Intellectual property is a strategic resource used in many ways. It helps you break into new markets and distribution channels, often times at a lower cost and higher return.
One strategy is to license out rights to your IP or parts of your IP. Examples include a brand extension into non-competitive product categories, or rights to sell your product in new distribution channels or countries. A second strategy is to license rights to a well-known brand and use that IP to reach new customers.
One of my clients was a toy company from Australia. They used both options to successfully expand their business into the US and Europe. I helped them acquire rights to some big well-known kids brands. They applied these brands to their new toy products and sold into all the major US toy retailers. It also saved them significant promotional money because these brands were popular TV shows that kids viewed every day.
Because they were a small company, they didn’t have the resources to expand internationally. They capitalized on their success in the US and licensed out rights to their top-selling products to toy companies in other countries.
Licensing is also a great strategy to differentiate your product in the market, especially if it’s a “commodity”. When I was licensing the Batman movies, a small bike company approached me to get a license. They wanted to expand sales and needed a way to break into mass market retailers, such as Walmart. Kids bikes were pretty generic, low-cost low margin products in a very competitive and promotions intensive market. When the movie opened, their “movie branded bike” sales skyrocketed. They got orders from every mass market retailer scrambling to fill their shelves as demand for movie related products went off the charts.
In today’s competitive market, licensing is one of the best low-cost high return ways to expand your business. Rather than spending time and money “building” a market, you can license out some or all of your IP to companies in different markets and industries. Acquiring rights to an IP saves development time and dollars, letting you focus your resources on what you do best – selling and making money with your products or services.