Corporate Corner
Michelle Alfandari, president and founder, MODA International Marketing
July/August 2008 — The Licensing Book
In the first edition of The Licensing Book’s new monthly feature Corporate Corner, we asked Michelle Alfandari, President and founder of MODA International marketing, to give her tips on corporate brand marketing. She should know: with a stable of brands including The New York Times, LYCRA, The National Trust for Historic Preservation and Le Tour de France, she’s got the know-how to push brands in today’s tough times.
By MICHELLE ALFANDARI
I am delighted to be inaugurating the corporate corner column for The Licensing Book and even more so at such a propitious moment of economic downturn (in the U.S.) and volatile marketplace and economies (just about everywhere globally). These are the conditions that are ripe for corporations to leverage their existing intangible assets (INTELLECTUAL PROPERTY such as brands, trademarks, slogans, patent, technology, know-how, etc.) through licensing to deliver a ROI like no other business model can. After all, it is a well known fact that licensing can be very profitable for licensees and licensors who can fast-track market entry at relatively lower costs than other business models.
Nothing is static however and in today’s global and quick turning marketplace what retailers, licensors and licensees need to reap the benefits of licensing is an approach that is not the usual standard operating procedure. It is necessary to consciously avoid the “ground-hog day” approach and take a “New Day/New Way” approach to licensing that blurs the lines of branding, marketing, sponsorships and cause marketing, and even look to competitors as possible partners (co-opetition). What I am proposing is to approach licensing as a strategic alliance model for business development that is firmly rooted in intellectual property but incorporates a menu of both tangible and intangible added-value assets that can fast-track end-results.
We start with the following fundamentals:
- Licensing as a BUSINESS MODEL: Brand licensing leverages intellectual property to reach short-term and long-term corporate objectives and goals. Since 1988 when MODA was established, it viewed licensing as an option to be considered and evaluated along with joint ventures, mergers, acquisitions, divestitures and organic growth when determining the best approach to achieving business objectives. We have been beating this drum for 20 years impressing our clients with the power of licensing beyond its impact as a ‘marketing’ tool for brand building.
- Valuation of INTELLECTUAL PROPERTY: The brand is generally considered the key component of a brand license, but is rarely the sole equity delivered to a licensee or retailer. An experienced licensing agency will conduct a ‘brand immersion’ that is a brand equity and corporate asset audit to assess the overall value of a brand license. Not all ‘assets’ are of commercial value thus a short list of “license-able equity” will be developed that may include technology, ingredients, know-how, R&D, marketing, advertising, distribution channels, sales force, sponsorships, membership, mailing lists, good will, etc. in addition to the brand.
- LICENSING/STRATEGIC ALLIANCE: We view a license agreement as a strategic alliance predicated on the give and take of intellectual property and relevant core competencies between licensor and licensee that will achieve greater results than other means.
New Day/New Way thinking broadens the approach to licensing but relies on a strong foundation of BASICS for successful Intellectual Property licensing, such as:
- Top-down Corporate support of licensing as a business development model
- Dedicated internal (decision-maker) licensing director
- Appoint a licensing agency with experience that: �
- Respects the corporate culture but brings complementary and new thinking to licensor. (Don’t hire a mirror image of yourself. In that case, you may as well hire an internal licensing professional. If you are big and bureaucratic, hire a small and nimble company that understands/respects your culture but will deliver innovative thinking and solutions).
- Has proven methodology for a holistic approach to ascertain value of intellectual property for licensing, including brand equity and corporate asset audit
- Conducts risk/benefit analysis
- Has a Keen understanding of marketplace, challenges and opportunities
- Has the Know-how to develop a strategy to meet business and corporate objectives (and protect Trademark/Brand and core business)
- Has ability to execute strategy
- Has Resources to manage and nurture licensing business
- Has a Track record of success.
- Articulates licensing objectives and metrics for success
NEW DAY/NEW WAY
At MODA we say remember what you know and then forget it! What we mean is that if we rely on yesterday’s success and practices, then we have stopped growing. If we rely on today’s data, we cannot ensure successful brand business in 5 or 10 years from now. It is critical to have a baseline, and equally critical to have a visionary outlook and willingness to take calculated risks. I am not cavalier in advocating NEW DAY/NEW WAY thinking and certainly feel that best practices must be considered but should not dictate.
