Benefits of Licensing
Licensing refers to granting permission for the use of intellectual property rights like patents, technology or trademarks under specific defined conditions. Many businesses are now using licensing like a marketing tool. If properly executed, a good licensing relationship provides advantages to the people involved in the deal. The following are key benefits of licensing.
1. Provides control
Licensing symbolizes a great avenue for designers and artists to get profits from their efforts, while still controlling how their creations are used. For international brands, registering and licensing brands in different markets helps to prevent unauthorized use of their brands.
2. Marketing opportunities
An exhibition of clothing or toys in a store tied to an interesting film assists in promoting the movie itself. When sports enthusiasts wear shirts that have their favorite team’s logo, they might be showing their respect for their team and also promoting the game to all people who look at the shirts. Licensing therefore provides sufficient support to the brand’s general marketing efforts.
3. Extending brands to new markets
Licensing is one of the methods used for moving a brand to new markets without the need to make huge investments in new production process, facilities or machinery. A good example is when a popular brand of building materials licensed to areas like providing work boots or work gloves. Another example is where a beauty products brand extends to the production of new vitamin supplements that promote skin health.
4. Enhances credibility
An individual concerned with car-racing videogames may license various popular automotive brands as well as other car models for lending authenticity and legitimacy to their game. Likewise, a producer of vehicle accessories and other car parts usually licenses with a certain car brand so as to inform the consumers that its merchandises will seamlessly work with any automobiles of the main brand.
In some cases, the licensor relies on the abilities, resources and skills of the licensee like a revenue source and thus the licensor may not get any royalty revenue.