Tony the Tiger, Toucan Sam and Snap, Crackle and Pop can be seen in plenty of places other than cereal boxes these days. As the Kellogg Co. moves full speed ahead with an aggressive brand-licensing program, the popular characters are showing up on everything from cereal bowls and children's snacks to greeting cards and even a NASCAR car.
Kellogg is so committed to licensing that it's even layering into the program some of its newly acquired Keebler brands and characters, like Ernie the Keebler elf, Famous Amos and Cheez-It.
"Licensing is a great way to extend the reach of our brands with kids," Elisa Webb, Kellogg's worldwide licensing director, told Brand Marketing.
The company, which created an in-house licensing department a year ago, already has 36 licensees. Among them: a Tony the Tiger NASCAR car, an American Greetings card line (Toucan Sam; Snap, Crackle and Pop; and Tony the Tiger), Brach's Froot Loops Fruit Snacks, Houston Harvest Rice Krispies Popcorn Krunch and Duncan Hines muffin mixes. Mattel and Hasbro are two other big license partners.
Through a licensing agreement with A. Aronson, New York, Kellogg just launched a line of cereal bowls with a suction cup on the bottom and a PVC image of characters associated with several of its cereals, including Rice Krispies, Frosted Flakes and Froot Loops. The bowls are being sold at key retailers, including Sears, Target, Wal-Mart, Kmart, Toys "R" Us and select department and supermarket chains.
"What we're doing with licensing is reinforcing the brand and creating an emotional bond between consumers and our characters," Webb said.
Battle Creek, Mich.-based Kellogg currently is focusing on publishing licenses, including books, interactive and CD-ROMs. It's also eyeing expansion in the food sector, considering such categories as yogurt, ice cream and waffle cones, frozen novelties and refrigerated fruit juices. And there's plenty of opportunity for other products, as Kellogg met with more than 200 licensees as a first-time attendee at L!CENSING 2001 International, this year's licensing trade show, held in New York City in June.
Like Kellogg, other consumer packaged goods companies are also taking a more strategic approach with brand licensing. Nabisco and Pepperidge Farm, for instance, also worked with A. Aronson to offer branded snack containers. Nabisco's container is in the shape of a large Oreo cookie; Pepperidge Farm's, the well-known Goldfish cracker.
Trademarks/brands like these are the second fastest growing sector of the licensing business, after fashion, according to a new study sponsored by the International Licensing Industry Merchandisers' Association in conjunction with the Yale School of Management and the Harvard Business School. Holding a 16.8% share of the market, they generated $982 million in royalty revenues in 2000, a 10% increase.
But entertainment licenses remain the strongest category in the licensing business, maintaining a 44.3% share of the market. They generated $2.6 billion in royalty revenues last year, a 2.5% increase.
Among recent efforts in this area is the massive "dino-marketing" campaign that's backing "Jurassic Park III." Some 50 licenses tie in with what's being called the leading dinosaur brand in the market. They include products from Nabisco, Hasbro, Fruit of the Loom, Tiger Electronics, Lego, Nabisco and Random House. Retail partners include Wal-Mart, Kmart, Fred Meyer Inc., Toys "R" Us, Rite Aid, Target and J.C. Penney.
No doubt, the size of the license collection proves that Universal Studios Consumer Products Group is batting on a huge success of the third part of its most successful film franchise. And manufacturers have been quick to get a piece of the pie.
Hasbro, the movie's master toy licensee, is offering action figures, toy vehicles, playsets, plush and games, while Lego has introduced interlocking pieces in the shape of dinosaurs featured in the movie. And "Jurassic Park"-branded Cheese Nips from Nabisco are planned to be on supermarket shelves soon.
Used in the right way, a license not only increases brand awareness, but also improves a company's stock equity, according to Dave Siegel, president of WonderGroup, Cincinnati, a kids' marketing agency, and co-author of "The Great Tween Buying Machine."
"A good license can create a brand where there wasn't any," said Siegel. "In some cases, the license is more important than the brand because that's why a consumer is buying a product."
What makes today's license market different than others is that there aren't any properties on the caliber of Pokemon or Power Rangers. Even movie licenses aren't performing like they once did. After the sluggish performance of some properties associated with "Star Wars Episode I: The Phantom Menace," many marketers shied away from film properties.
While the November 2001 theatrical release of "Harry Potter and the Sorcerer's Stone" from Warner Bros. Consumer Products has all the elements of a successful license, marketers haven't fully embraced it, said Siegel.
"'Harry Potter' should be the hottest thing around, but people aren't overbuying it," he said. "People are afraid of being burned in the way they were with 'Star Wars."'
