LICENSING Licensing creates contractual arrangements whereby firms can use the

Licensing licensing creates contractual arrangements

This preview shows page 102 - 103 out of 165 pages.

LICENSING Licensing creates contractual arrangements whereby firms can use the names, logos, characters, and so forth of other brands to market their own brands for some fixed fee. Essentially, a firm is renting another brand to contribute to the brand equity of its own product. Because it can be a shortcut means of building brand equity, licensing has gained in popularity in recent years. The top 125 global licensors drove more than $184 billion in sales of licensed products in 2010. Perhaps the champion of licensing is Walt Disney. Guidelines One danger in licensing is that manufacturers can get caught up in licensing a brand that might be popular at the moment but is only a fad and produces short-lived sales. Because of multiple licensing arrangements, licensed entities can also easily become overexposed and wear out quickly as a result. Firms are taking a number of steps to protect themselves in their licensing agreements, especially those firms that have little brand equity of their own and rely on the image of their licensor. 34 For example, firms are obtaining licensing rights to a broad range of licensed entities some of which are more durable to diversify their risk. Licensees are developing unique new products and sales and marketing approaches so that their sales are not merely a function of the popularity of other brands. Some firms conduct marketing research to ensure the proper match of product and licensed entity or to provide more precise sales forecasts for effective inventory management. Corporate trademark licensing is the licensing of company names, logos, or brands for use on various, often unrelated products. For example, in the depths of a financial crisis a number of years ago, Harley-Davidson chose to license its name synonymous with motorcycles and a certain lifestyle to a polo shirt, a gold ring, and even a wine cooler. Once it regained firmer financial footing, the company developed a much more concerted strategy, meeting with much success as described in its 10K report in 2011. CELEBRITY ENDORSEMENT Using well-known and admired people to promote products is a widespread phenomenon with a long marketing history. Even the late U.S. president Ronald Reagan was a celebrity endorser, pitching several different products, including cigarettes, during his acting days. Some U.S. actors or actresses who refuse to endorse products in the United States are willing to do so in overseas markets. For example, rugged American actors Arnold Schwarzenegger (Bwain drink), Brad Pitt (Softbank), and Harrison Ford (Kirin beer) have all done ads for brands in Japan. Although Millward Brown estimates that celebrities show up in 15 percent of U.S. ads, that number jumps to 24 percent for India and 45 percent for Taiwan.
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