1. 6.02 Discuss Product Licensing

2. 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

3. Ex: Nike, Reebok, Adidas, Sony, and Nintendo
Licensing (con’t)
A licensee is company paying for permission to use the name, logo, or trademark
Ex: Nike, Reebok, Adidas, Sony, and Nintendo

4. 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

5. 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

6. A license issued to another company may allow the licensee to:
Licensing (con’t)
A license issued to another company may allow the licensee to:
Manufacture
Market
Sell
Ex: Franchises

7. Licensing (con’t)
Licensing provides greater profit , promotion, and legal protection for the licensor

8. Licensor
The licensor approves the product and collects the licensing fees and royalties
For example, WB will give permission to Electronic Arts to use the Harry Potter character

9. Licensor (con’t)
Companies typically pay between 5 and 10 percent of wholesales in the form of royalties

10. Character Versus Corporate Licensing
A sports or entertainment entity permits a licensee to use their image, name or character for a fee

11. Character Versus Corporate Licensing (con’t)
For example, LucasArts licenses a manufacturer to use the images of the characters from Star Wars: Attack of the Clones

12. 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

13. Advantages of Licensing
Advantages for Licensor
a. Enhanced company image and publicity
b. Increased profit from royalties.
c. Increased brand awareness or recognition
d. Increased opportunity for penetrating new markets

14. Advantages of Licensing (con’t)
e. Limited manufacturing costs or risks
Advantages for Licensee
a. Existing brand awareness or recognition
b. Lower advertising and promotional costs

15. Advantages of Licensing (con’t)
c. Increased possibility of success and profitability
d. Connection with an athlete, sports team, entertainer, or corporation

16. Disadvantages of Licensing
Disadvantage for licensor
a. Potential for poor quality of a licensee’s manufactured products
b. Partial relinquishment of control over the marketing mix of the brand

17. Disadvantages of Licensing (con’t)
Disadvantages for licensee:
a. Athlete, entertainer, or corporation may lose popularity.
b. Sports teams may suffer losing seasons
c. Change in styles, trends, and consumer preferences

18. Disdvantages of Licensing (con’t)
d. Royalties and licensing fees can be expensive
e. Manufacturing costs and risks
f. Competition can drive up costs associated with fees and royalties

19. Disadvantages of Licensing (con’t)
g. Competition can cause a negative impact on market share

20. Impact of Licensing on Consumers
Increased opportunity to associate with an athlete, sports team, entertainer, or corporation
Increased supply of available products

21. Impact of Licensing on Consumers (con’t)
Competition can result in lower prices, new products and better quality.

22. 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

23. Bootlegging (con’t)
Bootlegging can result in poor quality products for consumers, which will decrease brand loyalty