Unit 6: Branding & Licensing



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Sports & Entertainment Marketing

Unit Six Outline, 2014-15 School Year

Unit 6:

Branding & Licensing



Unit six addresses the concepts of branding and licensing, two very important principles in the sports and entertainment marketing business. Branding, as a function of marketing, contributes to the overall perception consumers carry with respect to a particular company or its products. Successful branding strategies can be seen all over the sports and entertainment industry, with examples like ESPN, Sports Illustrated, MTV, Gatorade and the New York Yankees. Licensing has become a critical revenue producer for all properties in the sports and entertainment industry and continues to grow at an astounding pace. Unit six explores the factors contributing to that growth.

* TEACHER’S NOTE *

For some added classroom fun relating to branding, play the “Name That Brand!”, “What’s That Slogan?”, and “What's That Tagline?” PowerPoint games.  For the licensing lesson, play ““Name That Team!”. You can find them in the “Games and Classroom Fun” folder on your CD-ROM.



OVERVIEW






OBJECTIVES







1) Define branding

2) Define brand equity and brand extension

3) Differentiate between corporate brand, product brand and store brand

4) Determine the characteristics of an effective brand name

5) Define licensing

6) Discuss the licensing process

7) Distinguish between licensor and licensee

8) Explain the advantages and disadvantages to a licensee



9) Identify the four key considerations of on-site merchandising


LESSONS





Lesson 6.1 Branding

Lesson 6.2 Licensing

Lesson 6.3 The Licensing Process

Lesson 6.4 Merchandising

KEY TERMS






Brand Extension Branding Corporate Brand

Licensee Licensing Licensor

Product Brand Slogans Store Brand

Trademark





Lesson 6.1

Branding


  1. Branding

    1. Branding is the use of a name, design, symbol, or a combination of those elements that a sports or entertainment organization uses to help differentiate its products from the competition 1

      1. Describes a company’s or event’s efforts to develop a personality and make its products or services different from the competition 2

      2. Branding mechanisms

        1. Brand mark

        2. Logo

        3. Trademark

        4. Graphics

        5. Slogans and taglines

          1. Slogans are short, memorable catch phrases used in advertising campaigns designed to create product affiliations among consumers

          2. For example, Dick’s Sporting Goods advertising often features the slogan “Every season starts at Dick’s”

          3. To generate excitement about the team’s move from New Jersey to New York, the Brooklyn Nets launched a marketing campaign just after finishing their last game in their old home with the Twitter-friendly slogan #HELLOBROOKLYN


* TEACHER’S NOTE *
To take a closer look at the concept of slogans, review the student handout marked “Unit 6 - Lesson 6.1 - Student Handout – Slogans ” in the Lesson 6.1 folder on your CD-ROM. The handout spotlights various New Balance advertisements that featured the slogan from their 2012 marketing campaign, “Let’s Make Excellent Happen.” Another handout includes the slogans for each country leading up to the 2014 World Cup, also available in your Lesson 6.1 folder on your CD-ROM.


      1. When a brand name or trade name is registered, it also becomes a trademark 3

        1. A trademark is a device that legally identifies ownership of a registered brand or trade name 3

          1. In 2011, the NCAA paid $17.2 million to secure the registered trademark for the phrase “March Madness” 4

          2. In 2013, hip hop star Pharrell Williams filed a lawsuit against fellow hip hop star will.i.am of the Black Eyed Peas over the phrase “i am” after will.i.am. allegedly sent Pharrell a cease and desist letter informing him that he owns the rights to all things with an "I Am" element when Pharrell launched a YouTube channel called I Am Other

          3. In 2014, Utah State University considered suing San Diego State over the ‘I believe’ slogan (a popular chant at Aggies basketball games is “I believe that we will win”), after SDSU filed for usage of the "I believe" slogan with the U.S. Patent and Trademark Office

          4. Anthony Davis, standout freshman on the NCAA champion Kentucky Wildcats basketball team, trademarked the phrases “Fear the Brow” and “Raise the Brow” just prior to being selected first in the NBA Draft, a reference to his connected eyebrows

            1. I don’t want anyone to try to grow a unibrow because of me and then try to make money off of it,” Davis told CNBC in an interview. “Me and my family decided to trademark it because it’s very unique.” 5

          5. Former Texas A&M quarterback Johnny Manziel has applied for the trademarks "Johnny Football" and "The House That Johnny Built"

      2. Protecting the brand

        1. Organizations will go to great lengths to protect their brand from a legal perspective

          1. According to Michael Napolitano, Licensing Director for Major League Baseball in an interview, Major League Baseball spends millions of dollars per year on trademark protection 6

          2. According to the Oregonian: “Adidas is well known for aggressively guarding the logo it's used for more than 55 years. It has pursued at least 325 infringement matters in the United States, including 35 lawsuits and 45 settlement agreements, according to court records.” 7

            1. In the summer of 2011, Adidas filed suit against a small California footwear company (Radii Footwear) for trademark infringement, claiming two of Radii’s lifestyle sneakers infringe on the distinctive three stripes synonymous with the Adidas brand

          3. In 2012, Rawlings filed suit against rival manufacturer Wilson, over the glove Wilson supplied to Cincinnati Reds star, Brandon Phillips citing the "metallic gold-colored webbing, stitching and lettering" design on the glove as copyright infringement (Rawlings owns the trademark to the term “gold glove”) 8

          4. Since 1967, Chapman High School in Kansas had been referring to its sports teams as the “Fighting Irish” and featuring a mascot bearing a similar resemblance to the fighting leprechaun logo used by the University of Notre Dame. In 2012, the school received a cease and desist letter from Notre Dame, ordering them to discontinue using the logo. Unwilling to spend the money necessary to challenge the University in court, the school held an art contest to design a new logo for school athletics. 9

          5. In 2014, FIFA, ESPN and Spanish-language broadcaster Univision were aggressive in their efforts to curb social media enthusiasts from posting any game highlights via the popular video clip sharing social platform Vine

            1. Click here to read the story and the future of video sharing as it relates to sport related content

    1. Characteristics of a successful brand 10

      1. Positive, distinctive and generates positive feelings and association

      2. Easy to remember and pronounce

      3. Logo is easily recognizable

      4. Implies the benefits the sports or entertainment product delivers

      5. Consistent with the image of the rest of the product lines and company/organization and/or city

      6. Legally and ethically permissible

    2. Brand building 11

      1. Brand awareness

        1. The process of working toward maximizing recognition of a particular brand

          1. Many comic book fans associate comics with Marvel because of brand awareness. Because Marvel Entertainment has such a strong brand, the Walt Disney Company purchased the company for $4 billion.

