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Innovation sensations!

As the global licensing market matures, uncharted product categories are becoming scarce. But every so often, a deal comes along that draws a collective, 'Ah, yes. Brilliant translation!' from market players. Such deals are typically tied to category extension, reinvigoration and product innovation, and when a licensor hits on one, the excitement is palpable.
June 1, 2003

As the global licensing market matures, uncharted product categories are becoming scarce. But every so often, a deal comes along that draws a collective, ‘Ah, yes. Brilliant translation!’ from market players. Such deals are typically tied to category extension, reinvigoration and product innovation, and when a licensor hits on one, the excitement is palpable.

‘Part of the challenge is trying to find those companies that are great marketers, have great distribution to retail, and can apply the property to product in a way that the consumer is going to find exciting, fun and unique,’ says Dave Hedrick, VP of promotional marketing for Warner Bros. Consumer Products, which has helped to revolutionize the beverage category through a partnership with In Zone Brands that dates back to 1999. ‘It was one of those leaps of faith you take with a small company. We looked at their product, the innovation and what they were willing to do to support that product, and we had that combination of gut reaction and good business decision.’

Of course, partnering with small companies can be a mixed bag of blunders and blessings. On the one hand, smaller companies can sometimes be a little nimbler when it comes to launching new product. And because they are smaller, they can be a bit more enthusiastic and throw themselves completely into supporting their property throughout its life cycle. But, cautions Hedrick, ‘If you don’t have the marketing support or distribution to back [your really great, innovative product], you’re only going to get so far. It’s really about having a strong business plan to achieve the necessary penetration – coupled with the unique product – that makes a company worth a look for us.’

While licensors are often convinced to take the calculated risk of partnering with a smaller company, for those new to character licensing or those in a non-traditional product category, the bulk of the risk rests squarely on the licensee’s shoulders. For instance, Scholastic’s Clifford playground equipment line with licensee PlayCore has been a project two years in the making. And with product just beginning to roll out this year, Scholastic VP of consumer products Peter Van Raalte doesn’t undervalue the company’s level of commitment to the property. ‘It’s an extremely expensive proposition on their side because they have to mold parts [for large commercial playground sets].’

Similarly, with Marvel’s new Niagara Falls-based retail-tainment mecca Adventure City, the risk is carried by licensee the Niagara Group. ‘We’re not in the business of taking substantial financial risks, which is why Adventure City is a straight licensing deal with relatively little monetary expense incurred by us,’ says Marvel VP of consumer products and retail development Paul Gitter.

And most licensors have dedicated teams scouring the manufacturing market for potential partners. ‘Our sales force is constantly pitching and developing strategies for trade shows to find companies that might have unique product and be good partners for us,’ says WBCP’s Hedrick. Conversely, Marvel’s Gitter says his company never finds new licensees at trade shows: ‘Typically, most of our business relationships are built by word-of-mouth or research with retailers and other partners.’

Still other licensors create opportunities for their star licensees by digging into market holes. Years ago, ‘I recognized that there was a void in the packaged underwear category, which was dominated by Sara Lee and Fruit of the Loom. I was frustrated that there was no higher-quality and better-packaged product from the traditional sources,’ says Nickelodeon Consumer Products VP Hal Snik. ‘When I came to Nick [in December 1998] and was managing the Blue’s Clue’s business, I approached [hosiery licensee] Handcraft Manufacturing about doing underwear in reusable packaging that incorporates quality fabrics, embroidery and patterned waistbands.’ Snik claims that specialty underwear is a small but lucrative category that the major manufacturers had overlooked until Handcraft came along.

But when it comes to pure product innovation that no licensor can ignore, it’s often the companies that are new to licensing or those with unique distribution channels that command attention. Read on as KidScreen wades into uncharted licensing waters with a sampling of licensors’ favorite innovators.

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