Where and How to Find the Best Qualified Licensees

Pete Canalichio shows us where to find qualified licensees after we have chosen the category we want to expand or extend our brand into. You can view the next video in this series here or on his YouTube channel.

Transcript:

Well, hi. This is Hugh Simpson, and we’re back with Pete Canalichio, formerly of Coke and Newell Rubbermaid. And today, we’re going to talk about prospecting and vetting your third party partners. Right, Pete?

That’s exactly right. Yeah, third party partners are those manufacturers who borrow the brand from the brand owner. It’s a critical phase, right? So you want to make sure that when you find a partner, that partner is not only going to understand and appreciate what the brand stands for, but they’re going to be able to build those attributes into the product; but moreover can actually produce that product, get it to market, sell it into the retailer, and make sure that the consumer is delighted with that product.

So let’s talk about the closet again. I used it before. So I’m going, and I’ve done my survey, and I have found that something needs to be on the door. Then as you said Rubbermaid did not cover the back door but covered the closet. So they have decided that’s where they’re gonna go. Take us through the process.

Okay, very good. So you know as a brand owner what category you want to extend into, and then you decide, okay, how are we going to do that? Are we going to manufacture that product, or we’re gonna source it? Are we gonna acquire a company, or are we gonna license? In the case of Rubbermaid, they decided that they would extend the brand in the closet via licensing; finding a third party manufacturer that complemented what they did. And as I mentioned in our last video, Rubbermaid decided that anything that affixed to the wall that was a closet organization component, they would make. But anything that hung on the back of the door or hung on the rod or sat on the on the floor, like a shoe organizer, they would use a third party manufacturer. So the way they did that–the first thing that they do–is they have to do the research, okay. But you can go on the Internet… what are the companies that manufacture products for the closet? Then you can do things like look at trade magazines, who’s out there, you know, manufacturing products? So that’s another source. The third one is you could go to a trade show, go wherever, or potentially the fourth one is just going to your local retailer. Walk a Home Depot, walk a Lowe’s, walk a Walmart, wherever the brand is. You know, if Rubbermaid is a mid-tier brand, and it sells in mass. And in mid-tier, and and you know, just hear me… mid-tier for material, if you think about the mass channel that is lower mid-tier, like a Target. And then mid-tier would be Sears, JCPenney, you could think of The Home Depot and Lowe’s–they’re self-help companies, retailers–and then high tier would be more like your Saks Fifth Avenue, high-end department stores. So Rubbermaid actually, you know, flows through both lower end but with high quality brands into the mid tier. And so you would find the right companies, and then you would connect with them, you would call them, you would meet with them, and you would say, “Look, we are going to extend our brand in this particular category via licensing. We’ve identified you as a prospective candidate for that. Are you interested?”

Well in this economy, you would think anybody would be interested to work with it, so they can expand themselves into another area.

Oh, absolutely. There’s so many benefits of brand licensing. If you’ve got idle manufacturing facilities, then you’re running them more because you’re selling more products. You get to walk into a prospective customer with the Rubbermaid brand as opposed to being a no-name brand. I mean, there’s huge benefits. So what Rubbermaid does is they go find that prospective manufacturing partner, that manufacturing partner says, “Yes, I’m interested.” Then the next phase develops the process of vetting that prospective manufacturer to make sure they actually meet your standards. And those meeting the standards are everything from do they understand the brand, can they build that innovation into the product, can they market the product, are you going to spend money in the marketplace promoting the product, do they have good relationships with the retailers in those retail channels you want to be in? Yes, and then fourth, are they going to be in this? And then finally, are they financially strong enough that they’re going to be in existence for the long term?

Yeah, because you wouldn’t want to partner with somebody who knew how to do all that but was on the brink of bankruptcy and was out of the market and fights.

Exactly. Or that you created an incredible and unbelievable product, and then you can’t deliver it because there’s too many people wanting it. You know, a lot of times you over promote yourself, and you can’t deliver when people want.

Exactly. Brand licensing is terrific, because the way I think about it: you have a fantastic brand, that’s one. You have a fantastic manufacturer creating an innovative product, that’s another one. But one and one don’t equal two. They equal four or five. So that manufacturer has to be able to deliver on the demand that’s created by putting that brand with the manufactured innovative product in the marketplace.

So let’s go back to your example of Coca-Cola. Let’s go back with them. I’ve put on 5k and 10k events as an event coordinator and producer or whatever, so when I went to find somebody like Coca-Cola, they wanted to make sure I was going to be around for the next one and the next one and the next one. Now if they can involve you as a partner like DragonCon when I brought in Coca-cola and Subway to work with them as partners–till this day, they’re still partners–they wanted to know that DragonCon would continue to grow from the 15,000 to 20,000 of the 30,000 up about 60,000 for days during the Labor Day weekend so that they can continue to partner like what you’re talking about.

That’s exactly what I’m talking about. It takes such an investment of time and energy and thought process to find a good partner. It can take as much as a year to find that right partner, so when you do that, you want to make sure you find one that’s going to be there for the long term. It’s a win-win over the length of the life of that brand which can go for decades.

Right. What are we to talk about in the next video?

The next video we’re going to talk about defining the size of the opportunity. How big is the opportunity, and how do you know as a brand owner you’re getting the full value from that perspective manufacturing partner? Join us for the next video.