          2. Despite moderate expectations, Teenage Mutant Ninja Turtles, the fifth installment of the film franchise, stunned Guardians of the Galaxy by dethroning the superhero squadron after just one week at No. 1, shattering sales forecasts by $20 million

            1. In nearly 25 years, no Teenage Mutant Ninja Turtles film has opened below No. 1

            2. According to an interview with USA Today, "Due to the level of brand identification constructed over the past quarter-century, perhaps more people should have expected this sort of breakout debut," suggests David Mumpower, analyst for Box Office Prophets.

      2. Brand image

        1. Consumer perceptions linked to a particular brand (health, excitement, fun, family etc.)

        2. Example

          1. The Disney brand is associated with family fun and entertainment

          2. Brand image is not limited to just sports and entertainment properties but also to athletes and celebrities

            1. Click here to read a story on one author’s suggestion on how Milwaukee Brewers’ slugger could go about rehabilitating his image after a performance enhancing drug scandal rocked the baseball world in 2013

      3. Brand equity

        1. The value placed on a brand by consumers

        2. Nike has strong brand equity because consumers have long associated the brand with top level athletes and quality products

      4. Brand loyalty

        1. Consumer preference for a particular brand as compared to competitor products or services

          1. In the recreational/sport fishing category, Plano brand tackle boxes have established a loyal customer base, maintaining a significant share of the market year in and year out. Plano tackle boxes were again the preferred brand among anglers, representing 55.8% of all tackle box purchases. 12

        2. Brand loyalty is a critical factor influencing the concept of fandom, the higher the level of brand loyalty, the greater likelihood of an increased level of intensity in fandom

          1. In 2014, the Brand Keys Sports Fan Loyalty Index ranked the “most loyal” NBA fans in terms team (brand) loyalty. According to the report, San Antonio Spurs fans ranked number one overall while Sacramento Kings fans ranked last.13

          2. In 2014, the Brand Keys Sports Fan Loyalty Index ranked the “most loyal” MLB fans in terms team (brand) loyalty. According to the report, St. Louis Cardinals fans ranked number one overall while Houston Astros fans ranked last.

            1. Click here to download the full report

          3. Electronic Arts shares jumped 15% just after the video game publisher shared details on its deal with Disney to produce "Star Wars" games, pushing its stock to its highest level in more than a year, thanks to the incredible brand equity that the Star Wars brand has built over the years

            1. For a classic example of brand loyalty and fandom, click here to read the Reuters story about the Las Vegas resident who owns every single pair of Air Jordan sneakers ever made

    3. Event branding opportunities 14

      1. Naming rights

        1. ING, a financial institution that provides banking and insurance services, has the naming rights to the popular New York City Marathon

      2. Promotions and co-promotions

        1. PowerBar, another sponsor of the ING NYC Marathon, utilizes its partnership to provide a special promotional opportunity to race participants by offering 20% off all PowerBar products at the PowerBar store online

      3. Sponsorship opportunities and presenting rights

        1. While ING enjoys the naming rights to the annual NYC Marathon, several other sponsors enjoy “Principal” status, such as ASICS, United Airlines, Foot Locker, The New York Times and Timex

      4. Merchandising opportunities

        1. Licensing opportunities are often available which would include the authorized use of a brand, brand name, brand mark, trademark, or logo

        2. ASICS is a “principal” (primary) sponsor of the NYC Marathon. Part of their sponsorship agreement provides them with merchandising opportunities in that much of the merchandise sold online or on-site is co-branded by ASICS (they are also the presenting sponsor of the official Marathon Store). 15

      5. Hospitality

        1. Companies may have the opportunity to entertain clients, prospective customers and employees with tickets to the event

        2. Most events offer hospitality packages, which typically include access to VIP areas and include food and beverages


* TEACHER’S NOTE *
To see more examples of how the ING New York City Marathon has created awareness for sponsors, review the official handbook from the ING NYC Marathon in class. See if your students can find examples of event branding within the document. The handbook is a PDF on your CD-ROM marked “Lesson 6.1 - Student Handout - ING NYC Marathon Handbook.”


    1. Forms of branding 16

      1. A corporate brand represents an entire company or organization

        1. Walt Disney Company

        2. National Football League

        3. Apple

      2. A product brand represents a particular product of a company or organization

        1. World of Warcraft video games

        2. Harry Potter

        3. iPod, iPhone, iPad

      3. Store brands (also called private labels) are the products retailers sell as their own brands

        1. Gander Mountain, an outdoor sports store, carries brand name merchandise from Columbia Sportswear and Wrangler, but also offers many products under the label of Gander Mountain

        2. Athleta activewear for women (apparel primarily targeting the niche yoga and pilates consumer) is actually a store brand under the Gap, Inc. umbrella

    2. Branding in sports and entertainment business

      1. Sports and entertainment organizations and companies work hard to develop strong brands as a means for differentiating themselves from one another 17

      2. Branding provides a unique means for product differentiation in that individuals (athletes, actors, musicians) can have a tremendous impact on sales

        1. Fans of Johnny Depp will pay to watch nearly any movie for which he plays a role and will purchase DVDs, memorabilia and other licensed merchandise

      3. Brand extension refers to the use of a successful brand name to launch a new or modified product or service in a new market 18

        1. Celebrities and athletes in today’s marketing age are becoming managers of their own brands

          1. Forbes magazine Senior Editor Matthew Miller says “Celebrities are brands, and they are marketing to us and there's stuff we consume off of them, from movies to albums to concerts to books to speaking tours to everything in between, and we sort of all buy into it.” 19

          2. Musician Jimmy Buffett’s list of brand extensions is expansive; from restaurants (Margaritaville cafes), casinos and footwear (Sole of the Tropics flip-flops) to his own radio station on Sirius and a complete line of Margaritaville-branded food and beverages.

