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12-1 Chapter 12 Licensing Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

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Presentation on theme: "12-1 Chapter 12 Licensing Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin."— Presentation transcript:

1 12-1 Chapter 12 Licensing Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2 12-2 Introduction to Licensing Third Special Case of Sponsorship Licensing is a Value-Adding Process that Provides Revenue-Generating Opportunities Via the Conveyance of the Right to Use Another Organization’s Intellectual Properties for Commercial Purposes

3 12-3 Intellectual Properties Intellectual Properties – Intangible Assets for Which an Organization Can Claim Ownership Trademarks – Registered Identifiers Which Can Be Protected Using Existing Laws Examples: –Brand Names - Nike –Slogans – “Just Do It” –Logos – the Nike “swoosh”

4 12-4 Brief Historical Perspective 1930s - Walt Disney Characters 1950s – Television Personalities 1960s – Professional Sports in USA 1970s – Collegiate Sports in USA

5 12-5 Key Concepts - Participants Licensor – Owner of the Intellectual Property Who Conveys the Right to Use Select Intellectual Properties to the Licensee Licensee – Entity that Is Given Permission to Use the Intellectual Properties for Specified Marketing Activities

6 12-6 Financial Perspective (2006) Sales of Officially Licensed Merchandise Were Estimated at $187.4 Billion These Sales Resulted in Total Payments of Some $10 Billion to the Licensors Payments to the Licensors Generally Involve a Percentage of the Licensee’s Sales Revenue - Royalties

7 12-7 Top 5 Licensing Categories Categories Royalties Characters from Entertainment$2,680 Trademarks/Brands 1,090 Fashion 830 Sports 825 Collegiate 203 –2006 Royalties in Millions – US Dollars

8 12-8 Establishing and Maintaining Ownership Drop in Box 12.1 Here

9 12-9 Agreement Terms Eligible Products Scope of Exclusivity Geographic Scope

10 12-10 Eligible Products Product Item – One Specific Product –i.e. – Rival brand crock pots Product Line –i.e. – Rival brand food preparation items Product Assortment –i.e. – All products produced by Rival

11 12-11 Scope of Exclusivity Exclusive – Rights for Specific Product(s) Granted to a Single Licensee Nonexclusive – Granting Rights to Use Intellectual Properties on Same Product(s) to Two or More Competing Companies

12 12-12 Geographic Scope Regional –Small local region –Larger region but not national in scope –National –Multinational region Global

13 12-13 Example of Actual Agreement Drop in Box 12.2 Here

14 12-14Compensation Fixed Fee Royalty Minimum Guarantee

15 12-15 Compliance Reviews “Underpayments May Represent as Much as 50% of the Amount Due to the Licensor” Verify that All Payments Due to the Licensor Have Been Made Should be Performed Periodically

16 12-16 Benefits for the Licensor (Owner) Revenue Stream No Significant Investment Required Broader Product Assortment for Consumer

17 12-17 More Benefits for the Licensor Create Consumer Awareness & Interest Control Standards of Quality Control Array of Products Available Protect Image

18 12-18 Benefits for the Licensee (User) Capitalize on Licensor’s Brand Equity Capitalize on Short-Term Phenomena Capitalize on Economies of Scale Reach New (Higher) Price Points

19 12-19 Example of Selection Criteria Drop in Box 12.4 Here

20 12-20Infringement Unauthorized Use of an Organization’s Trademarks and Logos Counterfeit Issues –Lost Revenues –Lower Quality

21 12-21 Market Surveillance Policing the Marketplace in an Effort to: –Locate counterfeit merchandise; –Locate other trademark infringements; –Take appropriate measures to end the infringement; –Remove any illegal products, and –Discourage such efforts in the future

22 12-22 Remedies for Infringement Legal Restraints (Cease-and-Desist) Confiscate and Destroy Counterfeits Possible Time in Jail for Offenders

23 12-23 Performance Review Evaluate Licensee’s Financial Performance Evaluate Licensee’s Production and Marketing

24 12-24 Developing Licensing Plan Identify Licensable Intellectual Properties Establish Fee Structure Establish Selection Criteria Establish (Type) Terms of Agreement Engage in Compliance Review Market Surveillance Performance Review

25 12-25 Examples of Licensing Contracts Drop in Table 12.3 Here

26 12-26 Growth Strategies New Target Markets New Up-Market Products More Traditional Advertising (Leveraging)

27 12-27 Top American Universities Drop in Box 12.8 Here

28 12-28 Closing Capsule Licensing Is a Special Case of Sponsorship that Features a Win-Win Relationship for the Licensor and the Licensee Global Sales of Licensed Products Continue Steady Growth

29 12-29 Closing Capsule Major Infringement Issues in Many Countries across the World Manufacturers and Retailers Are Being Encouraged to Produce and Sell Officially Licensed Merchandise

30 12-30 Closing Capsule Insert Figure 12.3 Here

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