Licensing in India is an under explored business opportunity. For licensees, licensing facilitates generation of additional business from non competing product categories in most cases, and yet at lower incremental costs. Especially for licensors it enables an easy entry into retail formats, or at times even helps in creating new retail channels leveraging its intellectual property.
However there are a number of challenges inherent to any licensing business. One of the foremost strategic insights is identification of a right brand or license possessing emotional connect with the target consumers. Merchandise licensing ought to tell a story from design to distribution and finally retail experiences to match the core proposition of the intellectual property. Licensors must partner with Licensee in creating compelling products that generate a wow effect and not just extend IP rights.
Licensing is not a risk free business. From the Licensee perspective, factors like royalty percentages, minimum guarantee, support from licensor, design and manufacturing approval procedures, exclusivity clause, payment terms etc can determine the success of a licensing venture.
While introducing products at higher price point, consumers may get pricing shock initially and may not buy. However, if product values are strong, consumer will eventually buy the same in the course e of time. Hence Licensing partnership must look minutely into value price equation as against merely offering cheap products. In Indian context, parents are willing to stretch money for their kids’ happiness.
There are few other concerns that Licensee typically face. One, they work on promotion of a licensed character which may later be enjoyed others in the long run. If the merchandise is imported, one should look into the global uncertainty, financial implications and so on. Success of retail off-take of licensed products is also subject to popularity of the IP at time of launch and media coverage of the same.
For licensees, the cost structures involved in operating licensing as a complimentary business, far out weighs stand-alone licensing business models. From domain knowledge in manufacturing or sourcing to placing the product across retail channels and servicing the same; licensing integrated with complimentary business delivers favorable return on investment. In Indian context, Portico New York a premium bed & bath brand had envisaged a big gap in the kids bed linen segment. Hence it had gone ahead and forged licensing deals with Disney, Cartoon network, Nick, Mattel & Marvel long before other players in the category. Today it’s portfolio is complimented with kids bed linen and is significant contributor to it business.
With the advent of modern retail formats and family entertainment on the rise, licensing it set to witness exciting times. Attractive visual merchandising, coupled with best staff training is paramount in giving the final push to the licensing story.
