Licensing Clinic: How to Find and Qualify New Licensees


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From December 2012 BottomLine, Licensing Industry Publication

One of the biggest challenges for licensors is to keep the opportunity pipeline full. Regardless of the size of the licensing program, finding and qualifying prospective licensees can be a challenge. Some licensors need more opportunities to explore, while other licensors have the opportunities but don’t have an effective qualification process.

This article explores how to identify and qualify new opportunities.

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Licensing Clinic: How to Find and Qualify New Licensees

  1. 1. Licensing Clinic UPCOMING EVENTS Hong Kong International Licensing ShowHow to find and qualify new licensing opportunities 1/7-9 Hong Kong Convention & Exhibition Centre - Wanchai HK David HarkinsAssociate Director, Retail Business Development LIMA China Networking Cocktail ReceptionBoy Scouts of America 1/7 Hong Kong Convention & Exhibition Centre One of the biggest challenges for licen- prospects. is to keep the opportunity pipeline full. With these assumptions in mind, you canRegardless of the size of the licensing pro- begin developing or refining the process togram, finding and qualifying prospective li- grow your licensing program. International Consumer Electronics Show (CES)censees can be a challenge. Some licensors 1/8-11need more opportunities to explore, while Finding prospective licenseesother licensors have the opportunities but Prospective licensees fall into two Las Vegas Convention Center - Las Vegas, NVdon’t have an effective qualification pro- camps: Those who know and see value in www.cesweb.orgcess. your brand, and those who don’t. It’s likely Unfortunately, some licensors have both the former are already knocking at the door Sports Licensing and Tailgate Showchallenges. To overcome them, a licensor to pitch new ideas, but it’s the latter that 1/17-19might consider the following sales and pose the biggest challenge for most licen-business development techniques. sors. Las Vegas Convention Center - Las Vegas, NV The best way to identify possible new op- http://showproco.comKey assumptions portunities is through Environmental Scan- Let’s start with three key assumptions: ning—essentially careful monitoring of New York International Gift Fair • You have a strategy for each of your the marketplace—for new licensing deals 1/26-30 licensed properties; in your target product categories. You can • You’ve identified the product cat- also identify potential opportunities by not- Jacob K. Javits Convention Center and Passenger Ship egories that align to your core brand ing specific changes at companies within Terminal Piers - New York, NY message and best support your li- those target categories, which might in- censing growth goals; and clude: • You have a realistic understanding of • Changes in licensing, marketing, or the value of your brand and licensed other senior leaders; International Toy Fair Nuremberg properties. • A shift in organizational strategy, 1/30-2/4 While having a defined strategy for each new product line development or Nuremberg Exhibition Center - Nuremberg, Germanylicensed property and knowing the catego- line extensions; or www.toyfair.deries which each property fits best is a great • Expanding markets—either demo-starting point, you also need to have a real- graphic or geographic.istic expectation of your licensed property’s Great sources of such information for Spring Fair Internationalvalue to a prospective licensee. Environmental Scanning purposes include 2/3-2/7 For example, you may have a top brand LIMA, licensing trade publications andin one category, but your brand might not other marketing and business publications. NEC Birmingham - Birmingham UKbring significant or even incremental value It’s important to note that Environmental www.springfair.comto the market leader in another category Scanning typically provides advance indica-that you’re targeting; therefore, your brand tors of possible opportunities, not those op- Toy Fair 2013probably has less value for that category portunities that already are clearly defined.leader than it would for the number two You’ll have to work a little to determine if 2/10-13or number three player. This will be a key an opportunity does indeed exist and how Jacob K. Javits Convention Center, New York, NYfactor in targeting and qualifying licensing Please turn to page 7 6
  2. 2. Licensing Clinic CONTINUED FROM PAGE6you might leverage your licensed properties place, the market need for the product, theinto the mix. strength of the product development and When a prospect is identified, it’s impor- launch plan, and the company’s commit-tant to create an ongoing marketing and ment to market the licensed product.sales program to keep connected. Like any These review steps are somewhat sub-type of marketing program, a prospective jective, yet an experienced licensor willlicensee needs regular communication to quickly spot those proposals that are likelykeep your brand top-of-mind for the time to fall short of expected performance if awhen the opportunity does present itself, deal is completed.and the licensor’s sales and business devel- A prospective licensee who scores wellopment team steps forward to qualify and in all of these review categories is clearly aclose the opportunity. catch. Those who don’t may still be a good match for a licensor; it depends on the tol-Qualifying new opportunities erance level for imperfect feedback in one Regardless of the source, once you’ve or more of the review categories.identified what you believe to be a goodprospective licensee, it’s important to have Some licensors develop a rubric or score- card for evaluating prospective licensees, “Keep in mind the best oppor-objective criteria in place to help you evalu-ate fit with your brand. The majority of pro- and their tolerance for variances in the review categories is built into the scoring tunities for a licensor are notspective licensees will look good on the process. This approach also helps to makesurface and will be reputable, but a deeper the review process a little more objective. those that are readily apparent;dive will give you a clearer picture of how The biggest challenge in finding and qual-well the company, its products, and its busi-ness practices align with the values and ex- ifying new licensing opportunities has more to do with the lack of structured, formalized greater success in growingpectations of your company. The first step in collecting the informa- processes for achieving these goals. Keep in mind the best opportunities for a licensing opportunities comestion you need to further qualify a prospec-tive licensee is via a licensing application. licensor are not those that are readily ap- parent; greater success in growing licens- not from ‘what is,’ but fromThe qualification process should include a ing opportunities comes not from “what is,”review of objective matters such as: but from “what can be.” A defined process ‘what can be.’” • the applicant’s financial solvency, for identifying and qualifying opportunities possible legal issues (including prod- will help you find “what can be” much more uct recalls, infringements, social- quickly. and/or labor-related matters); • experience in developing and David Harkins is Associate Director, launching similar products in the Retail Business Development for the Boy marketplace; Scouts of America (BSA) National Coun- • experience working with other licen- cil. In addition to overseeing the licensing sors: and program, his latest projects include appli- • reputation in their distribution chan- cations of mobile technologies in customer- nels for meeting demand. focused retail and electronic publishing. A licensor may need advice from financeor legal experts for some areas of review. LIMA Wishes Everyone aDoes the market need this? The market need or opportunity for the Joyous Holiday Season,proposed licensed products is obviously and a Happy and Healthycritical in the licensor’s decision process. Alicensor should also evaluate the prospec- New Yeartive licensee’s understanding of the market- 7