Licensing University: June 2014
Elements of Successful Retail Presentations
Prepare, prepare, prepare
Know the objectives
- For you and prospective partner – Launch new products, incremental sales, seasonal executions, events, differentiated offering, etc.
Obtain the right insights
- Consumer – Planned or impulse purchase? Treat or need? Special occasion or every day? End user?
- Retailer – Category data, sales history/trends, retail challenges, merchandising tactics
- Marketplace – Overall category, seasonality, overall economy
Outline retailer benefits
- What’s in it for them and why should they care
Ensure a well-coordinated effort
- Timing, marketing support, ROI potential
Manage to a timeline (yours and partners’)
- Presentations, production, resets
Establish success criteria and metricsTrack against them
- Track against them
There were no dominant licenses on the Toy Fair show floor this year. Brands such as Smithsonian, Duck Commander, and Minecraft were scattered about. Strong properties, like Sofia the First and Star Wars, were spotted at a number of booths. The big toy companies tied in with tentpole films (e.g., Hasbro with the five 2014 Marvel films) and highly rated TV shows (Teenage Mutant Ninja Turtles at Playmates).
Nevertheless, there were a number of trends at Toy Fair that will make a difference to product for the next 24 months. Read on to learn about nine looks that Project Partners Network identified as “must-know” from Toy Fair.
1. Girl Power
The ubiquity of pink and purple on girls’ toys decreased a bit this year at Toy Fair, as greens, teals and especially yellows were interspersed with traditional girls’ hues. The movement away from pink was driven in part by a girl-empowerment trend, illustrated by the likes of engineering and sports brands such as Goldieblox and Go! Go! Sports. Other companies stressed inspirational themes for girls as well, including Rovio with its Angry Birds Stella brand extension. The zombie and vampire trends (still strong at Toy Fair) also brought color variations (especially the addition of black and green) to girls’ fashion dolls, plush and playsets.
2. Viral Videos
The popularity of viral videos had a coattails effect on imagery featured at Toy Fair, especially when it came to animals. Several companies—from Hasbro to LEGO and Douglas—added or prominently featured pandas and sloths, while foxes were more noticeable than usual on home décor, plush and other categories, perhaps due to the viral hit “What Did The Fox Say?.” Cat videos also propelled some toy activity of the licensed variety, with Li’l Bub, Venus (“the two-faced cat”) and Grumpy Cat all being shown in plush form. Grumpy Cat had further support in a range of items from t-shirts to car-window stickers. The most prominent animal theme, however—owls—had little connection to the viral video craze.
3. Patterns in Plush
The plush category illustrated a number of design trends, including psychedelic, tie-dye-like polka dot patterns and sculptural feels (e.g. bas-relief in the fur, or cable-knitted surfaces). Big-eyed, bigheaded animals were spotted across the show floor, as were patterned (and sometimes textured) plush balls and long-legged, sock monkey-like animals of various species and colors. A number of companies showed blankets that rolled up to form plush animal shapes, while others featured extra soft, squishy plush. Plush makers like Douglas, K-9 Couture and Pucci Pups featured Paris-Hiltonesque purses for carrying plush pets.
Click image for a larger view:
4. Looms and Other Crafts
The crafting category continues to grow. In fact, building, crafting and customization were themes all across Toy Fair, from jewelry and accessories to racing cars and track sets. Weaving was particularly conspicuous this year, thanks to the Rainbow Loom rubber-band bracelet craze. Other craft kit makers and toy companies (including Klutz, Faber Castell, Bead Bazaar, Craftastic, PlaySmart and Harrisville Designs) all promoted weaving crafts of various sorts, displaying them front-and-center. Other emerging or growth crafts this year:
- Pom-pom activities, shown at Klutz and eeBoo
- Crafts for boys, done best in Ford- and Nissan-licensed sketchbooks from Wooky Entertainment
- Sand crafts for both indoor and outdoor use
5. Packaging as Play Set
Silver Dolphin’s Animal Adventures
An emerging trend at Toy Fair consisted of packaging that moonlights as part of the toy, eliminating waste. The packaging for Hasbro’s Rovio-licensed Angry Birds Rock Collection becomes a play set, while the box on Silver Dolphin’s Animal Adventures: Dinosaurs book-plus-toy kit doubles as a diorama. In general, environmentally friendly attributes remained strong, with examples including products (especially for preschoolers) made from recycled paper, organic fabrics, and sustainable wood; eco-themes in craft and science kits; and less waste in packaging.
6. Tech Trends
Science kits and toys have had a significant presence at Toy Fair for some time, but the category grew even more this year. This was due, in great part, to the increasing emphasis on Science, Technology, Engineering, and Math (STEM) in U.S. schools. Several science specialists’ booths were larger, while toy makers of all types displayed their science toys in the foreground and a few used the STEM buzzword as a marketing hook. Meanwhile, the “augmented reality” trend—now three years old—extended into new categories, such as books. And apps were used in new ways, like replacing radio-control (RC) technology for airplanes and other vehicles. Robots were another big theme, not only in the science and building-toy categories, but also as design elements on puzzles, board games, and plush.