          3. Celebrities use their star power to launch product brands, like Boston Red Sox star David Ortiz (Big Papi En Fuego Hot Sauce) and Usain Bolt (Bolt branded SOUL headphone line), popular music stars Kanye West, Rihanna, Jay-Z, Taylor Swift, Justin Bieber, Tim McGraw (fragrance lines), Actress Emma Watson (teen clothing line), American Olympic gold winning gymnast Nastia Liukin (girls clothing line for JC Penney)

          4. Tara Reid, capitalizing on the success of cult film “Sharknado”, launched a fragrance called Shark by Tara on her website after the release of the film’s sequel

          5. Rap mogul Dr. Dre launched Beats Electronics (makers of high end headphones branded as “Beats by Dre”) in 2006, later selling 51% of the audio company for $309 million 20

            1. In 2014, Apple purchased the Beats brand for a lucrative sum $3 billion

          6. Athletes and celebrities also leverage their popularity to open restaurants (according to an article in ESPN the Magazine, over 200 athletes are also restaurant owners), such as John Elway’s “Elway's Colorado Steakhouse” in Colorado or Aerosmith’s “Mount Blue” in Massachusetts 21

          7. Michael Jackson, a celebrity who passed away in 2011, earned $160 million in 2013, more than Madonna (at $125 million) who is still performing

            1. Click here to see the Forbes’ list of the top earning celebrities who have passed away

          8. Click here to read a Forbes story about country star Toby Keith’s economic empire, much of it resulting from his ability to extend his brand


* TEACHER SUGGESTION *
Now is a good time to prompt a class discussion to see if students can identify any additional examples of brand extension! You might also want to access the “brand extension” assignment in lesson 6.1 as it relates specifically to this topic.


        1. Brand extension is not limited to individual athletes and celebrities

          1. According to the South Bend Tribune, the University of Notre Dame director of licensing announced that the University would be selling a Notre Dame branded cologne and perfume by 2013, with 3.4-ounce bottles expected to retail for $62

          2. The entire Pirates of the Caribbean film franchise is an extension of a Disney brand (originally a theme park ride) that has been around for years and the films have now made nearly $3 billion at the box office (that is the booty from the films alone, not including licensed merchandise sales, which range from Halloween costumes to nail polish to lamps) 22

          3. NBC’s hit reality show “The Biggest Loser” has spawned a number of brand extensions over the past few years, ranging from Biggest Loser drink mixes and exercise DVDs to cook books and video games. Through its various brand extensions, the Biggest Loser brand generates an estimated $100 million annually. 23

          4. The Food Network offers concessions items at eight Major League ballparks, including the “Red, White & Blue” steak sandwich which was developed specifically for stadium cuisine in the Food Network kitchen in New York City24

            1. Click here to read about the Food Network’s latest brand extension, opening a restaurant in a Florida airport

          5. In 2014, Rovio, creator of the wildly popular Angry Birds video game app, announced a brand extension into education in which they will be marketing early childhood curriculum worldwide

          6. HBO’s wildly popular “True Blood” series has spun off several products inspired by the show, including novelty costumes, themed fangs, comics, and a cookbook

          7. ESPN has since grown to include ESPN2, ESPN News, ESPN Classic, ESPNU, ESPN Deportes, ESPN Films, 47 international channels; the largest sports-radio network in America; a magazine (ESPN the Magazine), restaurants (ESPN Zone), and a website that clocks 52 million unique visitors a month; and its own $100 million theme park in Florida 25

    1. Importance of developing a strong brand 26

      1. There are a number of benefits associated with the development of a strong brand

        1. Strong brands have the power to create business value and impact more than just corporate revenues and profit margins

        2. Strong brands also create competitive advantage, command price premiums and decrease cost of entry into new markets and/or categories

        3. Strong brands reduce business risk and attract and retain talented staff

        4. Strength of a brand can carry the brand in a tough economy

          1. The Harry Potter brand continues to enjoy unparalleled success, even while the global economy continues to sputter. After the release of the last of the Potter, estimates placed the value of the Potter brand to be somewhere in the neighborhood of a remarkable $15 billion. 27

          2. Click here to read a 2014 story from brandchannel.com about the many Harry Potter brand extensions

        5. Re-establishing brand position and strengthening the brand is a critical component for maintaining a strong brand

          1. One strategy for re-establishing or strengthening a brand is the process of rebranding, which can be described as the updating or creation of a new name, term, symbol, design, or a combination thereof for an established brand with the intention of developing a differentiated (new) position in the mind of stakeholders and competitors28

            1. Gatorade determined it needed to see more growth within the teenage segment of its customer base

              1. In a rebranding effort aimed at recapturing the attention of the high school athlete demographic, Gatorade launched a “G Series” of sports drinks

              2. The G Series campaign targets not only mainstream sports but also emerging sport athletes like skateboarders, surfers, and other non-traditional sports participants 29

          2. Often times a re-branding effort includes the development a new logo or the alteration of an existing logo

            1. In 2013, a number of sports properties included a logo update or re-design as part of their re-branding strategy, including the Dallas Stars introducing a new logo and the NBA’s Charlotte franchise changing their name from the Bobcats to the Hornets (the franchise’s original nickname) and the New Orleans Hornets changing their name to the Pelicans

              1. According to the Charlotte Observer, Charlotte’s rebranding effort cost the franchise nearly $3 million but has resulted in an immediate uptick in sales, with an increase of 59% in new ticket sales and a significant boost in sponsorship and merchandise sales 30

              2. After a two year rebranding process that set The Big 12 Conference back roughly $415,000 on logo design and implementation alone, it was reported by Sports Business Journal that, for the first time in league history, the logo would be required to appear on football uniforms

              3. Click here to review the Jacksonville Jaguars new logo for 2013 as they begin the rebranding process in an effort to grow their fan base and attract more fans to the stadium

              4. Click here for a very cool infographic that shows the history of NFL logos

              5. In 2014, Dayton University unveils new logo, court (consistent with a popular industry trend) and basketball uniforms as part of their rebranding effort (click here for more on the story)

            2. Sometimes a sports or entertainment property will introduce a “secondary” or ‘alternative” mark as an extension of their brand

              1. In 2014, the Boston Celtics introduced an alternate logo reflecting on the team’s long, successful history in the NBA while the Philadelphia 76ers launched a unique mark that pays homage to the city’s history by depicting Benjamin Franklin in a new logo that will appear on team memorabilia for the 2014-15 season (the team reported that they would not be using it as an official logo, alternate or otherwise, but would use it on team branded products).

