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

A licensor is the rights-holder of the name, logo,

or trademark

LICENSING (CON’T)

A licensee is company paying for permission to use the name, logo, or trademark

Ex: Nike, Reebok, Adidas, Sony, and Nintendo

PARTIES OF LICENSING- REVIEW

Licensor- Company who owns the brand and issues the license

Licensee- Company or person who purchase the brand

License- The written agreement giving the licensee permission to use a brand

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’T)

A license issued to another company may allow the licensee to:ManufactureMarketSell

Ex: Franchises

LICENSING (CON’T)

Licensing provides greater profit , promotion, and legal protection for the licensor

LICENSOR

The licensor approves the product and collects the licensing fees and royalties

Ex: WB will give permission to Electronic Arts to use the Harry Potter character

LICENSOR (CON’T)

Companies typically pay between 5 and 10 percent of wholesales in the form of royalties

$900,000 in sales-10% royalties ($90,000)$810,000 before you pay the bills

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)

Ex: LucasArts licenses a manufacturer to use the images of the characters from Star Wars: Attack of the Clones

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 for Licensor1.Enhanced company image and publicity2.Increased profit from royalties3.Increased brand awareness or recognition4.Increased opportunity for penetrating new markets5.Limited manufacturing costs or risks

ADVANTAGES OF LICENSING (CON’T)

Advantages for Licensee1.Existing brand awareness or recognition2.Lower advertising and promotional costs3.Increased possibility of success and

profitability4.Connection with an athlete, sports team,

entertainer, or corporation

DISADVANTAGES OF LICENSING

Disadvantage for licensor1.Potential for poor quality of a licensee’s manufactured products2.Partial relinquishment of control over the marketing mix of the brand

DISADVANTAGES OF LICENSING (CON’T)

Disadvantages for licensee:1.Athlete, entertainer, or corporation may lose popularity.2.Sports teams may suffer losing seasons3.Change in styles, trends, and consumer preferences4.Royalties and licensing fees can be expensive

DISDVANTAGES OF LICENSING (CON’T)

Disadvantages for licensee: (cont.)5.Manufacturing costs and risks6.Competition can drive up costs associated with fees and royalties7.Competition can cause a negative impact on market share8.Competition can cause a negative impact on market share

IMPACT OF LICENSING ON CONSUMERS

Increased opportunity to associate with an athlete, sports team, entertainer, or corporation

Increased supply of available products +

IMPACT OF LICENSING ON CONSUMERS (CON’T)

Competition can result in lower prices, new products and better quality.

VS.

BOOTLEGGING Bootlegging is unauthorized use of a

name, logo, or trademark of a league, athlete, sports team, entertainer, film, TV show or character

Bootlegging reduces the profits of the licensors and legitimate licensees

BOOTLEGGING (CON’T)

Bootlegging can result in poor quality products for consumers, which will decrease brand loyalty