Can the risk of a brand license be evaluated?

In an article here, Ian D. McClure, writes about the risk of brand dilution through a license, how to evaluate that risk and how the risk should be a factor in calculating royalties.

In our opinion the risk of failure of the (licensed) new product(s) and the resulting “damage to goodwill” cannot be calculated.

About 90% of all new product launches fail. Failure is the norm, not the exception. Even big companies with the best reputation and all the market power fail. Do you remember Burn, an energy drink The Coca Cola Company introduced? It was backed with all of the might of the global market leader in carbonated drinks. And it tanked.

In general, licensed product launches are more successful.

And consumers allow brands to make mistakes. The Harley Davidson perfume or their cake decorations were bad ideas. They failed miserably. Did it hurt Harley Davidson? Yes, it did. Did it damage the goodwill with consumers? No, consumers are forgiving, if you do not repeat your mistakes over and over again.

Trussardi Brillen

Der bereits reichlich gefüllte Markt für optische und Sonnenbrillenist um eine weitere Lizenz reicher.
Die Italienische Modemarke Trussardi, die ursprünglich mit Lederhandschuhen gestartet ist, vergab seine Markenlizenz an die Charmant Group, den Lizenznehmer von Puma, Elle, Lacoste und Esprit.

Der Markt ist bereits eindeutig zu voll, als das alle Lizenzen erfolgreich sein können.

Neue Heimtex Marken Lizenzen

Der Amerikanische Heimtexmarkt füllt sich mit Marken. Nach der Lizenzvergabe durch Stetson folgt nun Elizabeth Arden mit einer Lizenz an London Luxury.

Und Kate Spade lizenziert an CHF Industries, die fast zeitgleich eine weitere Markenlizenz von Marc Ecko aufnahmen. CHF hat zudem bereits Lizenzen von Quiksilver, Donna Karan, DKNY, Hemingway, Dockers, Roxy und anderen.

Trussardi Eyewear

In an already pretty crowded market, Italian fashion house Trussardi gave its eyewear license to Japanese Charmant Group. The licensee already holds brand licenses from Esprit, Lacoste, Elle and Puma.

It seems, the market is too packed with licenses, to give all of them a chance to be successful.

Brand Licenses in Home Textile

Recently, new brand licenses were signed for home textile products.

After Stetson entering the market, the beauty brand Elizabeth Arden signed with London Luxury, which also holds the license Arm & Hammer.    

Kate Spade signed with CHF Industries, which also took on an additional brand license from Marc Ecko. CHF already has a broad licensing portfolio with Quiksilver, Donna Karan, DKNY, Hemingway, Dockers, Roxy and others.