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Licensing Clinic: How to Find and Qualify New Licensees

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                                                                                 UPCOMING EVENTS
                                                                                                     Hong Kong International Licensing Show
How to find and qualify new licensing opportunities                                                                     1/7-9
                                                                                                 Hong Kong Convention & Exhibition Centre - Wanchai HK
                                                                                                          www.hktdc.com/hklicensingshow
By David Harkins
Associate Director, Retail Business Development                                                  LIMA China Networking Cocktail Reception
Boy Scouts of America                                                                                                    1/7
                                                                                                       Hong Kong Convention & Exhibition Centre
  One of the biggest challenges for licen-       prospects.                                             www.licensing.org/events/view/971/
sors is to keep the opportunity pipeline full.     With these assumptions in mind, you can
Regardless of the size of the licensing pro-     begin developing or refining the process to
gram, finding and qualifying prospective li-     grow your licensing program.                     International Consumer Electronics Show (CES)
censees can be a challenge. Some licensors                                                                             1/8-11
need more opportunities to explore, while        Finding prospective licensees
other licensors have the opportunities but          Prospective licensees fall into two               Las Vegas Convention Center - Las Vegas, NV
don’t have an effective qualification pro-       camps: Those who know and see value in                           www.cesweb.org
cess.                                            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 Show
challenges. To overcome them, a licensor         to pitch new ideas, but it’s the latter that                          1/17-19
might 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.com
Key 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-                            www.nyigf.com
        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, Germany
licensed property and knowing the catego-                line extensions; or                                       www.toyfair.de
ries 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 International
value to a prospective licensee.                 Environmental Scanning purposes include                               2/3-2/7
   For example, you may have a top brand         LIMA, licensing trade publications and
in one category, but your brand might not        other marketing and business publications.                NEC Birmingham - Birmingham UK
bring significant or even incremental value      It’s important to note that Environmental                       www.springfair.com
to 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 2013
probably 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                          2/10-13
or number three player. This will be a key       an opportunity does indeed exist and how           Jacob K. Javits Convention Center, New York, NY
factor in targeting and qualifying licensing                          Please turn to page 7                    www.toyassociation.org
                                                                                                       www.licensing.org
  6
Licensing Clinic CONTINUED FROM PAGE6
you might leverage your licensed properties      place, the market need for the product, the
into 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 will
licensee needs regular communication to          quickly spot those proposals that are likely
keep your brand top-of-mind for the time         to fall short of expected performance if a
when the opportunity does present itself,        deal is completed.
and the licensor’s sales and business devel-        A prospective licensee who scores well
opment team steps forward to qualify and         in all of these review categories is clearly a
close 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 good
prospective 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 not
spective licensees will look good on the         process. This approach also helps to make
surface 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 growing
pectations 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 comes
tion 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 from
The 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 finance
or legal experts for some areas of review.
                                                   LIMA Wishes Everyone a
Does the market need this?
   The market need or opportunity for the           Joyous Holiday Season,
proposed licensed products is obviously            and a Happy and Healthy
critical in the licensor’s decision process. A
licensor should also evaluate the prospec-                New Year
tive licensee’s understanding of the market-

                                                                                                      www.licensing.org
  7

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Licensing Clinic: How to Find and Qualify New Licensees

  • 1. Licensing Clinic UPCOMING EVENTS Hong Kong International Licensing Show How to find and qualify new licensing opportunities 1/7-9 Hong Kong Convention & Exhibition Centre - Wanchai HK www.hktdc.com/hklicensingshow By David Harkins Associate Director, Retail Business Development LIMA China Networking Cocktail Reception Boy Scouts of America 1/7 Hong Kong Convention & Exhibition Centre One of the biggest challenges for licen- prospects. www.licensing.org/events/view/971/ sors is to keep the opportunity pipeline full. With these assumptions in mind, you can Regardless of the size of the licensing pro- begin developing or refining the process to gram, finding and qualifying prospective li- grow your licensing program. International Consumer Electronics Show (CES) censees can be a challenge. Some licensors 1/8-11 need more opportunities to explore, while Finding prospective licensees other licensors have the opportunities but Prospective licensees fall into two Las Vegas Convention Center - Las Vegas, NV don’t have an effective qualification pro- camps: Those who know and see value in www.cesweb.org cess. 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 Show challenges. To overcome them, a licensor to pitch new ideas, but it’s the latter that 1/17-19 might 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.com Key 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- www.nyigf.com 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, Germany licensed property and knowing the catego- line extensions; or www.toyfair.de ries 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 International value to a prospective licensee. Environmental Scanning purposes include 2/3-2/7 For example, you may have a top brand LIMA, licensing trade publications and in one category, but your brand might not other marketing and business publications. NEC Birmingham - Birmingham UK bring significant or even incremental value It’s important to note that Environmental www.springfair.com to 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 2013 probably 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 2/10-13 or number three player. This will be a key an opportunity does indeed exist and how Jacob K. Javits Convention Center, New York, NY factor in targeting and qualifying licensing Please turn to page 7 www.toyassociation.org www.licensing.org 6
  • 2. Licensing Clinic CONTINUED FROM PAGE6 you might leverage your licensed properties place, the market need for the product, the into 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 will licensee needs regular communication to quickly spot those proposals that are likely keep your brand top-of-mind for the time to fall short of expected performance if a when the opportunity does present itself, deal is completed. and the licensor’s sales and business devel- A prospective licensee who scores well opment team steps forward to qualify and in all of these review categories is clearly a close 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 good prospective 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 not spective licensees will look good on the process. This approach also helps to make surface 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 growing pectations 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 comes tion 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 from The 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 finance or legal experts for some areas of review. LIMA Wishes Everyone a Does the market need this? The market need or opportunity for the Joyous Holiday Season, proposed licensed products is obviously and a Happy and Healthy critical in the licensor’s decision process. A licensor should also evaluate the prospec- New Year tive licensee’s understanding of the market- www.licensing.org 7