Just two months back when the FIFA World Cup fever had reached its peak, loyal fans could be seen sporting their favourite team colours across India. The sales of branded merchandise?the official variety which carries a premium price tag?took everybody by surprise, such was the passion shown by the fans.
If you are wont to dismiss that as a one-off, let the Vodafone zoozoos jog your memory. The egg-headed characters created by ad agency Ogilvy and Mather last year became so popular that the telecom company signed a licensing deal with retail chain Shoppers? Stop to put these creatures on T-shirts, mugs and kidswear.
Welcome to the world of licensed merchandise. One that allows you to literally wear your loyalty on your sleeve, promising to give you a part of the icons and people whom you cherish and adore. A craze which companies world over have successfully tapped into to grow and compete. So much so, that licensing today is a $150 billion-plus industry worldwide.
In India too, licensed merchandise has been available for some time now. But it is only now that sales are taking off, as brand owners and retailers learn to leverage the market better. For instance, when Future Group decided to launch its private cornflakes brand, Tasty Treat, last year, it decided to go the licensing way and tied up with Disney Consumer Products India for the characters Mickey Mouse, Goofy, Minie and Donald Duck.
?What these characters do is provide instant awareness and recognition to the target audience in what I call last mile marketing. Maximum decisions are taken by consumers at the shelf. For a retailer? s brand, there?s less focus on above the line activities like TV ads and more on brand building where actual purchase decisions are made. Much more activations can be done in-store by using these characters to engage with the target audience.Plus, since Disney stands for quality, it forms an instant connect with the consumers,? says Devendra Chawla, head-private brands, Future Group.
Future Group is already reaping the benefit of the alliance. If earlier only 2 in 100 people were buying cornflakes from a Future group retail store, now 3 in 100 are buying the same, the third brand picked up being Tasty Treat.
And it is not just the big companies. Take for example, Cliffton Exports, a SME garment company based in Tirupur. The company has been in existence for over 25 years and exporting to Canada, France, UK, and South Africa among other countries. It now plans to sell its products in the domestic market and has opted for the licensing route. It has signed a three-year deal with London based RDF Rights, which looks after the licensing business of RDF media group for the animation character ?Mr Bean?.
?There is definitely a huge interest, kids know what they like and what they would want to buy. The vast number of kids channels has only added to it, and people are aware of Mr. Bean,? says Naveen Balasubramaniam, CEO, Cliffton Trends, the marketing division for India. The company plans to launch ?Mr Bean? T-shirts very soon, and is likely to price them in the Rs 300-500 range.
With the economy recovering, there is a lot of buzz around licensing. A lot of international licensing companies are setting up shop here and there are home grown ones as well. Bradford, a US based licensing company, in a JV with Franchise India, has set up Bradford Licensed India. Its clients include PepsiCo, actress Denise Richards, Marilyn Monroe by Shaw Family Archives among others. ?Licensing is a very careful programme. What Bradford plans to do is to not just bring international licensed brands here but also take a lot of domestic work outside,? says Gaurav Marya, president, Franchise India.
?If you look at it, TV has penetrated beautifully in India. It is only the retail sector which will speed up in the coming years. The consumers exist,? says Jiggy George, founder, Dream Theater, a licensing company which has won the exclusive rights to market Warner Brothers? iconic brands such as Superman, Batman, Justice League, Looney Tunes, Tom and Jerry, Scooby-Doo, and Harry Potter in India. It has recently bagged licensing rights for Animal Planet consumer products lines in India.
While entertainment (read animation characters) and fashion licensing has been there for a long time, it is only now that sports licensing is coming of age in India.
?Licensing of sports industry prop is currently largely related to cricket scenario. IPL has emerged as a new brand here. However, it is still very nascent in other sports,? says Anish Dayal, advocate, Supreme Court, who specialises in sports, media and entertainment cases.
Dream Theater?s George adds that the next thing in licensing could be corporate licensing (under which merchandise with a company logo is sold to employees) which is non-existent in India. The global market for licensed merchandise is estimated at anywherebetween US$150 billion and $180 billion in retail sales in 2009. Just under two-thirds of all retail sales of licensed goods is generated in the US and Canada.
To be sure, It’ll take some time for the licensed merchandise sales to reach a critical level in India. ?The Indian licensing business is still in the very early stages. The best developed sector, by all indications, involves apparel brands, with many of the goods sold through single-brand licensed or franchised stores. By all indications, Disney is the largest entertainment licensor in India, though others such as Turner and Nickelodeon have growing businesses,? says Marty Brochstein, LIMA?s senior vice-president of industry relations and information. LIMA or The International Licensing Industry Merchandiser’s Association is a 1,000 member plus body of licensing businesses across the globe.
A major reason behind this is the failure of the marketers to build brand extensions around the mother brand. A case in point?the failure of Indian Premier League (IPL) merchandise to click with cricket fans despite the IPL being the biggest sports marketing successes in India. Compare this with Real Madrid?s claim that they have recovered the ?80 million paid for football hero Cristiano Ronaldo by selling millions of merchandise with his name on it! A solid licensing programme takes a minimum of several months to develop, and often takes more than that.
?One of the major reasons why licensing has not worked beyond a few players is that there is a lack of understanding of how licensing works. There is a mismatch of expectations. Because Disney does licensing more like a consumer products business, we have set right processes, delivery and expectations. This is what the new entrants are now understanding and adopting,? says Roshini Bakshi, vice-president, licensing and merchandising, publishing, retail, Walt Disney Co. India. The company claims its business has grown 8 times since 2005 and has around 90 partnerships in India ranging from UniLever to small businesses.
Sandeep Dhaiya, vice-president, consumer products, Viacom 18 says that a lot of companies also use licensing and merchandising as a marketing tool instead of a revenue stream. But this create complications. ?It skews the market so people have a different notion about licensing. When serious players come then it becomes difficult for them.?
For example, in the IPL case, most of the merchandise deals were done without sufficient time being devoted to building something unique. So what the franchises finally ended up doing was putting a logo and the photograph of a cricket star on the objects and selling them. The danger here?the grey market can easily jump in.
Timing also plays a crucial role in determining the success of licensed merchandise, especially in the case of licensed goods associated with movies. Bollywood flick Kites, for example, had a licensing deal but it came at the last moment. For most Hollywood films, licensing deals are done much in advance and the products are rolled out on time, finishing within the month of the movie release.
Finally, the price tag. Some industry watchers say pricing of licensed stuff is bizzare. There are two sides to that story. Disney?s experience says that kids are more honest when it comes to buying branded stuff?they want the real thing. On the other hand, if there is a super premium to a product, sales are low. That?s also why most people end up going to the flea market to purchase the fakes.
The silver lining?more made-in-India icons are entering the market. Only last week, 9X Media (earlier INX Media) announced its plans to tap the licensing and merchandising market for its popular characters ? Bade-Chote and Bheegi Billi.
?There?s now much more talk about licensing of homegrown properties such as Little Krishna, Commonwealth Games, Spykar, etc., rather than just of brands and characters developed elsewhere in the world,? says Marty. That goes for the Zoozoos too.