        6. Opportunities may exist for two strong brands to collaborate on a marketing initiative

          1. Co-branding is the practice of using multiple brand names to jointly promote or market a single product or service

            1. In 2012, Reebok and Marvel partnered to launch a limited edition sneaker collaboration featuring shoes inspired by some of the most popular characters in the Marvel Universe (including Wolverine, Spider-Man and Captain America among others). The co-branded kicks were available online and through Finish Line retail stores.

            2. In 2012, the Collegiate Licensing announced a partnership with Barbie for a co-branded, University-themed Barbie doll collection featuring Auburn University, The University of Alabama, University of Arkansas, and Louisiana State University.

            3. The Sports Business Journal reported a co-branding arrangement between Mountain Dew and 7-Eleven in which they filmed several commercial spots featuring some of the soda brand’s athletes, including skater Paul Rodriguez, snowboarder Danny Davis and skater Keelan Dadd. PepsiCo and 7-Eleven will share the production costs for the spot, which will run during coverage of the 2013 Dew Tour. 31

            4. In 2014, five Australian rugby league teams suited up as Marvel Comics superheroes: Thor, Wolverine, Captain America, Iron Man and Hulk.

              1. The uniforms were licensed by Marvel Comics and replica jerseys were available to fans for a retail price of around $150


* TEACHER SUGGESTION *
The section below identifies a number of recent rankings of “top brands” from various publications and research companies. Use this section to re-emphasize that a brand can be anything from Apple to an individual athlete or celebrity.


      1. Top brands of 2014 32

        1. A brand analyst and strategy company (Millward Brown Optimor) annually ranks the world's most powerful brands measured by their dollar value

        2. Top global brands of 2014

          1. Google

          2. Apple

          3. IBM

          4. Microsoft

          5. McDonald’s

          6. Coca-Cola

          7. Visa

          8. AT&T

          9. Marlboro

          10. Amazon.com

            1. Click here for an infographic on the top 100 brands in 2014 according to Millward Brown Optimor (which shows Nike as the brand demonstrating the most growth by category last year)

      2. Top sports/entertainment industry related global brands of 2014 (overall rank listed in parenthesis) 32

        1. Apple (2)

        2. Microsoft (4)

        3. Amazon.com (10)

        4. Disney (23)

        5. Nike (34)

      3. The latest Forbes magazine ranking of the most valuable sports team brands based on overall brand value (defined as “the portion of a team's overall value that is derived from its name”) 33

        1. Real Madrid (UEFA Champions League) - brand value: $340 million

        2. Manchester United (UEFA Champions League) - brand value: $269 million

        3. Real Madrid (UEFA Champions League) - brand value: $264 million

        4. Dallas Cowboys (NFL) - brand value: $193 million 34

        5. Bayern Munich (UEFA Champions League) - brand value: $179 million

      4. The latest Forbes magazine ranking of the most valuable sports business brands based on overall brand value 34

        1. Nike – brand value: $15.0 billion

        2. ESPN - brand value: $11.5 billion

        3. Adidas - brand value: $5.0 billion

        4. Sky Sports – brand value - $3.0 billion

        5. Gatorade – brand value - $2.5 billion

      5. The latest statista.com ranking of the most valuable event brands based on overall brand value 35

        1. Super Bowl ($464 million)

        2. Summer Olympic Games ($348 million)

        3. FIFA World Cup ($160 million)

        4. NCAA Men’s Final Four ($137 million)

        5. MLB World Series ($135)


Lesson 6.2

Licensing


  1. Licensing

    1. Licensing industry continues to enjoy tremendous growth

    2. Sales of licensed products climbed for the third consecutive year in 2013, according to the International Licensing Industry Merchandisers’ Association’s 2014 Licensing Industry Survey. 36

      1. The 2014 report shows growth in nearly every licensing category, with entertainment, trademark/brands, fashion and sports merchandise being the key revenue drivers. These five broad-based categories together represented 94 percent of all licensed revenues in 2013. 36

        1. Character-related merchandise: The largest classification, encompassing entertainment, TV, movie and celebrity licensing, and the biggest sales generator in 2013. This category accounted for $2.66 billion in royalties and an estimated $51.44 billion in retail sales, up 4.3 percent from the previous year.

        2. Corporate brands: The second largest category in the report, and the one associated with major corporate brands and trademarks, collected $965 million in royalties in 2013, and an estimated $22.5 billion at retail.

        3. Fashion: Royalty revenues for fashion licensing, which includes branded goods of noted designers, increased 2 percent last year to $770 million, translating into estimated retail sales of $16.9 billion.

        4. Sports: Licensing revenues for major league sports, including leagues and individuals, increased 1.9 percent to $698 million in royalties, for an estimated $12.8 billion at retail.