Still, "Harry Potter" has strong potential, as do other up-and-coming licenses. Among those creating a buzz: 4Kids Entertainment's Yu-Gi-Oh; HIT Entertainment's Bob the Builder; Universal Studios Consumer Products Group's "E.T.," which celebrates its 20th anniversary in 2002; Nickelodeon's "Jimmy Neutron Boy Genius"; and Sony Pictures/Marvel Enterprises "Spider-Man."
Clifford, the Big Red Dog, is another property on which marketers have their eyes. The character got its start more than 30 years ago as a children's book, and has soared in popularity since it became the subject of a PBS television show last fall.
Today, Clifford is the subject of 50 licenses, according to Peter Van Raalte, vice president of licensing, Scholastic Entertainment. The Curad adhesive bandage and wound care brand from Beiersdorf, Wilton, Conn., is one of its licensees. The brand will soon launch a 30-count box of kids' adhesive bandages in two different designs.
Beiersdorf chose the Clifford license because of the character's popularity and because it fits with its target market. Most importantly, it felt Curad would benefit from the strong public relations and marketing support that Scholastic devotes to the property.
"We feel that any licensor who develops creative hype and awareness around their property will be successful and drive business in the retail arena," said Lynn Petropulos, consumer promotion manager, Beiersdorf, whose other brands include Nivea and Eucerin skin care products. "This, in turn, will help our brand grow."
While there aren't any guarantees that a license will work, marketers are headed in the right direction if they take the following steps, according to Siegel:
The Right Age
When choosing a license, marketers should keep in mind that some properties are only suitable for certain age groups. If, for instance, the target market is both younger and older kids, a Mickey Mouse license may not work. Why? Many kids over the age of 7 or 8 perceive it as being babyish.
"Anything that makes an older kid seem young won't work," Siegel said. "This age group is very concerned about not being a baby."
A candy company recently approached WonderGroup about using a Disney license. WonderGroup immediately discouraged it from doing so, stressing that it would have been an immediate failure because the product was geared toward older kids, said Siegel. Snoopy is another property that marketers should use caution when employing. While the license may work in the adult market, it hasn't been successful in the kids' market, said Siegel.
"We've seen so many people use Snoopy, but it's not a good kids' license; it never has been," he said.
As for what's hot and what's not, younger kids seem to favor Disney and television characters like Rugrats and Blues Clues. Older kids love music, characters from kid-friendly television networks like The WB and Scooby Doo products. Boys are particularly into sports and action licenses, while girls favor music, animals and art. If both boys and girls are being targeted, marketers should appeal to common interests, like sports, music (older kids), and animals and nature.
New or Classic
Some marketers opt for new licenses, while others feel more comfortable with the tried-and-true properties.
Deciding which type to use hinges on the competitive atmosphere of the product category. Siegel recommends that if the category has few, if any, licensed products, it's best to take the safe route and go with a license that has been around for a while. In this case, it may be best to align with a character from a long-lived television show.
"Don't swing for the fence if you don't have to," Siegel stressed.
But in cases where standing out from the crowd is critical, it's better to take a chance and try a newer license. Even in this case, though, it's still important that the license has something going for it.
"Some licenses are so new that you don't know what you'll get from it," he noted.
When contemplating a license, marketers should consider the attitude of the retailer. That's because a good license can increase product distribution, especially for new or small companies. Here, too, the age of the license comes into play.
"If a license is so new, chances are it won't make any headway with the retailer," Siegel said.
Deciding on which license to use is never easy. At times, it almost seems like a gamble when deciding what will work and what won't. Some movie licenses are faddish, often losing consumer interest once the popularity of the movie dwindles.
But as the Jurassic Park initiative demonstrates, the right movie licenses can last for years.
Marketers who want to have somewhat more of a guarantee may opt for television licenses, like those from Warner Bros. Television or the Cartoon Network, which tend to be safer than movie licenses because they're seen on a daily basis.
"Kids don't want to look uncool," he said. "They like television licenses because they know that if they wear it, eat it or play with it, people won't say, 'What's that?"'
Choosing a license is only half the battle. Next comes ensuring that kids know about it and ask for it. While advertising and promotion is key, product placement is important as well.
For instance, Siegel cited a several-year-old case when a company licensed the Power Rangers for packaging a refrigerated cheese product. But because the cheese was in the refrigerator case, rather than at eye level, where most kids' products are, it missed the target audience.
"Kids never knew it was there, so they didn't ask mom to buy it," he said. "While the license was strong, it missed the driver."
The best licenses have a strategic fit with the brand itself, said Julie Halpin, chief executive officer of the Geppetto Group, New York, a kids' marketing agency. For instance, a license for a music group may work better on, say, a kids' radio than a bath towel because the radio ties in with music.
"All licenses don't fit with all products," Halpin noted.
For Kellogg, this means not having many products in the marketplace, but having the right products in the marketplace, Webb said.
"We make sure that the product fits with the brand position," said Webb. "We work very closely with our brand managers to reinforce what our characters mean to our consumers."