Jul 20, 2017

Brand Saturation: Why Licensors Should Care

Even if you’ve never dealt with cases of brand saturation in your career, chances are you’ve heard of it before, especially if you work within the brand licensing industry. At the very least, we all know a tale of Icarus, whose father told him not to fly too close to the sun nor close to the sea. He disobeyed, and in the result, his wings melted, and he crashed into the sea.

In brand licensing, common sense plays the role of Icarus’ father, and brands play the role of Icarus. The reflection from brands to Icarus comes from the challenge of sustainably navigating in the brand licensing business. Consequently, it can either lead to overexposure of a brand’s licensed products to the consumers or the opposite extreme of a brand getting forgotten. The results are similarly disappointing - brand’s licensing revenues drop.

Shortly, the root of the evil is an imbalance between the IP strategy and the degree of market saturation.

Adverse Effects of Brand Saturation

Brand saturation per se is a beneficial strategy to exploit in licensing. By definition, it means to structure a brand’s ideal level of saturation to fit their goals and timelines. The strategy is frequently used to grow brand recognition within the end-customer group.

More frequently, licensors tend to come on strong in their efforts to maximize their brand’s presence in the licensing market. If a brand’s IP strategy is to gain big buck in the short-term, focusing on higher saturation level can be beneficial. Situation changes if the brand’s goal is to collect somewhat regular licensing income. In this case, finding the balance between the low and the excessive saturation levels becomes truly demanding.

As in the tale of Icarus, the negative effects of brand saturation are polar, yet alike dangerous. Here's a brief picture of what they may look like:

  • In the case of oversaturation, the target audience gets tired of the brand after seeing it in everywhere. As a result, they grow bored with the brand.
  • On the contrary, if the brand’s saturation in licensing is low, the recall of that brand by its target audience significantly decreases.
  • In either of the scenarios, brand's licensing partners fail to reach their financial goal due to lack of consumer interest.
  • Retailers lose faith in the brand as licensed products don’t move from the shelves.
  • In result, the brand loses its status and significantly decrease its value.
  • Needless to say, the brand’s revenues ultimately decline across the board

It must be noted, however, that the above are the effects of brand saturation per se. Rather, those are the result of misalignment of the brand’s presence in the licensing market and its overall licensing strategy.

The Fix

The best tactics to avoid oversaturation is prevention thereof. Such prevention is easy to achieve through regular analysis and optimization of a brand’s performance and perception within the market. It should include all brand activities from main IP activities to marketing, to brand licensing. Here are a few tips on what to keep in mind when extending a brand into new categories.

Focus On Brand’s Value

The first thing that licensors should understand is what value their brand's equity can add to the product categories. Thus, it's important to ask as many 'whys' as it requires to fit that will elevates the brand’s image in the eyes of its customers. The fundamental question, however, is whether the merger of brand's equity and licensee's product will enhance the experience of the end-consumers of the licensed production.

Choose Right Product Categories

When making this choice, savvy licensors rely on where the brand is at the moment and where it wants to be in the future. A brand's fans became fans for a reason. Thus, licensors shouldn't forget that they've given those fans a certain promise, which they must keep. An example of a discrepancy is a kids brand that accidentally makes a decision to extend into adult-oriented products like tobacco, gambling, alcohol, and others. Such act would run counter with the brand’s original values and could negatively affect customer perception

Measure The Market Presence

Other important aspects to consider are the so-called market presence measures. These measures include management of licensing timelines, marketing, and IP, and evaluating and optimizing brand’s presence in the licensing market. Measuring the market presence is all about finding the golden mean in the saturation level and adjusting brand’s licensing strategy accordingly. Considering this, brands should always keep their end-customers and the demand levels in mind.

Sustaining the desired level of brand saturation is a crucial part of a brand’s licensing strategy. Ultimately, it's always best to prevent the likelihood of diving into different saturation extremes, since the road back is rocky. It’s important for every brand to regularly reflect on its the saturation level in the market. The key is to assess and determine whether modifying brand's market presence would fit the strategy in both short and long run. After that, a brand should commit to pursuing the new direction and regularly revise it based on the market signals.

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