What's on your counter?

Some of these unique products are born out of license agreements, and according to many we spoke with, the number of agreements made in the automotive industry is likely to continue growing. In fact, the royalties paid in 2005 for Corporate Brands, in which the automotive industry is included, were $1.86 billion, according to the International Licensing Industry Merchandisers' Association (LIMA).

"In retail dollars, that's about $19.5 billion a year," asserts Charles Riotto, president of LIMA, which has been around since 1986 and has sample license agreements available in the members' section of its Web site, www.license.org. "The Corporate Brand segment has been going up every year for the last five years."

"Retailers are becoming more licensing savvy about how they can support branded products within their retail arena," says Kristin Edstrom, licensing manager with Turtle Wax. "I've seen retailers looking for incremental sales who have reached out to collectible auto-branded items in their stores."

A complete line of Turtle Wax-branded interior and exterior battery-operated accessories is arriving in stores this month. In 2006, Turtle Wax signed a license agreement with manufacturer ToyQuest, a division of Manley. The products include a Wheel and Tire Detailing Kit, Auto Interior Detail Kit and Sonic Car Wash Mit.

"It's a very competitive market right now, and we look to offer new products to our buyers and retailers that are going to contribute significant growth in their whole chain of auto branded products," Edstrom explains.

About two years ago, Coker Tire began expanding on its license agreement with Michelin Lifestyle — one it has had for years to sell vintage tires — to produce Michelin memorabilia and high-end garage accessories. As a large antique car supplier, these iconic products, our contacts say, are important in determining which license agreements to make (and what licensed products to stock and sell).

"Our license agreement is under the Heritage and Culture category because we are a vintage tire dealer and anything we produce has to use pre-1998 artwork, logos and graphics," explains Kendall Kaylor, Michelin license product brand manager with Coker Tire. Michelin's 100-year anniversary was in 1998. "That appeals to our customers because we deal with vintage car customers."

"We probably have another 25 to 30 products in various stages of approval and development right now," Kaylor says. "As we get a little further along in our marketing, we hope that Michelin dealers and tire dealers in general will offer these items in their stores. They offer good add-on sales and are good for in-store displays, too — some retailers just put them on the counter."

With locations in Chattanooga, Tenn., and Fresno, Calif., most of Coker's current business is online and mail-in, but the company has a retail market in mind for these products, notes Kaylor. For those interested in licensed Michelin items, e-mail [email protected] to learn more.

A trend on the rise

"It seems like there's been an increased number of companies that believe licensing can provide value for their company," he explains. "That means more opportunities for companies to license brands and trademarks because more of them are available. Part of that is the result of success of existing licensed products."

Goldmarks offers a wealth of licensing resources on its Web site, www.goldmarks.net, including good practice tips and links to other sources.

FRAM®, a division of Honeywell Consumer Products Group, found a natural extension for its new line of cabin air filters in a license agreement with Church & Dwight Co., Inc., the makers of Arm & Hammer® baking soda. Brian Holliday, vice president of FRAM marketing, says cabin air filters are one of the fastest growing components of the filter market, and more than 10 million new vehicles are entering the car parc each year with a cabin air filtration system.

He continues that consumers typically know of regular air and oil filters, but aren't as familiar with cabin air filter products. Consumers do recognize the Arm & Hammer name, however, and FRAM's new Fresh Breeze™ cabin air filter is designed to leverage that awareness of another trusted brand into their product.

"Arm & Hammer stands for purity, deodorization...it's a perfect fit for this filter," which features baking soda in addition to carbon in its filtration system, Holliday offers. The FRAM Fresh Breeze cabin air filter is designed to filter 98 percent of the contaminants in the five-to 100-micron size as well as absorb odors in the passenger compartment with carbon and Arm & Hammer baking soda. In focus groups, consumers said the FRAM Fresh Breeze cabin air filter with odor removal was highly appealing, according to the company.

Holliday adds this filter has a human touch, as many consumers deal with odors and irritations caused by airborne particles that cabin air filters can eliminate in vehicles. The product's clean, green packaging and new POP displays could help this filter jump off the shelves and into consumers' hands as well, he notes.

Direct to retail

While there's a clear outlet for licensed products in retail stores and jobber locations with DIY traffic, there's another trend taking shape that bridges the gap between retailers and licensors. Called direct to retail licensing, consultants we spoke with are noticing this trend where brand owners bypass the manufacturer and create license agreements directly with retail outlets, perhaps to sell their own store brand part or accessory.

