Trademark Licensing Agreement - PowerPoint by zos95951

VIEWS: 206 PAGES: 41

More Info
									   Developing and Enhancing
   Brand Reputation Through
          Licensing


             Jeffrey H. Olian
Executive Vice President & General Counsel
         Equity Management Inc.
              San Diego, CA
BRAND LICENSING
   OVERVIEW
BRAND LICENSING DEFINED
– Brand licensing is the association of a
  trademark, name, symbol, likeness or other
  brand identity with a product
– For a licensee, licensing a well-known brand is
  intended to facilitate consumer acceptance of
  the licensed product
– For the licensor, licensing should enhance the
  consumer‟s awareness, understanding and
  acceptance of the brand while simultaneously
  enhancing sales of the brand‟s core products
      CORPORATE LICENSORS
American Airlines   General Mills   Nabisco
Brown Forman        General Motors  Nike
Campbell Soup       Harley Davidson Pepsi Cola
Caterpillar         Hershey Foods   Pillsbury
Chiquita            Jaguar          Planters-Lifesavers
Coca-Cola           Jeep            Porsche
Coors               John Deere      Seagram's
DaimlerChrysler     Kahlúa          Starbucks
DuPont              Kellogg's       Sunkist
Eastman Kodak       Lockheed Martin Unilever
Ford                Maytag          Wells Fargo
General Electric    McDonald‟s      White Westinghouse
                              NORTH AMERICAN RETAIL SALES
                                OF LICENSED MERCHANDISE


                         80

                         70
   BILLIONS OF DOLLARS




                         60

                         50

                         40

                         30

                         20

                         10

                         0
                              1981 1983 1985 1987 1989 1991 1993 1995 1996 1997 1998 1999 2000

Source: The Licensing Letter, January 2001.
                   RETAIL SALES OF
          LICENSED MERCHANDISE BY LICENSOR

                                                       Entertainment/
                                   Music                Characters
                                    3%                      21%                    Publishing
                   Fashion                                                            2%
                     17%                                                                   Celebrities/
                                                                                            Estates
                                                                                               3%

         Non-profit
            1%

                                                                                           Sports
                  Art                                                                       16%
                  8%

                      Toys/Games
                          5%
                                                           Trademarks/
                                                             Brands
                                                               25%
Corporate Trademark licensing grew by 6% in 1999 and another 2% in 2000, producing the largest licensing
category in the industry.
Source: The Licensing Letter, January 2001.
RETAIL SALES OF LICENSED MERCHANDISE BY
           PRODUCT CATEGORY
       CATEGORY                                1984   2000
       Apparel & Accessories                   38%    22%
       Toys & Games                            20%    12%
       Publishing/Stationery                   12%     9%
       Gifts/Novelties                         10%     8%
       Home Furnishings/Housewares              7%     6%
       Foods/Beverages                          5%    10%
       Health & Beauty Aids                     3%     5%
       Domestics                               <1%     6%
       Electronics                             <1%     6%
       Computer/Video Products                  1%     6%
       Infant Products                         <1%     4%
       Footwear                                <1%     3%
       Music /Video                            <1%     2%
       Sporting Goods                           NA     2%
       Other                                    2%    <1%
Source: The Licensing Letter, January, 2001.
              ADVANTAGES OF
          A LICENSING PROGRAM
– Increased visibility of corporate brands, thereby
  enhancing consumer awareness
– Generate marketing benefits through brand
  exposure and advertising spending by licensees
– Strengthens the legal protection for the brand
– Generate incremental revenues that are virtually
  pure profit
– Ability to introduce new products and enter new
  markets without heavy investment
          SHORT-COMINGS OF
        TRADITIONAL LICENSING

– Absence of disciplined management and
  sophisticated research
– Key concern is selling the deal, not the impact on
  the licensor‟s equity
– The majority of thought and effort is focused on
  the contract terms
– Brand building opportunities are sacrificed and
  royalty revenues are not optimized due to
  insufficient attention to the long-term success of
  the licensed business
DEVELOPING A BRAND
LICENSING PROGRAM
    LICENSING’S REAL LEVERAGE

– Keys to successful, “brand building” licensing

   – Generating high quality deals with the right
     licensees

   – A “laser like” focus on maximizing the long-
     term benefits to the licensor‟s brand and
     primary business

   – Marketing driven rather than royalty driven
     approach
             TYPES OF LICENSES

– BRAND ADVANCEMENT:
  –   “Affinity” driven
  –   Traditional
  –   More routine
  –   Numbers oriented
  –   Less complex
  –   Shorter term
  –   Standardized
              TYPES OF LICENSES

– BRAND EXTENSION:
  –   Custom
  –   Complex
  –   Long term revenue implications
  –   Marketing based
  –   Distribution is often an integral component
  –   Totally driven by the equity
  –   Imagery vs. graphics
             PLANNING PROCESS

– Before initiating a licensing program, the licensor
  must consider at least four key strategic elements
   – Product categories to be approved
   – Type and number of licensees
   – Distribution channels to be approved
   – Marketing support
            PLANNING PROCESS

– Approved product categories
  – How close to the licensor‟s core products?
  – How far removed from the licensor‟s core
    products?
  – Public relations concerns?
  – Safety concerns?
            PLANNING PROCESS

– Type and number of licensees
  – Established businesses vs. “hungry” newcomers?
  – Market leader vs. #2 or #40?
  – Track record with licensed products?
  – Marketing savvy? Do they “get it?”
  – Retail relationships?
            PLANNING PROCESS

– Approved distribution channels
   – Mirror core product channels?
   – Expand into new channels?
   – Club, Mass, Department Store, Upscale?
   – Targeted consumers?
           PLANNING PROCESS

