BrainTrust Query: The Torrid Truth about Licensing’s Love Triangle
Spieckerman, President, Newmarketbuilders
Through a special arrangement,
presented here for discussion is a summary of a current article from
Licensors are just as aware of rationalization as licensees are and they are
appropriately freaked out about it … but sometimes for the wrong reasons.
licensing is on the rise as brand brokers like Iconix and even sourcing powerhouse
Li & Fung pursue direct deals with major retailers
such as Walmart, Target, and Kmart. However, the traditional model, a brand
owner/licensor granting the rights to a supplier/licensee to market products
to retailers under a brand, is still prevalent. We call this the licensing
triangle, and one thing’s for sure, it isn’t always a love triangle! As challenging
as it can be to keep the fires burning between suppliers and retailers, licensing
is inherently a riskier proposition … particularly when rationalization
Here’s where licensors can miss the connection: Most licensors
tell us that they are worried about brand rationalization. They see retailers
eliminating national brands in favor of private labels and know that it is
heading their way. However, they should be just as worried about supplier rationalization
because retailers are also looking for any excuse to reduce their supplier
base … and the suppliers on the chopping block may be their licensees.
experience; however, licensors often leave the licensee out of the equation
when they lose ground with a retailer; instead they blame the retailer: "They
just don’t get our brand." "I knew that marketing guy was trouble." Retailers,
on the other hand, tell us that licensees can be a licensor’s weakest link
and when that is the case, you have to know that retailers place responsibility
squarely on the licensor. Bottom line: There are some terrific licensees out
there; ones that provide expertise and retail access that would otherwise prove
elusive. However, your brand at retail is only as strong as your weakest licensee.
at a time of rampant rationalization, private label proliferation and retailer
AS brand, it’s time to reignite the flame by getting reengaged with your retailers
and your licensees as never before.
Here are a few tips on how to keep retailers
from getting the wandering eye:
1. Constantly assess, not only your own
portfolio of brands, but also those of your licensees. If their brand portfolios
aren’t important to the retailers that drive your business, your brand may
not be enough to make up for it.
2. Accompany your licensees to significant
meetings with retailers. When your brand is on the table, and on the line,
you owe it to yourself to be present.
3. Increase the frequency and intensity
of licensing summits and collaborative sessions. Your licensees will need to
have more than a stylebook in order to tell a story of alignment between your
brands and retailers’ brand visions.
4. Be more than a brand-centric cheerleader
(or dictator) for your licensees; be a partner to them by providing retail-relevant
resources and insights.
After all, licensees are more than middlemen; they
are a marketing arm for your brands.
How has ongoing rationalization affected licensing? Is the traditional
model less attractive than in the past? What further steps can licensors
take to support their brands in the current climate?