    3. Licensing refers to an agreement which gives a company the right to use another’s brand name, patent, or other intellectual property for a royalty or fee 37

      1. The licensor is the company or individual granting the license

        1. Licensor examples

          1. Cartoon Network

          2. National Football League

          3. NASCAR

          4. Walt Disney Company

          5. HIT Entertainment (home of Bob the Builder and Barney)

          6. WWE

          7. vii. The American Society of Composers, Authors and Publishers (ASCAP)

      2. The licensee is the company or individual paying for the rights to use the licensor’s name or property

        1. Licensee examples

          1. Mars, Inc. (Shrek Snickers bar with green filling)

          2. Mattel, Inc. (Harry Potter toys and consumer products)

          3. Reebok (NFL apparel)

          4. Hasbro (Marvel toys)

          5. EA Sports (rights to put NFL players, stadiums and teams in its games)

          6. Lincoln (for rights to use hip-hop artist Common’s music in an ad campaign for the popular Navigator model of SUV)

    4. The 3 P’s of licensing38

      1. Profit

        1. Determine price points that will establish higher profit margins

      2. Promotion

        1. Merchandise does not sell itself

        2. Trained sales staff and effective promotion are the keys to higher sales volumes

      3. Protection

        1. It is important to copyright or trademark all names, logos, or slogans associated with the product

          1. Michael Jordan has owned the trademark on his name since May 1988 39

  2. Licensing and merchandise 40

    1. Licensed products and merchandise are not manufactured by leagues, teams, or schools, but rather by independent companies under an agreement with a sports entity41

    2. Licensed products are an extremely lucrative business

      1. In 2012, sales of licensed New York Yankees-branded fragrances exceeded Macy’s (exclusive retailer of the product) initial projections by 40 percent, prompting the company to significantly increase the number of stores in which the cologne/perfume was available (industry analysts estimated sales in the $12 million to $14 million range) 42

      2. In 2014, the quarterback of the Super Bowl winning Seattle Seahawks bolted up the charts in the sales of licensed goods featuring his likeness, jumped 18 spots on the NFL Players Inc. list (which said sales of all individually licensed product sales surpassed $1 billion last year) and surpassing Peyton Manning as the highest selling NFL player 43

      3. Over the span of Star Wars' lifetime, $20 billion and counting of licensed goods has been sold, this on top of the $4.4 billion in tickets and $3.8 billion in home entertainment products44

      4. Despite debuting in the fall of 2013, analysts are already anticipating sales of licensed goods featuring characters from Disney’s blockbuster film, Frozen, will generate $1 billion annually for the company 45

      5. The LA Kings set an all-time Staples Center merchandise sales record during the clinching game of the Stanley Cup (and the day after) by selling $2.5 million in licensed gear — and that was just in the arena store 46

      6. Fans spend about $2.9 billion a year on National Football League merchandise, according to Ira Mayer of the Licensing Letter, a trade publication 47

      7. Total NBA product sales last year were about $3 billion 48

      8. ESPN reported that Florida State University director of trademark licensing Sherri Dye said the school's merchandise royalties were $4.58 million last season, helped by the Seminoles’ victory in the NCAA football championship game 49

    3. Licensed goods are available in retail department stores, chain stores, league-sponsored retail outlets, games/events and on the Internet

      1. Licensed merchandise is made available through many channels of distribution

        1. Consumers can purchase licensed products in a wide variety of outlets, ranging from team stores, online websites, retail outlets and specialty stores

      2. Special promotional deals create partnerships between the licensor and the licensee to help boost store traffic

        1. Sweepstakes and contests are run by the sponsor, with the prize being tickets to the sporting event

      3. The Collegiate Licensing Company generates huge profits from the sales of collegiate apparel at the local level within communities that show high levels of support for their collegiate athletic teams

        1. Click here to see a list of the top selling local merchants of collegiate apparel in 2013-14

    4. Because of high demand for licensed products and the wide distribution channels, both licensees and licensors face challenges from rampant counterfeiting

      1. Soon after the announcement that the Atlanta Thrashers NHL franchise would relocate to Winnipeg, Jets merchandise began appearing all over the Internet, despite the fact the franchise had yet to begin manufacturing any licensed merchandise. In an article appearing in the Winnipeg Sun, the newspaper reported finding a sweater described by an online site as being authentic with a price of just $28, however, officially licensed sweaters are expected to fetch closer to $130.50

      2. Major League Baseball uses a hologram sticker that makes a T-shirt or hat an official MLB product, making it easier for fans to identify counterfeit merchandise. MLB runs undercover investigations against merchandise counterfeiters year-round but it ramps them up every year for All-Star week. 51

      3. During the 2011 Stanley Cup Final, authorities in Boston and Vancouver, B.C., seized more than $500,000 of fake merchandise, Prochnow said. When the Bruins celebrated their championship with a parade in Boston, more than about $20,000 worth of counterfeit items was found. 52

    5. Licensing has become a huge part of sports and entertainment business with players, teams, event names, entertainers and logos appearing on almost anything you can imagine

      1. NCAA school logos find their way on to everything from pillows and bedding to waste paper baskets, wall clocks and bird houses

      2. DeLea Sod Farms, the company that supplies the New York Yankees with sod for their field, signed a licensing deal with the Yankees franchise and Major League Baseball to sell the sod at $7.50 for five square feet (and officially licensed Yankees grass seed) at New York City-area Home Depots 53

      3. Team Grill’s licensing deal with the NFL’s New England Patriots allows them to produce two team branded gas grills that retail for $699 and $1,499 54

      4. When Universal Studios in Orlando, Fla., opened its Wizarding World of Harry Potter attraction in 2010, the park’s revenue from licensed merchandise revenue doubled from the previous year (products included souvenir magic wands, Slytherin scarves, Dumbledore steins and Voldemort key chains, among other items based on the blockbuster movie series)55

      5. In 2011, Major League Baseball signed a three-year licensing deal with EyeBlack.com, a Maryland-based manufacturer of protective adhesives used to reduce sun glare, who will create branded versions of their products for all 30 MLB teams, the MLB World Series and the MLB All-Star Game 56

      6. One of the hottest selling items in Brazil during the 2014 World Cup among local fans was a $14 dog shirt with Brazilian colors and the #10 on the back—the number of Brazil’s leading scorer, Neymar 57

