Licensing is often thought of as a separate strategy – either we use licensing to generate revenues or sell our products directly. But that’s the wrong way to think about licensing. On the contrary, licensing is actually one of many marketing strategies.
The most common strategy is direct licensing to generate revenues. But that’s not the only way. Another strategy that’s often overlooked is using licensing to deliver more customers (and revenues) for your core products, services, or technologies.
And that’s just what one company with a laboratory R&D platform is doing. The regenerative and personalized medicine industries use their patented tissue-based cellular technology. The company’s marketing strategy focuses on licensing its patented technology to a global network of licensee laboratories operating with its R&D platform. This strategy uses its tissue cell technology as a feeder to drive revenue into its R&D development platform.
It’s using licensing to generate revenue with both its cellular technology and its core R&D platform. The company gets paid license fees on its cellular technology, R&D platform, training, and a percentage of the gross revenue generated from sales of products developed using their IP. Plus, it also receives revenues from the purchase of materials required to use its technology for research and development.
This is a great example of how licensing is integrated into a marketing strategy to increase market share, expand distribution, and drive revenue for your core products. But there are many other ways to use licensing—a third way to use it is to level the competitive playing field. Procter & Gamble licenses out their packaging design for one of their laundry soap brands. By letting competitors use their packaging designs, it eliminates the “packaging features” of competing products, enabling P&G to focus its marketing on the quality of their product.
Another variation of this strategy is to license your technology to other competitors in the same industry and accelerate its adoption by the market. That’s exactly what Tesla and Toyota are doing. Tesla opened its patents to competitive companies to help build the electric vehicle industry. And Toyota offers royalty-free licenses for its hydrogen fuel cell patents to accelerate the development of hydrogen-powered cars.
Other strategies include using your know-how and trade secrets to improve your production and distribution. If you’ve got a new patented product, but the real secret sauce is your manufacturing know how to make it do what it does, license the knowhow to your manufacturing supplier to get it produced and delivered quickly. Or your online ordering system that lets your customers quickly find, customize, and get your product delivered, license it to your fulfillment center to ensure fast delivery. Not only do these licensing strategies help generate more revenues (or lower costs) for your core products or technologies, it also generates new revenues from competitors using your IP.
When you think of licensing, don’t think of it as something separate from your marketing strategy. Make IP and licensing part of your marketing strategy. Use it to partner with other companies in different markets or industries, and drive revenues to your core products or technologies. In today’s interconnected market, your competition is no longer your competition. Instead, they are potentially some of your biggest income opportunities.
In today’s challenging marketplace, you must do more than “sell” your product or service. It requires reaching your potential customers using various marketing strategies, including digital, social media, offline, licensing, and more.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money Making Power of Licensing was released in 2019 and is available on Amazon.com. He’s also a published writer with articles appearing in several prestigious trade magazine including The Licensing Journal, Intellectual Property Magazine, and License India. Rand also mentors at the Cal State Fullerton School of Business and Economics and is a judge for their startup business plan competitions.