A company’s motives to acquire a license depend on its marketing strategy.
By associating your product with a fashionable character from a movie, cartoon, TV series or videogame, sales will increase by meeting consumers’ needs.
A license can also be acquired to differenciate the company’s product from all competitors; to enter new distribution channels that would otherwise be out of reach, and to justify increasing its brandname pricing.
Licensing positions a brand by giving it certain attributes and benefits that would otherwise be too expensive to achieve. There are characters that are immediately related to an attribute in the consumers’ mind, such as speed, strength, superpowers, etc.
A license is the best option to position your product with those attributes (i.e., an instant breakfast flavored milk to strengthen bones).
By associating this message with a character it becomes more relatable, and this is where a license enters the game.
A license creates a bond between the consumer and the product.
Requisites vary greatly depending on the factors previously mentioned. However, the following can summarize the list:
- Owning a product with significant distribution within specific channels -as we are rarely able to license a product sold in few stores and with insuficient coverage.
- To be a financially solid company: neither having been sanctioned by a credit bureau nor in legal trouble.
- Having a top-class design team that can create the best product.Having a profit margin that allows payment of royalties without undermining the business.
- Having the necessary infrastructure to manage sales reports, royalty payments, product approvals, audits, etc.
- To abide by the highest production and quality standards, as is expected of any manufacturing industry with international presence.
- If your company does not manufacture the product directly, your supplier must abide by these standards.
There are three main types of licenses, with their combinations thereof: product licenses, promotional licenses, and publicity licenses.
Product licenses tend to be long-term contracts, usually spanning 1-3 years; they are related to an in-line product, where the character is usually printed on the product. A clear example of this category would be a Batman t-shirt.
Promotional licenses tend to be short-term contracts, usually spanning 1-6 months; the product doesn’t always have the character printed on it, but includes a prize that does. A clear example of this category would be McDonald’s Happy Meal or Frito Lay’s Tazos.
Publicity licenses use the character in publicity campaigns on television, movies, print, or digital media. In this case, the character is used to communicate an attribute shared between it and the product.
There are other business models in which the license used is a combination of the three main ones, such as amusement parks, live events, conventions, concept stores, etc.
The cost of a license varies substantially, depending on the factors previously mentioned. The license is paid as royalties, as it is a percentage of the sales from the product. This percentage varies between 10-16% depending on several factors.
In some products with a low margin of profit, such as milk and other commodities, the percentage is lowered.
Contact us to go over your product’s specific case.
A licensed product with strategic planning regarding the product’s development, price point, market segment, and communication plan is low risk.
The key factor is to have a business plan with a positive sales forecast; royalties are projected based on sales, and whatever sales goal is in effect at the time of signing the contract.
One of your company’s top priorities should be that the character chosen is well adapted to your company’s marketing strategies, in order to firmly establish the brand’s name.
Even though many characters look alike (superheroes, princesses, comedic personages, etc.), the consulting services offered by other agencies is not the same.
BLEC is comprised of a seasoned team of experts in the area, who can offer proper advice, not only in finding the ideal character, but designing a communications campaign around it, to develop the best product, as well as to boosting catalogue specs within the main channels of distribution. Finally, we aim to provide constant follow-ups during the length of your contract with us