  3. Collectibles and memorabilia

    1. Collectibles and memorabilia have a major impact on the licensing industry

      1. According to the New York Times, there are 5 million autographs collectors in the United States alone 58

      2. According to Collector’s Digest, the sports autograph market is worth $500 million 59

      3. A piece of music memorabilia is sold every 15 seconds on eBay 60

      4. Americans alone spend an incredible $57 billion on sports memorabilia 61

    2. Like licensed merchandise, collectibles and memorabilia can be extremely lucrative

      1. Pete Rose, Major League Baseball’s all-time hits leader who is banned from baseball, still makes a reported more than $1 million a year signing autographs 62

      2. In 1992, McDonald's offered a McJordan Burger (a quarter-pounder with cheese, onion, pickles, barbecue sauce and bacon). The dish came in limited markets, making the secret sauce limited as well. In 2012, a gallon of that sauce on showed up on eBay for $10,000. 63

      3. In 2012, a signed, game-used Kobe Bryant face mask sold on eBay for over $67,00064

      4. The uniform Don Larsen was wearing when he pitched the only perfect game in World Series history sold for $756,000 in 2013 in an online auction, including a 20% buyer's fee above the final bid of $630,000 65

      5. In 2012, a 1928 World Series home run ball hit by legendary Yankee Lou Gehrig was auctioned off, ultimately fetching $62,617 (with the seller using the proceeds to help her son pay off his medical school debt) 66

      6. Prior to the 2014 World Cup, 1,283 “collectible” gems were created using legendary Brazilian soccer star Pele’s hair (1,283 represents the total number of goals scored throughout his playing career) with estimates placing the cost of the souvenir somewhere in excess of $4,000


Lesson 6.3

The Licensing Process


  1. Why do organizations engage in the licensing process? 67

    1. Many factors contribute to the mass appeal of licensed products

      1. Intangibility of sports

      2. Consumer affinity for particular teams and/or brands

      3. Brand awareness

    2. Licensee advantages

      1. Positive association with the sports entity

      2. Greater levels of brand awareness

      3. Help to build brand equity

      4. Receive initial distribution with retailers

      5. Expanded and improved shelf space

      6. May be able to charge higher prices

      7. Potential to lower advertising and promotional costs

      8. Increased possibility of success and profitability

      9. Connection with an athlete, sports team, entertainer, or corporation

    3. Licensee disadvantages

      1. Athlete, league, celebrity, organization or sport may fall into disfavor

      2. Success depends on athlete/celebrity performance

      3. Styles change quickly

      4. Royalties and licensing fees can be expensive

      5. Manufacturing costs and risks

      6. Competition can drive up costs associated with licensing fees

      7. Competition can have a negative impact on market share

    4. Licensor advantages

      1. Expansion into new markets

      2. Increase its brand equity

      3. Minimized risk

      4. Enhanced company image and publicity

      5. Increased profit from fees and royalties

      6. Increased brand awareness or recognition

    5. Licensor disadvantages

      1. May lose some control over the elements of the marketing mix when an outside party sells products connected to licensor’s brand

      2. Potential for licensee’s manufactured products to be of poor quality, potentially creating a negative perception of the licensor’s brand

  2. How does licensing work?

    1. Licensing process

      1. Licensees pay a licensing fee

      2. Fees include the ability to use specific logos, slogans or other trademarked images for use in the creation of company products

      3. Licensees take on production issues and assume the risk by manufacturing product



      1. Licensing in the music industry

        1. When you hear a Taylor Swift song while watching a television advertisement for Diet Coke, the brand likely invested a significant sum of money for the rights in a licensing fee for the rights to use the song in a commercial

        2. Examples of music licensing are all around us

          1. Listening to the radio

          2. Watching a movie and hearing music during a particular scene

          3. Listening to music on Spotify online

          4. Hearing music in a restaurant or store

          5. Watching American Idol contestants perform hit songs from various recording artists

        3. The rights to use music through a license are bought and sold every day

          1. Lionsgate, the studio that produces “Mad Men”, shelled out a reported $250,000 (about five times the typical cost of licensing a song for TV according to a Wall Street Journal blog post) for the rights to use The Beatles song, “Tomorrow Never Knows,” in the closing scene of a 2012 episode of the popular AMC series 68

          2. According to a Billboard report, music represented just a small fraction of the estimated $5.454 billion in royalty revenue grossed by licensors in the U.S. and Canada in 2012, rising 2.5% over sales from 2011

    1. Licensor and licensee relationship 69

      1. Licensing provides greater profit, promotion, and legal protection for the licensor

      2. The licensor approves the product and collects the licensing fees and royalties

        1. Warner Brothers granting permission, for a hefty fee, to Electronic Arts to use the Harry Potter character for the development of a new video game

    2. Character vs. corporate licensing 69

      1. A sports or entertainment entity permits a licensee to use specific characters for a fee

        1. Marvel licenses a manufacturer to use the images of the characters from The Avengers

      2. A corporation permits a licensee to use the corporate image of name for a fee

        1. NASCAR licenses a manufacturer to use their corporate logo on a baseball cap

  1. Impact of licensing on consumers 70

    1. Increased opportunity to associate with an athlete, sports team, entertainer, or corporation

    2. Increased supply of available products

    3. Competition can result in lower prices, new products and better quality


Lesson 6.4

Merchandising


  1. In-house merchandising 71

    1. When the demand for licensed products is minimal, an organization may choose to handle their merchandising in-house

      1. In-house merchandising refers to managing the merchandising process within the organization itself, rather than outsourcing or acquiring licenses

      2. The key benefit of in-house merchandising is the probability of increased profits

    2. Steps in the in-house merchandising process

      1. Design the logo and slogan or tagline (if it is not already available)

      2. Determine merchandise type, quality and quantity

      3. Interview local merchants (vendors) and select the company that can best fit the organization’s needs (on the basis of quality, type, quantity, pricing etc.)

