Licencing White Paper

8/7/2019 Licencing White Paper

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INCUBATORSINCUBATORS A systematic approach to Brand Licensing Page 6

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About the Author: Mahadevan Sundarraj is a Founder Director of Collabrant Incubators, a niche, turnkey consulting companywith interests in Foods, FMCG, Consumer Durables, Services & Retail. He can be contacted at [email protected]

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Feasibility Studies should include an analysis of:

o Core Brand Properties (past, present and future)o Consumer Segments (current, target),o Marketing mix (e.g. communications, support level)o Channel Structures & Viabilityo IP (e.g. brand, logo, tag-lines, recipes formulae etc.)

Step 2: Metric DefinitionItis important that license agreements reflect marketing objectives of both licensor and licensee. Performance should be

evaluated based on clear metrics in the agreement and then adjusted to reflect significant changes in business conditions.Unfortunately, divergent business objectives make it difficult to create fair, balanced agreements. In addition, negotiatingleverage and prowess are not always equal between the parties. A good practice is to list out metrics before commencing alicensing program.

Brand Metrics Brand Fit: Relevance, Authority in the new Category Brand Support: Promotion, Consistency Brand Appeal: Loyalty, Price Premium

Category Metrics Concept Viability: Feasibility, Distribution Mechanics Concept Uniqueness: Features, Style, Brand Differentiation Licensee Appeal: Investment, R.O.I., Payback, Success Parameters Retailer Appeal: Familiarity, Gross Margins, Licensing Success Sales Potential: Market Size, Demand, Competition

Resource Requirements Staff Availability and Budget Advertising, Promotions and Tie-ins Support Required Sales Plan Coordination


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Step 3: Alignment

Alignment of the licensor's marketing objectives with the licensee's business objectives is essential to optimizing thelicensing benefits for both parties. The end-goal is to develop terms that reflect these objectives and integrate relatedmetrics into the license. Regular performance reviews and adjustments to license terms should also be considered as partof the license alignment process.

Although sales and royalties are important elements of the license agreement, there are other metrics that can beincorporated into the license to create 'alignment' and better reflect the interests of licensor and licensee. From thelicensor's perspective, these metrics should include brand image, customer satisfaction, and loyalty. From the licensee's

perspective, the metrics should include distribution synergy, sales, and profits.

Step 4: License Negotiation:Once you have the brand & financial objectives listed out, you would go ahead building a complete licensing sales activityplan. This would include

1. Category Marketing plans2. Category sales strategy3. Developing Business plans4. Qualifying prospective licensees5. Meeting with and presenting to prospective licensees6. Negotiating license terms with prospective licensees7. Developing license agreements

Prospective licensees should be evaluated based upon operational, financial and marketing capabilities. The ideal licensecandidate is strong in each of these areas and is willing to make contractual commitments to ensure the success of thelicensed product business.

Step 5 Product Launch Planning & Execution

Step 6: Licensee Supervision


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Phase IIIStagePlan

IA:Initial Scoping &

Feasibility

IB:De-risking &

Metric Definition

IIA:ResourcePlanning

IIB:License

NegotiationExecution

OngoingSupervision

ActivityDetails

Consumer Researchrelevant to LicensingBrand

Category Researcho Strategic Fito Brand Objectiveso Category Fit

Define Objectiveso Brand to Licenseo Product Selectiono Dist. mechanicso Key Resources

Licensee CapabilityoMfg CapabilityoDist. CapabilityoFin. Assessment

Cultural FitmentMetric ListingoBrand MetricsoCategory SalesoChannel

ObjectivesoROI/Royalty

Legal RestrictionsLicense QA req.

Determine all theactivities neededthrough the lifecycle of the project.

Who will completethese activities?

Estimated cost?Share of CostsoLicenseeoLicensor

Trademarks?Time Period?Territory & ChannelNon-Compete?Business PracticesQuality Standards?Financials?Royalty?Min. Guarantee?Op. GuidelinesOrg StructuringLicensors

ObligationsoBrand Support?oExclusivity?oLegal Protection

TrialProduction

Test MarketingMonitoring

Plan

SupportBudgets fromLicensor

SampleReviews

Kick off

ProductReviews

Sales ReviewsLabel ChangesLicenseRenewalsQuality

MonitoringPlan

Outcome

Project Definition Identify StakeholdersGain buy-in to project Identify Project Mgr.

Licensee Short ListRisk SummaryQA RequirementsMonitoring Plan

Resource PlanoFinanceoQualityoBrand Resources

AgreementSigned by BothParties

Launch Performanceto Agreement

PhaseOwner

Collabrant 1. Collabrant2. Project Mgr.

1.Collabrant2.Project

Manager

1.Collabrant2.Project

Manager

1. Collabrant2. Licensee

Licensor

Orgn.ResourceOwner

Corporate /CEO /Brand Heads

Corporate Quality/Legal

Brand HeadsCFO.

Legal/ CounselCorporate Qlty

Division HeadBrand Heads

Division HeadFinance Head

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