Motocross manufacturers blaze a trail in off
First popularized in europe following World War II, motocross didn't fully take hold in the U.S. until the 1970s. In 1971, the American Motorcyclist Association (AMA) conducted a professional motocross race on a temporary track at Daytona International Speedway. One year later, motocross debuted in major urban sports stadiums, and the term, "Supercross"—a combination of Super Bowl and motocross—was coined. By the 1980s and '90s, teams, motorcycle manufacturers, broadcast partners, race facilities, and sponsors elevated the sport to a new level. Today, top motocross/Supercross riders are household names, and off-road motorcycle sales have soared, opening the door for a range of merchandising opportunities.
WHEELS & DEALS
Motorcycles, ATVs, Utility Vehicles, and Jet Ski Personal Watercrafts are just some of the unique consumer products that have made the Kawasaki brand a household name. Although the company's 7-year-old licensing program focuses primarily on the overall brand, off-road vehicles represent a large part of the company's licensing sales. According to Dana Smith, president and COO of Equity Management Inc. (EMI), which has handled Kawasaki's licensing program for the last two years, "We represent Kawasaki the brand, therefore, all of the products become secondary to the brand. That said, we also do a number of licenses that are model specific." EMI's licensing strategy focuses on several core elements including: toys and collectibles, apparel, and the Kawasaki brand. "The majority of consumer interest lies in the toy and replica categories, including die-cast, plastic model, and radio-control and ride-on toys," explains Smith. "As we begin to branch out, the next big area is apparel and accessories. For Kawasaki it remains a good secondary focus with a strong consumer base that is very brand loyal." EMI also focuses its attention on the Kawasaki brand itself. "This focus," says Smith, "is not motocross specific, rather it's about the core brand equities of power and performance." Ultimately, he continues, this strategy opens up categories under the Kawasaki brand that are not directly tied to motorcycles. "Our most recent license in this area is a line of Kawasaki power tools with All Trade, which debuted at the National Hardware Show in May." In this case, Smith says, the license does not necessarily have direct relevance to off-road motorcycles, but it does align directly with Kawasaki's core brand equity. EMI also has put together a musical toy instrument license with Kidz Toyz that introduces children to the brand. In addition, says Smith, "We are looking to do a more adult-oriented, higher-end musical instrument program."
Yamaha Corporate Licensing Manager Kim Steadman had nine years of previous licensing experience when she came on board in April 2002 to help implement Yamaha's new licensing program. "Since racing is our heritage," says Steadman, "Yamaha Sport is the strongest part of our licensing program. We emphasize our blue-and-white image and Yamaha Factory Racing. Our particular focus is on off-road competition motorcycles and our roadrace motorcycles." As far as Yamaha's overall licensing strategy, "we work in conjunction with our genuine accessories and apparel sold through our nationwide dealer network," explains Steadman. Designing apparel for mainstream retail placement is a strategic next step. "When we go mainstream with licensed apparel, it is 'image' or lifestyle apparel, and it promotes a specific model." At this time, notes Steadman, the company seeks licensees for Yamaha Sport lifestyle apparel to be sold through teenage lifestyle stores such as Tilly's and Pacific Sun, both of which market to the same target demographics as Yamaha's off-road motorcycle enthusiasts.
Honda's licensing push began about 12 years ago as a way to control infringement, particularly within riding apparel, graphics, and bike parts. "Infringement was rampant in our industry, so we negotiated many of our infringers into licensees," explains Jon Stillman, manager of Honda's powerhouse support group. "Once we had that under control, we wanted to expand the licensing program outside of our industry and into the mass market." In an effort to solicit other industries such as video games, toys, and ride-on toys, Stillman, who previously served as manager of Honda's accessories and licensing department, and his team organized an exclusive sponsorship and representation agreement with Universal Studios Consumer Products Group, whereby the company would serve as the exclusive agency for Honda Racing and Woody Woodpecker. As a result, says Stillman, "We used their character, Woody Woodpecker, for our race teams. Woody infused a sense of youth into our otherwise very corporate brand, Honda Racing. Meanwhile, Universal was able to represent our professional racing teams on an exclusive basis for licensing."
Honda's licensees fall into two fairly distinct groups: those that sell within the motorcycle industry, for products including apparel, decals, and accessories, and those that build the brand outside the dealer network at some level of mass or specialty. Speaking specifically to this last group, Stillman notes that Universal has played a large role in garnering brand recognition outside Honda's core business. "One of the best examples is a deal with Radio Shack that Universal brought to us two years ago," says Stillman. "Radio Shack wanted to do a large-scale radio-control dirt bike vehicle that incorporated its patented technology. The deal included all of our sponsors, Woody Woodpecker, and one of our star racers at the time." Product was sold exclusively through Radio Shack, and the result was a 100 percent sell-through the first year out.