      4. Determine distribution outlets

      5. Train sales staff

      6. Prepare on-site merchandising strategies

    3. If an organization feels an in-house merchandising approach is not be the most efficient strategy, they may choose to outsource the effort to a third party

      1. For example, last year the Big 10 Conference signed an exclusive five-year deal with sports retail vendor MainGate to sell merchandise for its football championship and the men’s and women’s basketball tournaments 72

  2. On-site merchandising 73

    1. Refers to the process of selling merchandise at the physical location of the event

    2. The primary purpose is to maximize income for a sports or entertainment event

      1. Organizations maximize income through the sales of concessions and merchandise

    3. Four key considerations for a successful on-site merchandising plan

      1. The location of where the merchandise is being sold

      2. The physical layout and appeal of where the merchandise is being sold

      3. How well the sales operation is performed

      4. The appeal of the merchandise or product itself

    4. Best practices for selling on-site merchandise

      1. The heaviest traffic for merchandising is upon arrival and departure

      2. Test marketing is important to ensure the effectiveness of a good or service

      3. Training of sales personnel varies with the event

  3. Online merchandising

    1. Refers to the process of selling merchandise on the Internet

      1. Online sales now represent more than half of overall sales for the Green Bay Packers’ Pro Shop 74

    2. Making merchandise available online opens up a new sales channel for a sports or entertainment organization to purchase related goods and services

      1. Organizations maximize income by providing a customized shopping environment and allowing consumers access to a wider variety of products and services

      2. Global e-commerce sales surpassed $1 trillion in 2013 75

      3. Overall, eMarketer estimates, US retail mcommerce sales will reach nearly $39 billion in 2013, up 56.5% over 2012 and almost triple the amount spent in 2011 76

    3. Distribution methods

      1. Direct shipping to consumer

      2. In-store pickup

    4. Advantages

      1. Easier to control inventory

      2. Opportunity to offer exclusive merchandise

        1. According to USA Today, sales at the NASCAR.com Superstore jumped 359% after Dale Earnhardt Jr. announced he’d be joining a new team — even though images of the new merchandise weren't yet available 77

        2. In 2012, the NFL Players Association launched an online store featuring authentic merchandise of more than 1,800 NFL players, becoming the first retailer to give fans the choice to own licensed apparel of every NFL player

      3. Opportunities to reach out-of-market consumers

        1. FIFA's Marketing Director Thierry Weil told Yahoo! in an interview: "The ecommerce platform is a vitally important component of our global licensing program. We have a great range of merchandise available and we want to ensure that accessibility to this range is optimal. The online store will give football fans worldwide the opportunity to own their very own piece of the FIFA World Cup." 78

    5. Disadvantages

      1. Security concerns in making transactions online

      2. Potentially higher distribution (delivery) costs

      3. Consumers inability to touch, feel or “test-drive” products before buying can be a deterrent and lead to higher return rates


* TEACHER’S NOTE *
As a fun way to wrap up unit six, ask your students if they have ever wondered how teams that have just clinched a championship win can be wearing championship hats and t-shirts just minutes after the victory. Obviously that merchandise has been printed in advance, but what happens to all the gear that was printed for the other team? For an interesting look behind-the-scenes, read this story.

Unit 6 Key Terms Defined:
Brand Extension: The use of a successful brand name to launch a new or modified product or service in a new market

Branding: The use of a name, design, symbol, or a combination of those elements that a sports organization uses to help differentiate its products from the competition

Corporate Brand: Represents an entire company or organization

Licensee: A company or individual paying for the rights to use the licensor’s name or property

Licensing: Refers to an agreement which gives a company the right to use another’s brand name, patent, or other intellectual property for a royalty or fee

Licensor: A company or individual granting the license

Product Brand: Represents a particular product of a company or organization

Store Brand: Products retailers sell as their own brands

Trademark: A device that legally identifies ownership of a registered brand or trade name

Unit 6 References & Resources:
1. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

2. Sports & Entertainment Marketing Applied, State of Utah Curriculum, Standard One

3. Sports & Entertainment Marketing, Glencoe-McGraw Hill, 2nd ed., p. 144

4. http://www.indy.com/posts/ncaa-pays-17-2m-to-secure-march-madness-trademark

5. http://bottomline.msnbc.msn.com/_news/2012/06/26/12416824-anthony-davis-trademarks-his-fearsome-brow?lite

6. Napolitano, Michael. E-mail interview. 27 May 2008.

7. http://www.oregonlive.com/business/index.ssf/2011/06/adidas_accuses_radii_footwear.html

8. http://deadspin.com/5924491/rawlings-sues-wilson-over-brandon-phillipss-gold-glove

9. http://www.seattlepi.com/sports/article/Column-Notre-Dame-wants-its-leprechaun-back-2228923.php#ixzz1cHhbO1wf

10. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

11. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

12. http://www.floridasportsman.com/casts/100316

13. http://www.forbes.com/sites/marketshare/2013/04/16/19766/

14. Sports & Entertainment Marketing Applied, State of Utah Curriculum, Standard One

15. http://www.asicsamerica.com/nycm

16. NC Education Center, Objective 6.01

17. Sports & Entertainment Marketing, Glencoe-McGraw Hill, 2nd ed., p. 144

18. http://www.tutor2u.net/business/marketing/brands_introduction.asp

19. http://www.cnn.com/2009/SHOWBIZ/06/03/forbes.celebrity.list

20. http://content.usatoday.com/communities/entertainment/post/2011/08/dr-dre-makes-309-million-in-headphone-sale/1

21. Assael, Shaun. “Eat at the Pro’s”. ESPN the Magazine, Aug 10, 2009: p. 48-51.

22. http://www.brandchannel.com/home/post/2011/05/23/Brandcameo-Pirates-of-the-Caribbean-On-Stranger-Tides.aspx

23. http://www.brandchannel.com/home/post/2009/11/30/Biggest-Loser-Brand-Wins-Despite-NY-Times-Expose.aspx

24. http://www.cnbc.com/id/42233089

25. http://www.thedailybeast.com/newsweek/2012/01/15/espn-is-bigger-than-ever-and-that-might-not-be-a-good-thing.html

26. http://www.millwardbrown.com/Sites/optimor/Content/KnowledgeCenter/BrandzRanking2007.aspx

