Cashing in on pester power

To understand the power of toy licensing as a marketing tool, take a pre-schooler to the supermarket

To understand the power of toy licensing as a marketing tool, take a pre-schooler to the supermarket. In the canned food aisle the child is sure to want the Barbie beans or the Postman Pat pasta and at the frozen food cabinet the pestering will loudly focus on PokΘmon yoghurts or Rugrats cheese.

It doesn't stop there: at home toddlers' bedrooms are shrines to Barney with matching duvets and lampshades. These, of course, have to be replaced a year later when the four-year-old is horrified at the babyishness of the purple dinosaur but seduced by wall-to-wall Action Man paraphernalia.

Take a peek in their drawers and you'll find Bart Simpson socks and Bob the Builder vests.

It's all about licensing: a manufacturer buys the rights to use another brand to popularise its product. The brand can be anything from a cartoon character like Winnie the Pooh to the National Museum - the manufacturer who buys the rights can be in the business of making anything from toothpaste to greeting cards.

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In Britian alone it is estimated to be a £5 billion industry, growing annually by 16 per cent, eight times the rate of the US. Globally it is worth over £100 billion.

It didn't take long for marketers to see the potential for that bespectacled young wizard Harry Potter. As a marketing proposition he's a winner - cute, smart with an edge of danger and, most valuable of all, he appeals to both adults and children, even the difficult-to-reach 10 to 14-year-old boys.

The $150 million global deal between Warner Bros, which owns the licensing rights to J K Rowling's character, and Coca Cola is one of the biggest ever.

The soft drinks company says "'the company will combine the worldwide resources and geographic reach to bring the specialness of Harry Potter and Coca Cola to people and communities around the world".

That emphasis on "specialness" and "community" is bound to provoke some eye-rolling among any media-savvy teenager. However, the purpose of any licensing deal is that a manufacturer, in this case a global mega brand, buys the rights to use a cute child-friendly character to enhance the appeal of its product.

Between now and Christmas it's going to be difficult to avoid Harry Potter as Coca Cola exploits the connection in all media.

But it doesn't stop with the soft drink: toy giants Hasbro and Mattel have both signed Harry Potter licensing deals with Warner.

Hasbro will market Harry Potter trading cards and trading card games, role-playing games, sweets and electronics. Mattel will sell Harry Potter items such as figures and board games.

It was almost certainly the last thing on J K Rowling's mind when she wrote the first Harry Potter book, but each page is full of licensing opportunities.

Take Bertie Bott's Every Flavour Beans. Admittedly Mars, which bought the confectionery rights to the film, isn't likely to be in a hurry to make vomit or spinach flavoured beans, but the company did have its branded beans ready for distribution when the film opened this month.

Licensed toys are a fast growing market. The Toy Manufacturers of America trade group says toys based on licensed properties have posted impressive growth in recent years. Their share of the overall toy market climbed to 46 per cent in 2000 from 35 per cent in 1996.

However licensing a popular toy isn't an automatic road to profits for a manufacturer - as the Phantom Menace phenomena proved.

George Lucas, who owned the license for the figures, sold it to a vast range of manufacturers and the market was quickly saturated with merchandise. While the films were vastly popular among all age groups, the spin-off merchandise was less so. Book publisher Dorling Kindersley ordered 26 million Star Wars books and sold only 3 million, which resulted in a massive cost reduction programme for the company and the loss of 40 jobs.

Whatever the reason, all that merchandise just didn't have the predicted appeal.

Licensing isn't new. It's just the scale that has changed. In 1950s France detergent giant Procter & Gamble began promoting its Bonux washing powder brand by including a toy in every box.

Generations of French children grew up looking for their "cadeaux Bonux" in the box of soap powder, while at the same time they were subliminally being sold a brand loyalty to the US company.

From the start the promotion was a success and several other companies copied the idea. When it was phased out, the toy-in-the-box concept was taken up by breakfast cereal manufacturers and is now the most common marketing ploy in that sector.

However, Proctor & Gamble is now relaunching the "cadeaux Bonux" idea, this time with a Rugrat toy giveaway, and it is being seen as a sign that the idea could be on the way back for good.

The soap giant clearly realises that pester power can be a force in even the most mundane household product and that the way to get that pester power really going is through toy licensing. The television advertising campaign to promote the new Rugrat freebie shows how important the child is in the hard sell.

In it a child dressed all in white is seen moving his slide to avoid a small muddy puddle. He quickly places the slide next to a much larger muddy puddle so that he can get truly filthy and his mum will have to buy Bonux.