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What do Coca-Cola, Disney, and McDonalds really gain by licensing their very valuable trademarks into products such as glassware, tee shirts and beach towels? What are their key licensing objectives?
Royalty revenue is often a primary focus, but it is not always the most important objective for these licensors. For example, Coca-Cola has over 300 licensees who sell over $ 1 billion of licensed products each year. It is estimated that Coca-Cola generates over $ 70 million in royalty revenue and billions of incremental impressions from licensed products.
For Coca-cola and other licensors, the marketing benefits far exceed the royalty revenue generated by licensed products. These marketing benefits include:
- Advertising and promotion. The licensed mark or brand benefits from the advertising and promotional support by the licensee.
- Image enhancement. Licensed products can be an excellent strategy to enhance and reinforce brand equity.
- Increased exposure. Increased exposure can help improve top-of-mind awareness, a cornerstone developing consumer preference and a strong brand.
Licensors should be careful in the selection of product categories and licensees, especially for products that lack differentiation and are very price sensitive.
Licensing Drivers
Licensing Process
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