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Definition: Licensing

Licensing is a generic term and in a marketing connotation involves profitable growth of a company by instantly tapping its entire stream of production and offering a small percentage of sales in return. In this way, the cost of R&D and other costs are significantly reduces.

It is a form of collusion for generating better revenues between licensor and a licensee.

Eg: A chocolate shop ABC can have an outlet where it advertises and markets its own product and to add to its business also, sells chocolates from CDF brand. Here, ABC has tapped the production lines etc of the CDF Company and in return offers a small percentage of the sales.

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