market exposure, increase brand relevance and open up its offer to new and untapped consumer groups and retail channels?
Determining a brand’s viability for licensing is a complex and time consuming task. Nevertheless (and I’ve said this before), licensing has the potential to be one of the most lucrative, yet low-risk brand development strategy, unlocking not only new revenue streams but also offering ways to further strengthen, promote and increase the visibility of a trademark.
Like most other business decisions, the choice to go into licensing is one that should be carefully considered, weighing pros and potential cons while assessing probability of a new proposition to succeed. In 2014, the worldwide licensing industry was worth approximately $155.8 billion at retail and while the 2015 figures are yet to be released, I look forward to seeing this sometimes hidden sector of the marketing mix grow even stronger in coming years.