A brand’s decision to sell licensed merchandise is not merely based on financial goals; it is much more than that.
Marketing experts believe that in the exchange for a name (license), the brand gets partnership and collaboration with the licensor, which are not plainly monetary in nature. Every brand has a certain self-image and in collaboration with the licensor, the image has to strive hard to not fall short. For example, a health drink brand, wanting to sell licensed sippers should sell it in a way that its health-oriented image is maintained. So, licensed merchandise builds a relationship between the brand and the licensor.
Licensing is also about reflecting the licensor’s belief system within that of the licensee. For example, brand X wants to sell licensed merchandise by buying the licensing rights of a movie; if the movie is meant for kids, the brand cannot go against that image and produce merchandise for old people.
In the modern world of marketing, licensing is a means for a prestigious brand to produce technically sound and high-quality products based on the market positioning of the licensor plus, its own market image.
Licensing adds to a brand’s character through visuals on its merchandise and lends itself to improve profits. It’s a path to a brand’s success story, not its destination.