– Marketing Support
  – Expected from licensees?
  – Commitment from licensor?
  – Integration among licensees?
  – Retailer programs?
            PLANNING PROCESS

– Execution of the Licensing Program
  – External “agent”
  – External consultant
  – Internal resources
           PLANNING PROCESS

– License Program Management
  – Licensing Sales    – Creative
  – Market Research    – Licensee Management
  – Contract Admin     – International Sales
  – Royalty Admin
  – Legal/Compliance
  – Product Admin
                PLANNING PROCESS

– The License Agreement
  – Product grant                – Royalty rate
  – Territory grant              – Guarantees/Advances
  – Distribution channel(s)      – Reporting obligations
  – Term of agreement            – Insurance/Indemnification
  – Quality control              – Termination rights
  – Product review               – Sublicensing rights
  – Collateral material review   – Marketing commitment
EXECUTING A BRAND
LICENSING PROGRAM
       BRAND LICENSING PRIMER

– A quality corporate brand licensing program is
  characterized by the detailed and disciplined
  management of all of the licensing activities
– Critical factor is a focus on the management of the
  trademark imagery
– Always be “protective” of the brand
– Never be “exploitative” of the brand
    BRAND LICENSING PRIMER



– Begin with an analysis of the brand‟s
  “core” values, the breadth and scope of
  awareness of its associated imagery, and an
  understanding of the brand‟s equity and the
  way in which that imagery develops
  consumers‟ trust and confidence
      BRAND LICENSING PRIMER

– Knowledge is the Key
  – History
  – Key equity components
  – Size, trends
  – Market position
  – Support level
  – Marketing and Advertising Plans
  – Aided awareness, unaided awareness
  – All imagery
       BRAND LICENSING PRIMER

– Evolution of a Licensing Program
   – Licensing is not a stagnant process
   – Feedback from licensees and consumers must be
     factored into next step planning
   – Licenses can move further away from the core
     equity based upon the “expanded” equity created
     by initial licenses
   – Changes in the marketing direction for the brand
     itself must be considered
BRAND EXTENSION
   LICENSING
   CASE STUDIES
  DuPont™ - Teflon®
       Maytag®
    Jack Daniel‟s®
“Out of the Frying Pan and Into Your Life”
      TEFLON® OBJECTIVES
• Objectives
  – Reinforce DuPont‟s ownership and legal protection of
    the Teflon® trademark
  – Establish the Teflon® brand as separate and distinct from
    the PTFE “ingredient”
  – Develop licensed products and distribution channels
    directed at non-traditional users
  – Convert current PTFE ingredient customers into new
    Teflon® licensees
  – Use a technology-based license, supported by high levels
    of brand awareness, to communicate performance
    benefits meaningful to consumers
                TEFLON® RESULTS
       Teflon license catapulted Sally Hansen into
         the #1 share position with Teflon Tuff line
                                        of nail care
• Licensed Categories
   –   Automotive finishes
   –   Oil filters
   –   Lubricants
   –   Glass protectants
   –   Wheels
   –   Wiper Blades
   –   Socks and hosiery
   – Personal Care
   – Hardware/Tools
   – Sports Equipment
      MAYTAG ®              OBJECTIVES

• Maximize full financial
  potential of the Maytag®, Jenn-
  Air®, Admiral®, and Magic
  Chef® brands.


• Reinforce Maytag‟s
  competitive position in the
  core, home laundry business by
  extending the equity into
  products for “the home”.
          MAYTAG® RESULTS
             Maytag Room Air Conditioner




                      Jenn-Air Room
                      Air Purification
                          System




Premium Quality        Magic Chef           EMI is currently working to
    Maytag            Small Kitchen        finalize a HVAC License for
 Water Heater          Appliances                the Maytag brand
BRAND ADVANCEMENT
    LICENSING
     CASE STUDY
      Chevrolet®
    CHEVROLET®                    OBJECTIVES
• Develop a long-term licensing plan for the strategic direction of
  the program
• Broaden program orientation from infringement control to
  increased generation of royalties and marketing benefits
• Identify Brand Extension licenses that generate substantial
  marketing value and broaden legal protection of the Chevrolet
  Trademarks
                                   ®
        CHEVROLET RESULTS
• The largest automotive licensing program and among the top 5
  largest corporate trademark programs in the world.
• Multi-faceted program with broad-based results, generating not
  only significant royalty revenues, but also tremendous marketing
  benefits
• Set a new standard in the
  category and
  revolutionized how these
  products are marketed.
• GM die cast market share
  today is 55%.
                                       ®
         CHEVROLET RESULTS
Developed a benefit-oriented program for die cast manufacturers
converted to licensees.
• Negotiated a “stair-step” royalty approach for long-term business
  relationship development across the board for all brands.
   – Improved communication of
     vehicle design data for faster
     speed to market.
   – Initiated access to new vehicle
     data up to two years in
     advance.
   – Systematically improved the
     quality of the licensed
     merchandise.
                                    ®
         CHEVROLET RESULTS
  Corvette Tournament Ski Boat:
  EMI executed a “Corvette on the
  Water”




                                    Corvette
                                    Fragrance
Over 50 articles on the
“Wet „Vette” appeared in
newspapers, automotive,
boating, and specialty                          Corvette
magazines                                         Vacuum
       BRAND LICENSING
          SUMMARY
  The ultimate objective for a brand licensing
  program should be to represent the clients‟
    brand for the purpose of enhancing or
  extending its brand image, generating new
revenue and protecting the intellectual property
                    assets.
EQUITY MANAGEMENT INC.

								
To top