7. Baking and Other Design Themes
Baking imagery extended beyond traditional cooking kits, toy appliances and kitchen play sets to activity kits, board games, and puzzles featuring lots of cupcake and donut themes. In addition, snack foods—from sandwiches to bologna and from bacon to sushi—also appeared on a variety of items, especially in the board and card game category.
Americana continued to grow as a theme in the toy industry, mirroring a cultural trend in the US. Don’t think red, white and blue or flag designs here. It’s about camouflage-patterned, ride-on jeeps and Duck Commander marshmallow guns (licensed from the Duck Dynasty clan’s company) instead.
Cross-Licensing and Co-Branding
Hello Kitty Cross Licensing
The collaboration trend continues to intensify in the toy industry, with Toy Fair exhibitors of all types showing co-branded or cross-licensed toys:
- Plushland featured stuffed Hello Kitty and Sock Monkey in collegiate-logoed t-shirts
- Mattel offered a Teenage Mutant Ninja Turtles x Kawasaki Power Wheels ride-on
- License2Play showed plush that paired Domo and DC Comics
Project Partners Network’s insights into the world of licensing in the US and abroad are the result of decades of combined experience in the industry. This group’s depth of understanding about the ins-and-outs of the business side of licensing has made them a go-to agency for marketing-consulting services. Luckily, they are also friends of The Trend Curve. Their recap of the top eight trends from this year’s Toy Fair is a must-read for anyone who touches the world of licensing.
By Leigh Ann Schwarzkopf, Project Partners Network
As corporations work to assess and enhance their overall growth strategies, many have found licensing to be an effective tool to help them meet their objectives. In particular, licensing can be a route to innovation, both at home and abroad.
Licensing occurs when one company grants another organization the rights to use its intellectual property (often a brand) on specified products or services, for a limited period of time within a defined geographic territory. The company granting the rights (the licensor) retains ownership of the intellectual property and the company being granted the rights (the licensee) pays a royalty on net sales, usually including a minimum guarantee.
In an optimum licensing agreement, both the licensor and the licensee benefit from the transaction. The licensor is able to extend its brands into new areas, often with less risk and less investment than would be required for internal expansion, while capitalizing on the licensee’s manufacturing expertise and distribution network. At the same time, the licensee benefits from the association with a well-known brand, reaping advantages in marketing and exposure that it could not generate on its own.
As part of an innovation strategy, licensors often utilize licensing as a means to test a new product, category, or geographic region. After the licensing deal confirms the viability of the new business direction, the corporation can take the licensed line in-house.
One of our clients here at Project Partners Network, a global company with multiple brands, used licensing as a means of learning about geographic regions where it thought its brands had potential. Its strategy was to license one or more of its brands to a leading category licensee in each territory it wanted to explore, with the intention of acquiring the licensee if the business turned out to be viable.
On the other side of the coin, licensees can innovate by borrowing the equity of an established brand to help launch new products or new technologies. Such a licensing deal often enables the company to move forward faster, with less investment than would be required to launch a brand from scratch.
Another of our clients had a new food-preparation technology and sought our help in securing the rights to a well-known brand. Licensing an established brand would assist consumers in understanding the new concept immediately, give the launch a level of awareness that could not be achieved by a brand-new label, and require a smaller upfront investment in marketing than would be necessary for an unknown brand.
Some licensors are leery of licensing, in large part because they feel they will lose control over their business, and over how their IP is being used, in the category being licensed. Conversely, licensees sometimes fear that the royalty, including the required minimum guarantee, will be an undue financial burden, both in terms of their upfront investment and in the impact on their margins.
These challenges can be overcome, however. Strong licensors maintain control over their IP and business direction through diligent quality control procedures, for example, while licensees often find that associating with a strong outside brand improves their total revenue and profit picture, despite the potential narrowing of margins.
Adequate due diligence and research prior to embarking on a licensing deal is a critical success factor for both licensor and licensee. Both partners need to not only assess each other’s goals, businesses, and other factors, but also determine whether licensing is a good solution at all, given current marketplace conditions and the overall context within which each partner operates. Gaining this knowledge requires discovering, through primary and secondary research, details about the marketplace, the internal strengths and weaknesses of each partner, and the needs and desires of the customer.
Above all, successful licensing deals depend on a good fit between licensor and licensee, with both parties having compatible objectives, strategies, brand images, business models, and employees. It’s also important to remember that licensing is one of many tools that corporations have at their disposal. It may not be a good solution in every case, but it is often a viable option that is worth consideration.
If you want to learn more about licensing, we recommend EPM’s The Licensing Business Handbook (www.epmcom.com/products/item121.cfm). If you would like to discuss how licensing can benefit your company in achieving its growth and innovation objectives, contact Project Partners Network (firstname.lastname@example.org).