Licensing Marketing

During the past two decades many enterprises have entrusted their brands to other enterprises for their products without brand names on the basis of licensing agreements. Usually in return for payment as well as for advertising and promotions monies.

Cigarette brands suddenly showed up on sports jackets, fashion brands on upholstery, car brands on leather purses and so on. This was called licensing marketing.

This was at first rather, in some cases even extraordinarily, successful. For all involved. Licensing marketing offered the possibility to broaden the relationship to familiar brands and consumers accepted the brands they had come to value, in these new product segments. Licensing marketing offered a variety of advantages to the brand owner. Aside from revenue which could be used for the expansion of brand awareness, licensing marketing was used for fortification of the trademark protection and a stronger presence on the store shelves. The use of a well-known brand rendered a faster market penetration possible. It created trust, strengthened net added value and saved money due to the development of brands being time-consuming, expensive and of course high-risk, at all times.

Where there is light, there could also be a lot of tall shadows. And that is how it went in licensing marketing.

First of all, participants had to find out that the life of a brand was not contractually adjustable to licensing. Maybe in theory but not practically. Brands cannot be pinned down contractually, just as people who, subjected to strict regulations, could no longer live and breathe freely.

And then the problem arose that brand custodians often have very different ideas regarding development of brands entrusted to them. Suddenly they realized that a certain red is not the same to everyone, that layouts and fonts could be viewed very differently. And how great an impact distribution and point-of-sale could make; positively as well as negatively, only licensing marketing was able to show to the full extent.

This is how it began that brands started to suffer from the multi- and plural utilization and it happened as it had to: the radiance and success of licensed brands began to dwindle. The crisis of licensing marketing began to spread. That first of all weak brands or those who in principle could not even really be considered brands fell victim to this trend is obvious.

Even though licensing marketing is going to retain a permanent space in the marketing of consumer goods, it remains stuck in a deep crisis. Even the few cases where licensing marketing is really successful cannot hide this fact.


The Image Transfer

Next to licensing marketing, practically parallel image transfer celebrated it biggest success. Especially through use of celebrities who gave a product character through their name.

The image people had of a celebrity transferred to the product. At least, that was the goal in most cases. Especially sports idols, but also actors and artists in general, authors and other extraordinarily successful persons were used for image transfer.
The list of products and celebrities is long: from spinach to shampoo, sweets, soft drinks and cars, from Verena Feldbusch, Heidi Klum, Britney Spears all the way to Robbie Williams, just to name a few. Often, stories were being created which were used to make the fantasy of the consumer accessible. The famous ‘Mozartkugel’, a marzipan praline, which has no more in common with Mozart then the same native city, is one example for this.

The heyday of image transfers has passed, too. Wherever image transfer was not being used brand specific, it suffered. Today, in some cases there could still be the possibility of a sales promotion.


Brand Diffusion

The future seems to belong to brand diffusion, because brand diffusion is a strongly controlled conceptual design for the application which is solely founded in its brand personality.

Prerequisite is first of all that a strong, independent brand personality is in the center which includes the classic and as we consider the only true criteria which turn a name or an idea into a brand: aside from the 7-elements-definition, as we call it. In other words, we speak of brands which possess origin, history, profile, positioning, image, awareness and protection and have a notable aura and mysticism. One could also say that only through and through real brands are good for brand diffusion.

A second important criterion of brand diffusion is determination of a defined space where it can take place. A fashion brand which conforms to the previously mentioned criteria is not going to be responsible for a mineral water and a car brand is not going to be responsible for a t-shirt. However, brand diffusion is possible where today’s concept of fashion as a whole is being understood, that is to say, whatever serves to emphasize the personality of a person. The same goes for food and drinks, for the large field of education and knowledge, for all spheres within life culture.

Successful brand diffusion does not thrive on the thicket of paragraphs of a licensing contract, but of the good intentions of the business partners, within the scope of strategic alliances to work and live together for, and along with, a brand. In a process where give and take govern the relationship to the brand.

The contractual basis allows for a flexible and quick action, wherever required. The adjustment to often quickly changing market circumstances, the return on brand value instead of any licensing fees whatsoever, the meaningful design of market investments and marketing disbursements, new coordination mechanisms in regards to marketing appropriate distribution concepts, the protection of well-being of the brand, the care of market positioning, the compliance of corporate identity and communications regulations functioning in partnership, planning as well as implementation procedures without avoidable time and monetary expenditure and, last but not least, ambitious objectives which, in regards to content, define brand diffusion and which give meaning to the principles of strategic alliances. We call this code where all of this is consolidated: The Canoe Principle©.

For many years we have dealt with the diversification of the basis of impact of brands. Today and in the future, brand diffusion and the strategic alliances built for them are the most promising means to be at the forefront of a branch. Last but not least, this is why brand diffusion is advancing quickly, while the conventional licensing marketing and the image transfer are caught in a crisis that they might not necessarily survive.

To lead a brand is an art, especially if under one roof there are several, if not many, businesses partaking in the brand achievement and working on the attainment.

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