The Benefits of Brand Licensing for Your Profits.
When you have a highly successful product, it may be tempting to expand to global markets. While this presents an opportunity to increase profits, it can also lead to a decline in business if foreign markets are not as receptive as local ones. Brand licensing is one way to counter this issue.
Unlike other options, where extensive research is necessary to establish the right approach, brand licensing eliminates the need for this. With this option, you give another person the right to use your product in a different location for a specified period. Of course, this is done under strict contractual agreements.
If the venture is successful, you can extend the agreed-upon period with the licensee if they agree. You can also take back your property rights and continue marketing on your own. This is advantageous because you will have already received remuneration under the original contract.
Aside from what you will gain in return, brand licensing also shields you from losses in case the venture fails. Losses usually arise from amounts spent on marketing ventures, employing staff, and establishing production and storage centers. Furthermore, you will still receive the basic amount for awarding the license.
Before taking this option, you should realize that there are different kinds of brand licensing available. Your choice should be made only after consulting with legal experts from the country you are targeting. You should also consider local laws in your country before entering the agreement. Remember, any mistake you make can lead to grave financial consequences.
When seeking to take advantage of this option, keep certain issues in mind. For instance, how do you value your product? Many people use financial data, while others try to copy arrangements made for similar products. However, some products have created so much loyalty among customers that with every new launch, more customers will trust the new product. Such products obviously have a higher value than those that are readily recognizable but do not inspire loyalty.
Apart from extending your already established products, it is also possible to license a different product that is closely associated with yours. For instance, you can add a car product to a brand name normally associated with vehicles. As the owner, you will still benefit from the loyalty payments, while your licensee will be able to test the market while enjoying the protection of the established product name.
Brand licensing presents many advantages to both the owner and the licensee. However, it is important to note that most licensees present the best-case scenario in a bid to get the license. This means that all projections may not be met in all cases. Additionally, some fail to understand that their product will have to meet your standards and not just use your logo.