FLOURISH IN THE FUTURE
by Jim Sachs, partner at Harris-Sachs, LLC Licensing
Tips for succeeding in today's economic environment
The past four years in the licensing business have been challenging, to say the least. Economic events both abroad and at home have affected our economy and left everyone-retailers, licensors, and licensees- wondering what the future will bring and how to address it. Froma licensing consultant's perspective, the key to flourishing in this environment requires a macro view of the retail environment, a micro view of licensing as it relates to retail, and its specific applications. So, how do we achieve success?
First, knowing the target market and its customer is paramount for any manufacturer and licensor. Understanding what motivates the retailer is indispensable knowledgewhen it comes to licensed products. There is a finite amount of shelf space out there, and all of us are vying for a piece of it. So, if you're in the business of selling and buying licenses, and ultimately putting the right products onto the shelves with some assurance of success, what do you do?
To start, you need a working knowledge of retail. It is also important to understand marketing and to have a vision when it comes to matching property and product. Finally-and I don't know if you can learn this-you have to market creatively. I don't mean coming up with a new widget and applying a license to it. I mean taking a licensed product and reconfiguring it to appeal to new markets and channels of distribution.
In this business atmosphere, money is tight and there is little room for failure. The vetting process for licenses has becomemuchmore introspective and complicated, so it takesmuch longer for themanufacturer to make a decision. Once the decision is made, the deal is done, and the goal is clear, you need to get to market and sell something. In the past, the entiremarketing and sales effort fell exclusively on the licensee's shoulders. Now, as a result of the new economy, we are guiding our clients to utilize all available resources their new licensing partners have to offer.
These days, the combined power of both the licensor and licensee is required to drive a successful licensing venture. I always ask a prospective licensor how theywill support andworkwith our clients.Most of the time, they say the company has a general marketing fund into which all licensees pay. Unlike with retailers, who pay for co-op advertising or promotion, there is no proof of performance, and whatever promotional activity takes place supports the licensees collectively. So, the licensor needs to actively help and cooperate with the licensee. Our client, the manufacturer, is the customer. They are buying the rights to an intellectual property and are entrusted with maintaining and growing its core value and integrity. Subsequently, everyone needs to be on board to help the common cause. To affect success, work with your licensing partner to connect with other licensees and develop cross-promotional opportunities.
Learn how your fellow licensees market the property and learn from their insights. Ask your licensing partners, as many of them present on behalf of their licensees. Tie into national promotions, public relations, and events the licensor may be running. Ask your licensing partner tomake a database of customers available to you so you can send email blasts. There is strength in numbers, and having as many allies as possible is key.
This very competitive atmosphere will result in better educated players, more creative thinking, and a necessity for teamwork. How open we are to change and how quickly we can adapt are the decisive factors between moving ahead and getting left behind.
Jim Sachs has 30 years of licensing business experience and served as vice president of sales, marketing, and licensing at Chein Industries. He spent the past 10 years in partnership with Steve Harris at Harris-Sachs, LLC Licensing.