Definition
In strategic marketing, licensing is an arrangement in which a licensee is given the right to use a process, trademark, patent, or other proprietary item for a fee or royalty. It’s a relatively simple, low risk linkage that allows a manufacturer to “enter” new markets.
In global marketing, licensing is an agreement between two companies in which the licenser grants the right to the licensee to sell a patented product in specified markets for an agreed-upon fee. It’s a tool for participating in foreign markets without large capital outlays. When capital is scarce, when import restrictions forbid any means of entry, when a country is sensitive to foreign ownership, or when it is necessary to protect trademarks and patents against cancellation for non-use, licensing is a legitimate means of capitalizing on a foreign market.
In sponsorship marketing, licensing is the right to use a property’s logos and terminology on products for retail sale. Note: While a sponsor will typically receive the right to include a property’s marks on its packaging and advertising, sponsors are not automatically licensees.
See also
References
- American Marketing Association, AMA Dictionary.