Why buy licenses?
To sell more products and make more money. To encourage as many people as possible to buy your production as much as possible and as often as possible at higher prices.
The task of buying license is similar to that of marketing department in a company and fulfills its real purpose – to sell all that the company is capable of producing and to guarantee the payback of funds invested in production.
Efficiency of your enterprise
Of course you need to have production, distributing and trading service. At the end of the day it does not matter how well you distribute your product, how efficient your production is and how dexterous your sellers are if no one wants to buy your product.
The aim of buying license is to ensure the maximum payback of the investments. This means that you need to sell all that your company is capable of producing until you reach the point where the increased cost of production and sales brings the desired profit.
Most companies create production capacities so as to be able to meet peak demand, at certain times of the year, so that in the interim periods are part of capacities stand idle. This is typical for producers of soft drinks, and most of those who work in this industry, perceive the seasonal ups and downs as a natural integral part of business. But the maximum use of the production capacity is what makes the production most profitable, and therefore letting capacities remain idle is simply criminal. Good license will sell all that company is producing, and not 80% but all of it. Studies show that consumption of soft drinks in the winter is not any less than in summer. May be it is not as hot in winter but people drink beverages not only when it is hot but for other reasons as well. The duty of marketers is to find out what these reasons are and to keep selling the product to the consumers at all times of the year. Each dollar in marketing should be attached to the sales. Buying license is investment to sales.
Volumes: if you think that you cannot sell any more, you really cannot
Suppose you have decided to take up selling pizza. You have made your mind to sell 100 pieces a day and order ingredients accordingly from a company selling semi-finished products.
Those calculate how much pepper, anchovies, dough, tomato sauce and cheese it would take, and send all to you. Then you rent an oven, order packaging boxes and you are in business.
But on opening your pizzeria you only sell 70 pizzas on the first day. This means that you have 30 pizzas left. The question is what should be done. There are two options: you order 40 more for tomorrow and do not sell more than 70. Or you develop a marketing strategy aiming at selling at least 150 pizzas per day. So you order 70 more for the following day.
For the second option you need to think of advertising activities for your business, offering extra services such as delivery or selling some of the pizzas by slice. We need to understand why people do not buy pizza and to figure out what to do and to say to encourage consumers to be more active. The first option described above is vegetation, you will sell the same amount every day, lucky if nothing bad happens. But more likely very soon you will go bankrupt.
It is important to plan according to how much you want or need to sell. After that comes the turn for marketing with strategies and objectives. This is not building sand castles. This is defining the necessary sales volumes and after that looking for ways to achieving the desired results.
Positioning is what licensee is responsible for
Licensed products are being bought not because someone wants to eat or to play with something. The image of a character on the packaging is the reason why a child wants to have this product. After buying license you do not need to explain what makes this particular drink, snack or service different from all others, what makes them better, preferable, and special. But this is not enough reason for mom to open her purse.
In order to increase the basic sales volume it is necessary to expand the list of reasons why one should prefer your product to all others. Does it affect child development? Does it contain only natural ingredients? It there are no such reasons this should be seriously considered at the stage of developing the product.
One of the most favourite sayings of marketers is that if you manage to attract young consumers they will stay with you for the rest of their lives. The idea is comforting but not true. In order to win consumers’ votes the company needs to announce again and again what makes its production special and different from others. If you do not position yourself the competitors de-facto will position you as they please.
What makes license a success
Successful license requires efforts from both sides - from the part of owner (the licensor) and the manufacturer (the licensee).
Price – licensed products cost more
Licensed products must ALWAYS cost more. The point of licensing is exactly to make licensed products more expansive than its analogues. Of course you can sell products in giant quantities if you give them away for free. But the sales volume only matters when it makes profit or ensures sustainable growth, promising to become profitable.
Licensing during crisis
Times of recession provide the best opportunity to increase market share and to lure consumers form competitors. The reason is traditional reduction of marketing expenses in such periods. If you continue marketing activities at the times when your competitors reduce the expenses be sure that their products will not sell not yours. By the way, we only sell exclusive licenses.
So, things to understand when purchasing a license
Licensing is a marketing tool for successful sales
Licensed products sell themselves to the target audience
Licensee needs to find out/to create reasons why adults should buy this product
Licensed products must cost more
Manufacturers plan consumption volumes themselves and then develop the plan on how to achieve it
In times of crises the one who is not sitting idle wins
We hope you chose the right license and we wish you great sales!
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