"The manufacturer is cut out of the deal," Riotto says. "The brand owner goes straight to the retailer, who becomes the licensee as well." He explains that in these cases, retailers will go to a manufacturer with a specific order to produce certain merchandise that is sold only in their retail outlet. Sometimes, retailers will set up production offshore where it's cheaper, he adds.

"The retailer has the exclusive rights to that product because they have that license, so they are able to get better margins," continues Riotto, adding that the downside is retailers operating under this agreement have all the problems of a manufacturer. If there is a shortage of materials, for example, retailers must be prepared to handle it.

But it is a way for retailers to gain from successful license agreements.

"Most of these deals have worked out pretty well. It's a trend that's been on the increase in the last several years and it seems it's still going in that direction," Riotto states.

For those interested, another way to brand your company name and develop a solid reputation is to license out service. "I believe that these automotive retailers could be developing automotive services that they could roll out as part of their footprint," offers Martensen. "Licensing services is a whole new frontier that's just in its infancy at this point."

Consider this: A retailer like Wal-Mart, which already sells tires and batteries, might consider partnering with a local jobber or retailer with its own bays in order to perform professional installations of Wal-Mart tires and batteries, he explains. Therefore, Wal-Mart benefits from the experienced installation, while the retailer benefits from the exposure to consumers (especially if their technician is wearing a shirt or hat with his or her employer's name).

"Consumers have a natural affiliation with our brands," says Julie Smartz, vice president marketing and retail development for Primedia Enterprises. Primedia has more than 50 automotive titles available to license, but three in particular are coming up on major anniversaries: Motor Trend is celebrating 58 years this year; Hot Rod, 59 years; and Low Rider is celebrating its 30th anniversary. Products carrying the Hot Rod name include garage furniture and tool sets; products with the Motor Trend name include a line of auto accessories, such as jumper cables, power inverters and spotlights; and Low Rider just launched into the cleaning and wax market.

She adds that it can be difficult to build a brand from the ground up, which is why licensing has such a positive impact: Products stand out when accompanied by a name that has such a high level of awareness.

And the licensing industry is "definitely growing," says Smartz, who notes that Primedia works with more than 80 retailers.

"That's why it makes sense for manufacturers to do it," she says. "We have marketing capabilities that can really help drive the business. And for the distributors and retailers (our licensees) work with, it helps them as well, because the product ultimately moves quickly off the shelves into the hands of the consumer."

Sales abound

If forming your own license agreements isn't your thing, there still are ways to benefit from the brand recognition that licensing generates. Licensing could bring consumer awareness to lesser-known products. That is one reason FRAM teamed with Arm & Hammer to promote its cabin air filter product.

"FRAM recommends that cabin air filters are changed like a regular air filter: once a year," Holliday explains. "The reality now is it's probably closer to 25,000 miles. The bigger reality is that it might not ever get replaced."

The brand is hoping the awareness generated through the partnership with Arm & Hammer will help change that.

Counterpeople and store managers can take the opportunity to explain the benefits of a particular product. Martensen of Goldmarks Company says licensing offers marketing and brand building benefits to a core business as well as financial benefits to core revenue.

But one of the most important benefits for brands in the automotive industry is legal, especially as it relates to counterfeiting, he says.

"That's one of the reasons General Motors licenses," Martensen explains. "If they didn't, there would be a whole series of bootleg goods out there to meet the demand of enthusiasts."

And carrying these properly licensed and trademarked products increases a retailer's credibility with customers. In an effort to maintain quality reputations, most licensors also follow a stringent approval process for products that wear their brand. For Coker Tire, Michelin must approve everything they produce — from concept to final package.

Edstrom says the Turtle Wax/ToyQuest agreement gives ToyQuest an opportunity to leverage the strength of the Turtle Wax brand to increase consumer awareness as well as develop new retail relationships.

With licensing relationships around the world and five licensees in the U.S. in the automotive category, Turtle Wax leverages the brand in auto accessories, appearance products, vintage collectibles and T-shirts. It is looking to move the brand into surface care, including household cleaning and polishing products as well, Edstrom says.

In the end, license agreements allow companies all along the supply chain to form more concrete partnerships and solid business opportunities.

"The big thing for us is (the agreement) really shores up our relationship with Michelin," Kaylor explains. "We're in the tire business, but we also want to have these other items available for collectors."