A topic, which is regarded as a crucial and effective tool for fashion brands, is licensing. The licensing industry has turned out to be a very profitable and high-sales generating business segment. The Licensing Industry Merchandiser’s Association (LIMA) states, that the total licensing industry’s market revenue accounted for more than 5,9 billion dollars in 2007. These figures, however, only include the revenue, which has been created only from licensing fees and royalties, paid as compensation to brand owners.
The present sales figures for licensed products in the fashion and apparel industry underline the presence and effectiveness of this marketing tool. The entire fashion and apparel industry's sales volume for licensed products is more than 80 billion dollars. The totals sales volume of licensed products in German-speaking countries, including Germany, Austria and Switzerland, was approximately 22,4 billion Euro in 2005. This shows that more than a quarter of annual sales in the European fashion industry are generated in those countries. Due to the fact, that most of the sales were generated with products arising from brand licensing agreements, brand owners see the biggest potential for growth in brand licensing agreements. Additionally, growth expectations arise from the increasing number of contracts and market volume. The number of brand licensing contracts, which were signed in Germany, grew from 750 contracts with a market share of more than 6 billion Euro, to a current number of over 1.000 brand licensing agreements with a total market volume of over 8.5 billion Euro in licensing fees.
The objective of this thesis is to analyze how brands develop and act in the fashion industry. In this context it is crucial to provide a clear overview of the fashion industry and the brand operation in this special industry. The main objective of this thesis will be the examination of how and to what extent companies and brands operating in the fashion industry use licensing. Examining the opportunities and threats arising for brands entering licensing agreements, this thesis will provide an explanation about the motivation for brands, especially in the fashion industry, to enter licensing agreements. After reading this thesis, the reader should be able to evaluate the advantages or disadvantages of licensing in the fashion industry and have a broad understanding of the importance of licensing for this industry in the past, present and future.
Table of Contents
1 Introduction
1.1 Problem Definition and Objectives
1.2 Course of Investigation
2 Fundamentals and Theoretical Framework
2.1 Brand and Branding Components
2.1.1 Definition of the Terms Brand and Trademark
2.1.2 Definition of Brand Equity
2.1.3 Definition of Brand Image
2.1.4 Definition of Brand Identity
2.2 Brand Stretching
2.2.1 Definition of Brand Stretching
2.2.2 Types of Brand Stretching
2.3 Licensing
2.3.1 Definition of License and Licensing
2.3.2 Dissociation from Merchandising
2.3.3 Industry Overview
2.4 Fashion and the Fashion Industry
3 The Concept of Licensing
3.1 Licensing Agreements
3.1.1 Licensees and Licensors
3.1.2 Content of a Licensing Contract
3.1.3 Compensation
3.2 Types of Licensing
3.2.1 Personality Licensing
3.2.2 Character Licensing
3.2.3 Event Licensing
3.2.4 Brand Licensing
3.2.5 Designer and Fashion Licensing
3.3 Licensing Objectives
3.3.1 Objectives of Licensors
3.3.2 Objectives of Licensees
3.4 Licensing as a Strategy to grow Internationally
4. Brands and Licensing in the Fashion Industry
4.1. Brands and Fashion
4.1.1 Fashion Brands
4.1.2 The Importance of Fashion Brands
4.2. Licensing in the Fashion Industry
4.2.1 Brand Licensing Concepts in Fashion
4.2.2 Examples of Brand Licensing in the Fashion Industry
4.2.3 Opportunities and Threads of Licensing in the Fashion Industry
4.2.4 Advantages and Disadvantages of Brand Licensing in the Fashion Industry
5 Summary and Conclusion
Objectives and Topics
This thesis examines the role of licensing within the fashion industry, specifically focusing on how brands utilize this strategy to expand into new markets and product categories. The central research question investigates the motivation behind, and the effectiveness of, licensing as a tool for brand extension and business growth.
- Theoretical foundations of branding, brand equity, and brand stretching.
- Detailed analysis of licensing concepts, including contract structures and compensation models.
- Classification of various licensing types relevant to the fashion sector.
- Evaluation of opportunities and risks associated with brand licensing in fashion.
