Brand licensing
In 1903, a soft toy of Peter Rabbit appeared alongside the first public edition of The Tale of Peter Rabbit. Beatrix Potter created this fictional character and patented it for sale that same year. This event marked the world's first licensed character in business history. Merchandise featuring Peter and other characters from her books began appearing at Harrods department store in London by 1910. Potter continued to oversee all merchandising opportunities throughout her career. She authorized porcelain figurines, painting books, and dishes bearing her creations. Her control over these products set a precedent for future brand management.
Mickey Mouse popularity exploded during the 1930s and 1940s across American markets. Toys, books, and consumer products featuring his likeness flooded shelves without manufacturing by the Walt Disney Company itself. McDonald's play food and Burger King T-shirts became common household items. Even ghastly Good Humor Halloween costumes found their way into stores nationwide. Companies realized they could make real dollars renting out their equity to manufacturers instead of creating new brands from scratch. Armor All auto vacuums and Breyers yogurt carried well-known names under license. TGI Friday's frozen appetizers and Lucite nail polish also bore established brand marks. These extensions made the marketplace much more lucrative than previous decades.
A licensing agreement authorizes a company to lease or rent a brand from an owner operating a program. The licensee pays royalties calculated by multiplying the royalty rate by net sales figures. This money goes directly to the licensor for the right to use the property. Contracts force the licensee to achieve specific sales targets within agreed territories. Licensees develop concepts, prototypes, and final production samples before submission. The licensor then approves these licensed products for sale to authorized retailers. Sales growth may occur within existing markets or through entry into new ones. Business objectives drive the entire process forward with financial obligations attached.
Companies choose to license brands when strong consumer acceptance exists for extensions. Licensees gain access to major national and global logos without sharing ownership rights. Marketing power becomes the most important benefit for any licensee entering new categories. Brand managers create opportunities for companies to grow their operations significantly. Licensees expect the brand to open doors and help meet business goals quickly. They must fulfill contract obligations while achieving rapid sales growth. Renting equity allows firms to avoid spending millions creating entirely new identities. This strategy provides immediate market presence and established recognition for products.
The Licensing Industry Merchandiser's Association sponsors the annual Licensing International Expo each year. License! Global magazine publishes an annual list of top 150 global licensors annually. Disney Consumer Products led in 2017 with $53 billion in retail sales of licensed merchandise. Meredith Corp followed with $23.2 billion while PVH reached $18 billion. Global licensed merchandise sales totaled $272.2 billion in 2016 compared to $262.2 billion in 2015. These figures demonstrate massive international trade volumes across multiple sectors. Professional associations track these numbers to maintain industry standards and growth metrics.
Branded perfumes and cosmetics often get produced under license within fashion industries. L'Oreal Group holds fragrance and beauty licenses for Yves Saint Laurent, Giorgio Armani, Valentino, Prada, and Ralph Lauren. These agreements allow major houses to extend their reach into personal care markets. Companies utilize brand licensing to enter categories completely different from their core offerings. The process involves selecting product categories and negotiating with best potential partners. Final samples receive approval before reaching authorized retailers worldwide. This sector represents a significant portion of total global licensing revenue streams today.
Dooly the Little Dinosaur appeared in Bomulsum magazine in 1983 and changed the Korean character market forever. American and Japanese characters had dominated the animation industry until that specific year. A six-part TV show featuring Dooly first aired in 1987 with another seven parts following in 1988. Creator Kim Soo-jung established Dooly World company in 1995 to enter the design industry directly. An animated movie titled Dooly the Little Dinosaur released the next year. Related markets generated between 2 billion and 3 billion won per year over three decades. This success paved the way for the entire character market in South Korea to expand significantly.
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Common questions
When did Beatrix Potter create the world's first licensed character?
Beatrix Potter created the world's first licensed character in 1903 when she patented Peter Rabbit for sale. This event marked the beginning of brand licensing in business history.
How much retail sales revenue did Disney Consumer Products generate in 2017?
Disney Consumer Products generated $53 billion in retail sales of licensed merchandise in 2017. This figure led all global licensors that year according to Licensing International Expo data.
What is the financial obligation a licensee must fulfill under a licensing agreement?
A licensee pays royalties calculated by multiplying the royalty rate by net sales figures. These payments go directly to the licensor for the right to use the property.
Why do companies choose to license brands instead of creating new ones?
Companies rent equity to avoid spending millions on creating entirely new identities. This strategy provides immediate market presence and established recognition for products.
Which Korean character changed the animation industry in 1983?
Dooly the Little Dinosaur appeared in Bomulsum magazine in 1983 and changed the Korean character market forever. Related markets generated between 2 billion and 3 billion won per year over three decades.