Ronald Crawford

‘Verlies uw merk niet uit het oog!’

30 september 2010

Structuring a Licensing Strategy

Licensing objectives

To generate additional consumer touch points for the trademarks

To increase trademark awareness beyond the traditional aisle

To compliment and enhance key marketing messages

To create additional income from licensing activity

Develop new consumers

How do you decide what products to develop?

Work from core brand values

Brainstorm, then be sensible

Match with consumer perceptions

Sequential and logical extension from the core

Develop new customers

Few great leaps

Dart board approach

Consumer must understand the link between the core brand and the licensed product

Can’t lead – must follow

Commercial realities

Can only license what consumers are prepared to buy and retailers are prepared to sell

Major retailers control significant share of the market

Distinguish between approach to ‘giveaway point of sale material’ and potential licensed product, e.g. Arsenal bags

Products and launches

Market positioning:

Price/Quality Specification

Volume

Inferior PQS, unbranded high volume, price driven

Branded mainstream, good volumes, accessible prices, added value, superior specifications

Prestige brands, low volumes, high margins, low consumer accessibility, overspecified

Financial benefits

Royalty revenue goes straight to bottom line:

No capital costs of manufacture

No stock costs

Overheads largely confined to salaries and legal fees

Choosing the right partner (1)

Ability to achieve required positioning

Product development capability

Distribution capability

Marketing capability

Financial security

Shared vision

Enthusiasm

Choosing the right partner (2)

The right partner is not always the No. 1 or No. 2 in the market. The best partners work on a win-win basis

For example Danilo for Calendars

Appropriate distribution channel

Mirror positioning of core brand

Extend through examining distribution of new product type

Alternative distribution – internet – mail order

Legal support: Enable licensing strategy

Partnership between Legal Team, Internal Licensing Team and Novagraaf

Risk analysis: Focus - key brand/market combinations

Co-existence Agreements

Database management

Reporting tools

Overcoming obstacles

License Agreement Process

Deal proposal received

from Licensee and

reviewed/signed by

Licensing Team/Novagraaf

Deal proposal received

and signed off

by Marketing

Deal proposal received

and signed off

by Senior Management

Novagraaf draft

Contract agreement and

send to licensee

for review

Contract signed by allNamed parties

Licensing agreement (1)

Key elements of negotiation

The Rights – Trademark and/or other imagery licensed

Licensed Articles – Avoid defensive licensing, i.e. licence only for products licensee will produce

Term – normally 3-5 years. Dependant on required investment by Licensee

Licensing agreement (2)

Territory – only for countries where Licensee has distribution

Advance – dependant on forecast

Royalty – dependant upon margin Varies from 3% (high volume, low margin business) to 10% - wholesale value

Policing the agreement

Key control mechanisms

Contract:

o Sign off on all artwork, packaging, point of sale

o Approval of location if, e.g. restaurant

o Choosing the right Licensee with shared vision for brand and developing an effective business relationship with Licensee is the key to success:

• Control of parallel imports

• Income reports – when to audit

Control Measures

Brand Guidelines for Licensees

All licensees are briefed on Social Responsibility and agree to support this initiative

Licensees adhere to anti-counterfeiting strategy

All products are compliant with the Code of Conduct and the Corporate Social Responsibility guidelines

Regular audits of Supply Chain

Regular licensing income audits

Summary

How we can help?

Licensing strategy

Commercial practicalities

Choice of Licensing Partner

Audit support to manage licensing income

Legal support to help shape and implement strategy

Case Study - Arsenal

Mission Statement:

Generating, Capturing and Delivering the most valuable ideas while maintaining the true essence of Arsenal.

Original Licensing Strategy (1)

Develop new relevant product ranges and product areas

Increase distribution in the UK

Develop key international markets

Maximise the value of brand on licensed product

Original Licensing Strategy (2)

Develop new relevant product ranges and product areas

Increase distribution in the UK

Develop key international markets

Maximise the value of brand on licensed product

Achieved

Original Licensing Strategy (3)

Arsenal’s position as one of the world most recognized brands presents a strong opportunity in football related licensed products

Football market fragmented with no umbrella or dominant brand even though Manchester United have a major foothold

Arsenal’s position as global football brand provides a natural link to toys, clothing, books & ultimately sports performance products

Link Arsenal’s brand position with product innovation, product quality and good design via the best licensees globally

The Opportunity

Biggest market for licensing is North America

Brand values solid but not driving desire to purchase

Need to develop younger, softer & more emotive values and a stronger bond with consumers outside the UK whilst reinforcing existing brand values

Maintain look and feel of the Arsenal’s product

How can the Arsenal’s success be translated for a consumers outside of Football?

Brand Challenge

Current and Future Earnings

Conclusion

Licensing is a more complex business than it appears

A coordinated approach is required, encompassing:

o Research

o Selection of correct partner companies

o Strong control/inspiration of product

o Integrated retail initiatives

o Implementation

o Centralized PR and promotional support

o Co-ordinated international rollout and

Novagraaf IP Management and Consulting Services