Published by MBA Skool Team, Last Updated: October 27, 2014
What is Brand Licensing?
A licensing agreement allows a company (a licensee) which markets a product or service to rent a brand from a brand owner (a licensor). The responsibility of licensee’s is to produce, promote and distribute the product while the licensor gets royalties for its brand.
After license branding, a licensee gets access to the logos and trademarks associated with the brands. Association with the brand gives marketing power to the licensee’s products. It takes years of hard work, huge amount of money and luck to build a brand from scratch. Brand licensing is a shortcut way to gain immediate access to all the positive brand quality. It also enables companies to differentiate their product from competitors and communicate attributes of their products to consumers.
For example: Huge popularity of Reese’s peanut butter cups created an immediate need for other peanut based chocolates. Reese’s instead of manufacturing other peanut chocolates chose to go for brand licensing. Betty Crocker being a licensee handles the production, sales and distribution because of its experience and expertise in the market position. This partnership enabled Reese’s to generate more revenue by extending its brand into an unfamiliar and unexplored area; in return Betty Crocker was able to increases its revenues by leveraging on Reese’s brand which appealed to masses.
Different stages of brand licensing:
Hence, this concludes the definition of Brand Licensing along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.