Toy cash register

From Creation to Cash Register: Building a Successful Juvenile Brand

A FRESH NEW LOOK AT LICENSING

Remember licensing?

Those heady days of excitement, traffic, profits? Of Strawberry Shortcake and Cabbage Patch Kids? Licensing might be a $56 billion industry, but it's not without its problems.

Especially in juvenile licensing, performance is lagging.

Today's successful license must provide the retailer with tremendous cross-merchandising opportunities. The license must be treated as a brand.

In 1987, licensed toys and games generated close to $8 billion in retail, or 14% of all licensed products sales; non-toy licensed juvenile merchandise, including ready-to-wear, probably brought in billions more.

But toys and games sales--which often determine how the rest of the license will fare--were lower than the year before, and in marked contrast to the bullish years of the early '80s.

Today, licenses account for fewer than a quarter of sales at a typical retailer's children's departments. Five years ago, licenses accounted for as much as 60%-70%.

What's gone wrong?

A License Is A Brand

One key problem, according to many industry experts, is that licenses have not been merchandised as brands across a variety of categories. Today's successful license must be treated as a brand, be lifestyle--rather than character-driven, and be promoted throughout the store.

Ironically, some of today's problems are the direct result of licensing's early and huge successes.

When first introduced not much more than a decade ago, licensing nothing less than revolutionized the children's merchandising market. Retailers were quick to embrace what essentially were presold concepts, with established consumer awareness that helped stimulate demand.

Licenses Add Value

For everyone involved, licensing had great merit: Here was an idea that consumers agreed added value to regular merchandise, and were willing to pay a premium for.

Sales soared. An evergrowing number of licensors jumped on the juvenile licensing bandwagon.

Next came the "big boom" formula, which meant, simply, having as many manufacturers as possible, with different products and lots of consumer advertising, hit the market all at the same time.

The results were predictable.

As licenses proliferated, consumers grew confused. Retail was being flooded with licensed characters and products of little social or emotional value. Many products were shoddily made, lacked adequate backing, were inappropriate to the licensed concept, and lacked a branded approach.

And for every license that became a success, an increasing number of others wound up going nowhere, creating a backlash among retailers that continues to linger.

Licenses Create Excitement

The truth is, they had failed to carefully evaluate the merits of the programs they were backing.

Even now, oversaturation is getting a big share of the blame.

In a recent Chain Store Age study of retailers' attitudes on licensing, 7 out of 10 said they believe there are too many licenses in the marketplace.

The good news is that retailers clearly want to see new licenses and new brands. Even as they decry the number of licenses available, many retailers realize that sales come from a steady infusion of fresh ideas.

These days, you might need your "basics"--but to create excitement, new product is needed as well.

What's more, the great majority of retailers continues to view the concept of licensing as inherently sound. According to a recent study by the Licensing Industry Merchandisers' Association (LIMA), 71% of retailers say they are satisfied with the sales performance of the licensed products they carry, simply because these products do what they expect them to do: They sell.

The truth is, retailers could do much better.

A New Look

As some see it, what's needed above all is a change in some current attitudes toward juvenile licensing. If sales are soft, part of the reason might well be retailers' insistence on playing it "safe." Having been burned once, retailers are no longer willing to take a chance on a product.

In a classic case of overreaction, even retailers who once routinely bought deep on a number of concepts have pulled back on all fronts.

By playing it safe and buying a bit of everything, however, retailers are not supporting any program in any significant way. And should a concept get "hot," they might well get caught short--thus sustaining a self-fulfilling prophecy of mediocre performance.

The better approach? Carefully analyze the variety of programs being made available early in the year, then throw your full support behind one or two or three at the most. Go in early, take a stand, promote across the store, create excitement, be a leader.

For too long, retailing has strayed from the positive benefits of licensing--with bad products, weak concepts, wrong attitudes. Treating a license as a brand will revive the juvenile category.

Good Licenses Are Like a Brand

Licensed products don't just mean another selling opportunity. A well-conceived, complete juvenile licensing concept provides a retailer with many of the same advantages that are inherent in major national name brand products.

Like ntional name brand products, licensed merchandise is perceived by consumers as products with added value. As such, consumers will often pay a premium for licensed products, as long as the program's concept is inherently sound in today's marketplace.

Concept Consistency

The concept should be well-defined, have emotional appeal to its targeted audience and all products in the program must be consistent in quality, conception and packaging.

By their very nature, licensed products are highly promotable. They can bring excitement to virtually any department or category. Well-advertised, well-packaged and well-promoted, licensed products can be the merchandise a retailer relies on to "stop" a consumer as she walks down the aisle.

Not only are children's brands highly promotable, they lend themselves particularly well to all kinds of promotions. For example, licensed product lines can be effectively merchandised in highly visible, convenient boutique settings--or aggressively cross-merchandised throughout the store.

moreover, because many licensed products are backed by strong consumer advertising from their manufacturers, retailers' in-store promotions become doubly effective.

Licensors As Partners

Depending on who's behind the license, retailers can also benefit from the licensor's marketing skills. The best licensors work with both manufacturers and retailers in designing the most effective and appropriate marketing program to bring their creations to "life." Creators of a strong license not only create television specials and other high-visibility promotions to presell their licensed products, they also create appropriate packaging, displays, and point-of-purchase materials to highlight the merchandise within the stores themselves.

Among other advantages of carrying licensed juvenile products:

* Multi-product concepts encourage consumers to shop the store, not just a department--thus creating opportunities for ancillary sales.

* Licenses help build repeat business and encoruage add-on sales as consumers "buy through" a product line.

* Hot selling, fast turning licenses can be real traffic builders.

* Well-promoted licenses sell themselves, reducing the retailers' labor requirements.

Not the least, licenses also give retaielrs a strong identity at a time when mergers and acquisitions have reduced industry diversity. It's one reason why more and more retailers look to sign exclusive license agreements.

Licensed merchandise can do all this for retailers. The challenge for retailers is to make the most of what licenses offer.

Cutting Through The Fog:

How To Evaluate A Juvenile License

For a growing number of retailers worried about the over-proliferation of licensed brands on the market, the need to carefully choose product has become more important than ever.

The benefits are obvious: Careful evaluation takes the mistakes out of brand choices. Select a license with thought and on the basis of its demonstrable strong points, and iths likely to be a long-running winner.

Here's what retailers should look for in a licensed concept or brand before making their choices:

* Emotional involvment. A retailer would wan a product he can respond to instantly, not one that leaves him "cold." The emotional appeal might be based on any number of reasons, but if it's there, chances are the consumer will feel likewise.

* Parental appeal. Children nominate the purchase parents elect to buy. Retailers want a product that's attractive to parents, because in almost all cases it's the parent who makes the purchase. At the very least, the concept should evoke a neutral response--not turn the parent off (see separate article in this supplement).