The basic tenets of New Day/New Way as applied to licensor, licensee and retailer are: What is the end game and is this brand/partner (Licensor) or Vendor, Manufacturer, Retailer (Licensee) the best way to get me there? Brand/partner is combined because they should be inextricable. Long gone are the days of a licensor simply licensing its brand and getting a royalty. Today, licensing is a strategic alliance that marries intellectual property with other added-value benefits both parties can deliver to mutual benefit. The brand/partner must deliver equity that is ‘relevant’ to the consumer and beneficial to the licensee thus delivering a return on investment to licensor and licensee. While MODA represents the LICENSOR, we must ensure that the licensee is well served or the business partnership will be short-lived. These are our five dictates:
- It’s not just about the Brand! Oftentimes a retailer or licensee has a brand awareness metric that must be met before being considered. Brand awareness should no longer be the sole criteria for licensing. We have seen great results when retailers like Lowe’s and vendors like Valspar Paint and Empire Moulding use the National Trust for Historic Preservation brand for historic paint colors and decorative mouldings. In this case, the National Trust “brand” could not be tested by the same “brand awareness metrics” of a consumer brand, yet, it deliveres authenticity, relevance, an emotional connection with the consumer and reason to buy; while at the same time, providing differentiation for the retailer.
- Blur the lines of sponsor, cause marketing with licensing: Many companies and non-profits strictly delineate the lines between what is licensing and what is cause marketing or sponsorship. In many cases the lines are clearly drawn but need not be and in all cases they are a form of strategic alliance. Once you accept that licensing is a strategic alliance you can begin to gain a greater mutual benefit to traditional licensing or sponsorship deals.
- Leverage core competencies in addition to the brand: For example, Le Tour de France is the iconic globally recognized bicycle event. The brand logically extends to bicycles, accessories and gear. The owner of the Tour de France event and brand is an event company. Clearly, a high profile retailer event run by and branded the Tour de France combined with branded merchandise delivers a unique and enjoyable consumer retail and purchasing experience. This is certainly a winning proposition for all parties.
- Connect the dots of licensor with R&D, know-how, ingredient, etc.. For example, LYCRA® is a textile “ingredient” as well as a fashion and lifestyle brand. INVISTA (brand owner) wanted to extend the LYCRA® brand into complementary fashion products without interfering with its core textiles/apparel business. MODA developed and executed a strategy that brought LYCRA® to cosmetics (fashion related / no textiles). While the branding was enough inasmuch as LYCRA® communicated special function and performance of certain cosmetics, INVISTA was able to add-value to this proposition with a form of LYCRA® that could be incorporated into the formula as an ingredient to nail enamel that actually enhanced product performance. The end result was a licensed brand + ingredient that not only substantiated product performance but actually enhanced it (long-lasting, durable, maintains shape, flexible).
- License with your competitor, Co-opetition: This has been going on for a long time in technology licensing but has not been used as much in brand licensing. Years ago, for example, P&G decided that a valuable juice formula it had developed would deliver greater return on investment if licensed to competitor Tropicana rather than keeping it exclusively for its own Sunny Delight. The license fees generated went back to R&D where they were used for more research and development. This same thinking can be applied to co-branding.
The advantage of licensing over other strategic alliances, is that the Licensor is relying on the expertise of the licensee to mitigate risk and fast-track market entry into new geographies, products, services or channels of distribution (amongst other objectives) while allowing the licensor to keep a focus on its core business. Taking a more holistic approach does not stress the resources of the licensor but effectively leverages existing assets.
There are 2 schools of thinking with respect to difficult market conditions. One is to hold on to what you have and stick with business as usual; the other is to seize the opportunity.
CARPE DIEM!
Reprinted with permission of the publisher. The Licensing Book, July/August 2008 issue, Adventure Publishing Group and Total Licensing Ltd.