- Case studies illustrating successful and failed licensing strategies.
Excerpt from the Book
3.2.1 Personality Licensing
This special type of licensing involves real-life personalities. Well-known personalities appearing as licenses are for example Michael Schumacher, a German Formula One driver, Ed Hardy, who sold the rights for using his name and the rights of his tattoo designs to Christian Audigier, and Tom Ford, former designer and board member of Gucci and Yves Saint Laurent. The celebrity status of these personalities is often used to increase sales of certain products. Therefore the products do not necessarily have to be labeled with the name, picture or logo of this personality. There are also cases, where advertising is a type of personality licensing, if the person is directly connected to the product in consumer’s minds and vice versa. Michael Schumacher’s advertising for Rosbacher water is a good example of personality licensing. This example highlights, that using a celebrities name in an advertisement helps to increase sales and that the name does not necessarily have to be directly linked or attached to the actual product (Böll, 1999, p. 29). Personality licensing does carry a lot of risk for the licensee because the brand or products success is dependant on that person’s current popularity. Looking at the most recent example of Tiger Woods can outline this risk. Negative press and discussions about his private life have caused severe damage to his image. Woods represented various well-known brands, which now distanced from Woods in order to prevent this image-loss to backfire on them and, moreover, to prevent customers from decreasing demand for their products due to the linkage to Woods.
Summary of Chapters
1 Introduction: Provides an overview of the European fashion industry and introduces licensing as a critical marketing instrument.
2 Fundamentals and Theoretical Framework: Establishes definitions for brands, trademarks, brand equity, brand identity, and outlines the theoretical context of brand stretching.
3 The Concept of Licensing: Defines licensing agreements, compensation, and classifies various types of licensing, including personality, character, and brand licensing.
4. Brands and Licensing in the Fashion Industry: Analyzes the specific application of licensing within fashion, examining opportunities, risks, and providing industry examples.
5 Summary and Conclusion: Synthesizes the findings, confirming that while licensing is a potent growth strategy, it carries significant risks that require careful management.
Keywords
Licensing, Fashion Industry, Brand Management, Brand Extension, Brand Equity, Trademark, Licensing Agreement, Royalty Payments, Personality Licensing, Character Licensing, Brand Identity, Strategic Alliance, Internationalization, Consumer Perception, Brand Awareness.
Frequently Asked Questions
What is the core focus of this thesis?
This work explores the role of licensing as a strategic tool for brands within the fashion industry, specifically analyzing its function in brand extension and international business growth.
What are the central themes discussed in this research?
The research covers brand definitions, the theoretical framework of brand stretching, the mechanics of licensing contracts, the classification of licensing types, and an evaluation of the opportunities and risks inherent in licensing for fashion firms.
What is the primary objective or research question?
The main objective is to examine how and to what extent fashion brands employ licensing, and to determine the motivations and risks associated with these agreements.
Which scientific methods were applied in this study?
The thesis utilizes a literature review and the analysis of industry statistics, reports, and expert statements to build its theoretical foundation and justify its critical analysis of licensing practices.
What topics are covered in the main section?
The main section details the mechanics of licensing agreements, categorizes types of licenses (e.g., personality, character, designer, and brand licensing), and provides a critical assessment of the opportunities and threats faced by brands when entering these agreements.
Which keywords best characterize this work?
Key terms include Licensing, Fashion Industry, Brand Management, Brand Extension, Brand Equity, and Royalty Payments.
How does the author define personality licensing?
Personality licensing is defined as a specific type of licensing involving real-life individuals where the celebrity status is leveraged to increase sales, even if the individual is only indirectly linked to the physical product.
What are the critical success factors identified for brand licensing?
Critical success factors include consistent design, well-structured management, quality control, and ensuring a strong fit between the core brand identity and the licensed product category.
What risks does the author associate with excessive licensing?
The author highlights risks such as the dilution of the brand name, loss of credibility, damage to the brand image, and potential loss of exclusivity, which is crucial for luxury and designer brands.
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- Maximilian Bogner (Autor:in), 2017, Licensing in the Fashion Industry. Opportunity or Threat?, München, GRIN Verlag, https://www.grin.com/document/500544
