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Nonprofits adopt more businesslike strategies as they try to give shoppers a reason to buy.

They have great causes--some that tug at the heartstrings, others that support noble works of different kinds. But if there's one thing that's become apparent to those involved in cause-related licensing over the past few years, it's that they are, in many respects, no different from anyone else trying to match property to merchandise to create a compelling reason to buy.

"It's all about the product. Period," says Johanna O'Kelley of Sierra Club. The vast majority of shoppers won't buy a product with a non-profit's name on it just to feel good. While the brand may attract some initial attention in the store, it ultimately serves, in sales terms, as "the closer"--the factor that drives somebody to pick one product over another when all other factors are equal.

The business case for the cause

The 2004 Cone Corporate Citizenship Study found that 86% of Americans agree that "I am likely to switch from one brand to another that is about the same in price and quality, if the other brand is associated with a cause."

It's a sense that hits home with Gary Hymowitz of SG Footwear, who within the past month began discussions with one non-profit. "It's the kind of license that makes a parent feel good about buying this one versus that one," he says. He also notes that the recent tragic tsunami has brought such thoughts front and center.

That's a point acknowledged by Erika Foster of Save The Children, who says the organization's visibility during post-tsunami relief efforts brought calls from many companies "looking to do short-term events," four of which have turned into potential product licenses.

As has been the case with many other segments of the licensing business, the nonprofit category has remained fairly stable for the past several years; in 2004, it accounted for $850 million in retail sales, according to TLL's Annual Licensing Business Survey.

It's a tough road, particularly for those trying to function in organizations that don't inherently understand licensing. (One organization, The Nonprofit Licensing Forum, was launched earlier this year with the goal of helping guide them.)

Those within non-profit licensing have had to become more strategic just to keep up with the rest of the brand world--and to fulfill their missions. "Building awareness is an important consequence of the licensing program, but the revenue generated is far more important," says Michelle Alfandari of Moda International Marketing, which represents the National Trust for Historic Preservation.

The most fundamental step is to understand the group's core appeal. For the National Trust, it's all about design heritage, authenticity and credibility. That's reflected, for example, in the furniture that will be launched by Hammary at the High Point market in April. All three collections in the line--each representing a distinct design period--have been inspired by pieces at actual historical sites (though Alfandari is quick to note that the pieces aren't exact replicas).

Similarly, the National Trust co-brand on a paint line that licensee Valspar has been selling through Lowe's since 2001 is a "stamp of authenticity for historically documented colors."

Co-brand, or go it alone?

Alfandari says that for manufacturers of commodity products, cobranding with a nonprofit should be an attractive proposition. For one thing, there's the marketing association that can only be seen as a postive. Secondly, unlike in some other licensing relationships, there's no chance the non-profit is going to use a short-term agreement to learn the business, and then pull the license to do it themselves.

That may be, but the American Red Cross is going in the other direction in its newly launched program via agent Campbell Associates--transitioning from the prior cobranding strategy to one that centers on the Red Cross itself. Brand attributes such as expertise in health and safety will be emphasized.

Jennifer Chametski of American Red Cross says one tactic for differentiation could be packaging information from Red Cross experts in with the products--establishing a real added value, rather than relying just on a feel-good appeal to drive the sale.

O'Kelley of The Sierra Club has taken a methodical approach in strategizing a cohesive plan, rather than the small cadre of "opportunistic" licenses in place when she arrived. A key element was having brand con sultants Graj & Gustavsen develop a "brand book" to communicate a feel and style sense.

The apparel program that is now moving into its fifth season has penetrated "a few hundred" upper-tier independent retailers of women's apparel and men's furnishings. Other than via tags and labels, none has overt Sierra Club identification. Rather, that comes in subtle touches, such as small "Protect" labels that signal that a garment is made from renewable resources, or an "Explore" tag that indicates technical garments.

More recently the apparel has been supplemented by accessories--a bag program is about to be launched--and organic food, which O'Kelley expects to be a major growth vehicle.

O'Kelley concedes one of the inherent weakensses of non-profit as licensor--few marketing dollars to support the program. But she's trying to work products organically into public service ads that support the cause.

One other piece of creative outreach: A class this semester at Parsons School of Design is structured around a competition to develop a tabletop direction for The Sierra Club.
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Title Annotation:product licensing
Comment:Nonprofits adopt more businesslike strategies as they try to give shoppers a reason to buy.(product licensing)
Publication:Licensing Letter
Geographic Code:1USA
Date:Feb 21, 2005
Words:869
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