27. http://www.millwardbrown.com/global/blog/Post/2007-12-29/Is-Harry-Potter-a-good-role-model-for-aspiring-global-brands.aspx

28. http://en.wikipedia.org/wiki/Rebranding

29. http://www.brandchannel.com/home/post/2010/04/13/Can-Gatorade-Re-hydrate-Its-Image.aspx

30. http://www.sportingnews.com/nba/story/2013-08-02/charlotte-hornets-name-change-bobcats-rebrand-ticket-sales-team-store-shop?modid=recommended_3_5

31. http://www.sportsbusinessdaily.com/Journal/Issues/2013/06/03/Marketing-and-Sponsorship/Mountain-Dew.aspx?hl=co-brand&sc=0

32. http://www.millwardbrown.com/brandz/2013/Top100/Docs/2013_BrandZ_Top100_Chart.pdf

33. http://www.forbes.com/sites/mikeozanian/2012/10/17/the-forbes-fab-40-the-worlds-most-valuable-sports-brands-4/

34. https://www.youtube.com/watch?v=8ez5Y9LZc8Q


35. http://www.forbes.com/sites/mikeozanian/2012/10/17/the-forbes-fab-40-the-worlds-most-valuable-sports-brands-4/

36. http://www.licensing.org/news/lima-industry-survey-licensing-industry-sales-rise-for-third-consecutive-year/

37. Sports & Entertainment Marketing, Glencoe-McGraw Hill, 2nd ed., p. 151

38. The Ultimate Guide to Sports Marketing, S. Graham, p. 199

39. Rovell, Darren (@darrenrovell). “Fun Fact: Michael Jordan has owned the trademark on his name since May 1988.” 19 February 12. 10:02 a.m. Tweet.

40. Sports & Entertainment Marketing, Glencoe-McGraw Hill, 2nd ed., p. 152

41. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

42. http://www.sportsbusinessdaily.com/Journal/Issues/2012/07/02/Marketing-and-Sponsorship/Yankees-fragrances.aspx

43. http://www.bloomberg.com/news/2014-04-28/seahawks-wilson-overtakes-manning-in-licensed-nfl-product-sales.html

44. http://www.hollywoodreporter.com/gallery/star-wars-universe-20-billion-288325

45. http://money.cnn.com/gallery/news/companies/2014/05/13/frozen-disney-franchises/6.html

46. http://www.sportsbusinessdaily.com/Journal/Issues/2012/06/18/Franchises/Leiweke-QA.aspx?hl=merchandise%20sales%20record&sc=0

47. http://www.northjersey.com/news/business/137921358_Giants_fans_grab_T-shirts_and_other_gear_to_cheer_their_team.html

48. http://www.oregonlive.com/playbooks-profits/index.ssf/2011/11/nike_adidas_are_two_nba_partne.html

49. http://espn.go.com/college-football/story/_/id/11312752/florida-state-seminoles-move-revenues-list

50. http://aol.sportingnews.com/nhl/story/2011-08-07/counterfeiters-reportedly-forging-profits-from-winnipeg-jets-knockoffs#ixzz1UxIhV0eB

51. http://www.scpr.org/news/2010/07/08/counterfeit-stars/

52. http://latimesblogs.latimes.com/lanow/2012/06/la-kings-fans-parade-warning-fake-memorabilia.html

53. http://www.nbcnewyork.com/news/sports/Get-Your-Own-Yankee-Sod.html

54. http://www.bostonherald.com/business/general/view.bg?articleid=1187434&srvc=business&position=1

55. http://theocnow.com/2011/03/30/theme-parks-expect-new-rides-to-send-merchandise-sales-soaring

56. http://www.bizjournals.com/washington/news/2011/06/20/mlb-and-montgomery-countys.html

57. http://time.com/money/2923348/world-cup-merchandise-best-selling-condoms-jerseys-cleats/

58. http://en.wikipedia.org/wiki/Autograph_club

59. http://www.collectors.com/articles/article_view.chtml?artid=3604

60. http://half.ebay.com/help/sell_music.cfm

61. http://econsumersearch.com/blog/sportstalk/sports-memorabilia/

62. http://www.rollingstone.com/music/news/michael-jacksons-thriller-jacket-sold-for-1-8-million-20110627

63. http://www.usatoday.com/story/gameon/2012/10/15/michael-jordan-mcdonalds-secret-sauce-chicago-bulls-nba/1633917/

64. http://www.huffingtonpost.com/2012/05/09/kobe-bryants-mask-charity_n_1502593.html

65. http://www.usatoday.com/story/sports/mlb/yankees/2012/12/06/don-larsen-perfect-game-uniform-sold/1751461/

66. http://newyork.cbslocal.com/2012/07/10/lou-gehrig-1928-world-series-ball-fetches-62617-at-auction/

67. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

68. http://blogs.wsj.com/speakeasy/2012/05/07/how-much-mad-men-paid-for-the-beatles/

69. NC Education Center, Objective 6.02

70. Framework for Strategic Sports Marketing, Presentation Notes, Dr. Brian Turner

71. The Ultimate Guide to Sports Marketing, S. Graham, p. 204

72. http://m.sportsbusinessdaily.com/Journal/Issues/2011/08/22/Facilities/MainGate.aspx

73. NC Education Center, Objective 7.0266.

74. http://www.greenbaypressgazette.com/article/20120710/GPG03/307100276/Packers-rack-up-record-net-income-2011?odyssey=nav%7Chead

75. http://www.bizreport.com/2013/08/global-ecommerce-sales-top-us1-trillion.html

76. http://www.emarketer.com/Article/Smartphones-Tablets-Drive-Faster-Growth-Ecommerce-Sales/1009835#FDCTcfER2SZfLJ78.99

77. http://www.usatoday.com/sports/motor/nascar/2008-02-07-earnhardt-jr_N.htm

78. https://smallbusiness.yahoo.com/advisor/millions-of-shirts--how-the-2014-fifa-world-cup%E2%84%A2-store-is-supplying-merchandise-to-soccer-fans-online-203035225.html



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