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1. What does the word LICENSING mean?
2. What is involved in LICENSING?
3. How can LICENSING boost business?
4. How does LICENSING work ?
5. What factors are taken into account when planning a new license or evaluating an existing one?
6. How big is the LICENSING industry?
7. What sectors of activity best lend themselves to licensing of properties?
1.- What does the word LICENSING mean?
LICENSING is the process by which the use of a particular type
of legally protected property is leased. Generally the property
in question is a commercial trademark or intellectual property
right. This can be a name, a logo, a graphic image, a form, a
signature, a character, or a combination of several of these
elements together with a product or line of products. A property
of this type can also be licensed for specific actions such as
promotions or to publicise services.
The starting point for licensing activity is the LICENSING
AGREEMENT between two parties: the owner of the right
(signature, logo, etc.), also known as the licensor, and the
licensee, the party that develops and/or markets the products.
Naturally, specific terms and conditions will apply, for
instance, a specific purpose, a defined geographical area or a
time limit for the agreement.
In exchange for the use of the property, the owner of the
license is paid an agreed fee, known as a ROYALTY. The royalty
is set as a percentage of sales for the products that are the
subject matter of the license.
A LICENSE is a contractual authorisation to use a trademark in
association with a defined product for specific period of time
and in a particular geographical area.
2.- What is involved in LICENSING?
Licensing is a marketing tool that generates recognition and
awareness of a trademark while reinforcing its image,
particularly at the retail level. Licensing allows licensed
product manufacturers to use a trade name or trademark that has
been established in the market for a number of years and take
advantage of the identity linked to the trademark to create a
set of immediate expectations.
In short, there are three main elements involved in licensing:
the owner of the trademark or image, the licensee, and the
royalty that the licensee pays to the owner of the right.
3.- How can LICENSING boost business?
LICENSING – the granting of licenses for commercial trademarks
as a way of doing business – has been around for many years, and
recently the number of licensed products and trade names on the
market has increased dramatically.
LICENSING can generate a number of benefits for your business
by:
• EXPANDING your product portfolio
• STIMULATING the flow of revenue
• INCREASING global recognition and the value of the trademark
• PROVIDING partners in the retail sector and value-promoting
activities
• FOCUSING the trademark on target consumers.
4.- How does LICENSING work?
Licensing opens up opportunities to differentiate products and
provides a direct line to the preferences of consumers. This is
particularly apparent in the audiovisual sector, where cartoon
characters have been turned into products and fashion chains, as
well as finding their way into supports and products that
include everything from stationery to home decorations.
In supermarkets, aisles are brightened by licenses linked to
promotional products, and trademark products such as cereals
have achieved notable success.
In specialised retail shops, we find high-priced collectible
items and designer products that use classic icons to strike a
balance between the classic touch and design or modernity.
5.- What factors are taken into account when planning a new license or evaluating an existing one?
There are four basic factors that need to be taken into account
when evaluating an existing license or assessing the possibility
of launching a new one on the market:
- Positioning of the trademark or property: This is the most
significant factor in determining the success of a trademark and
one that will motivate potential licensees to invest in it.
- End consumers: The trademark or property must succeed in
attracting the attention of end consumers.
- Distribution: The distribution of licensed products is a key
consideration. Points of sale provide trademarks with access to
consumers.
- Publicity-promotion: Investment in this area is vital to
increase awareness of the trademark and ensure a successful
licensing programme.
6.- How big is the LICENSING industry?
In 2004 turnover for the licensing industry in the retail sector
was 34 billion euros (in Europe alone) and nearly 6 billion
euros in royalties was generated.
These figures give some idea of the significance of the sector
and the volume of business generated as a direct result of
licensing. It also points to the prospects that lie ahead in the
immediate future for the economy as a whole.
7.- What sectors of activity best lend themselves to licensing of properties?
• Television and films:
television programmes or series, films, etc.
• Sports:
specific clubs or championships
• Events:
sports and musical events, prizes, special dates
• Art and design:
painters, architects, writers, designers, photographers
• Drinks and food products:
promotions in the food sector, promotional packs, product lines
• Personalities:
individuals (dead or alive) from any field of sport, music or
science
• Institutional:
museums, art galleries, tourist attractions, charitable
organisations, cities or geographical areas
• Corporate trademarks:
corporations or organisations
• Music:
individual artists, groups, discotheques, nightclubs
• Fashion trademarks:
fashion trademarks or designers
• Magazines:
Specialised, scientific or society magazines
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