Over the last 7 years, Suzuki has steadily built its toy licensing program by entering into licensing arrangements with key players such as THQ, Activision, Jakks Pacific, and Mattel. According to Matt Cwieka, corporate paralegal in charge of licensing at Suzuki, Suzuki works hand in hand with its licensees to ensure that products look exactly the same as the motorcycles Suzuki sells in its showrooms. "Suzuki currently has a patented software program called Sales P.R.O., which allows Suzuki to give licensees accurate detailed scans of Suzuki motorcycles in 3-D form," explains Cwieka.
The motorcycle race business is particularly difficult in terms of licensing because it's tough to get all the manufacturers on board for a particular product, says Cwieka. "There is no Players' Union in our industry, so when a company comes out with a new product and wishes to incorporate top factory motocross/Supercross riders into that specific product, the company needs to strike individual licensing deals with each rider. Ultimately, licensees have to determine how many racers they can afford to include." Another issue to consider is development time. "It usually takes about a year for toy and video game products to be developed," says Cwieka. "But because manufacturers are coming out with new vehicles and models on a yearly basis, it's a challenge for licensees to keep up to date in terms of manufacturer content."
Kawasaki boasts a broad base of retail exposure with product in such places as Home Depot, Lowe's, Wal-Mart, and Toys "R" Us, along with the automotive aftermarket channels. The challenge of selling into retail, says Smith, is no different than any other brand in the market, thanks to retail consolidation. "The retailer becomes the gatekeeper to the consumer, so the difficulty at retail isn't getting the consumer to decide to buy Kawasaki product, it is convincing the retailer to sell Kawasaki product."
In the case of Yamaha, says Steadman, "we have licensed more than 40 companies since April 2002 and already have licensed products at all the major mass retailers. Our Raptor ATV ride-on toy by Dumar International received placement at Wal-Mart and is doing well. Mattel Hot Wheels and Jakks Pacific continue to sell scale model Yamaha YZs (off-road motorcycles) with figures of our factory racers. We also received retail placement for our licensed vintage apparel with Mighty Fine, featuring off-road motorcycles from the '80s, at high-end boutiques and, in the near future, other mall retailers."
According to Suzuki's Cwieka, the company has been sticking with mass distribution. "The bottom line is that it tends to get expensive for a company such as Jakks Pacific or Mattel to manufacture specialty items," he explains.
Kawasaki's dealer network runs around 2,000, of which 500 are exclusive to Kawasaki. For the most part, says EMI's Smith, the dealer is focused on sales and accessories, the majority of which are internally developed. "The dealers don't carry much of the licensed products, because our goal is getting brand exposure in the mainstream consumer marketplace."
Steadman also notes that licensed products have a limited distribution within Yamaha's dealer network. However, she adds, "We do have a licensed Dealer Imprint program offered through Midnight Impressions. This program lets a dealer have its store logo or name imprinted on a Yamaha T-shirt that includes a screen-printed graphic." More important, says Steadman, "We use licensing as a marketing tool to drive additional traffic to our nationwide dealer network to buy core Yamaha products."
Honda's Stillman agrees, "Licensing has successfully bolstered our brand within the motorcycle industry, primarily because we partner with well-known suppliers such as Moose Utility, Joe Rocket, and Intersport Fashions West. Meanwhile, our focus at mass is to get kids associated with Honda and build brand loyalty. As a result, much of our product at mass is kid oriented such as our entry-level bikes from Cycle Source, originally sold through Kmart and now at Toys "R" Us."
According to Cwieka, Suzuki dealers don't tend to factor into the sale of Suzuki licensed toy products. "The problem is that Suzuki has trouble keeping the price competitive with the larger retail stores. For instance, in the case of a die-cast toy, Suzuki may purchase the item for $5 to $6 from the licensee and then by the time of Suzuki's markup and the Suzuki dealer's markup, the final product ends up retailing for around $9. Meanwhile, Wal-Mart or Target will sell the identical toy for $7.50."
Since 1972, Kawasaki Motocross Racing has amassed 40 AMA Supercross and motocross championships, and, as with any professional sport, Kawasaki offers a number of co-branding opportunities and cross promotions, all of which are sponsorship driven. However, says Smith, these have very little impact on licensing. "When you have a top rider within a category, you do have co-licensing opportunities, but most of our licensing focus is on the brand itself, rather than the specific rider." Kawasaki's history of grooming racing enthusiasts and champions is due in large part to its Team Green amateur racing program. As a result, says Smith, "our Team Green licensing program relies heavily on products targeted toward a younger market such as toys, video games, and youth apparel." Team Green also offers technical support and trackside assistance at hundreds of amateur motocross, off-road, and drag racing events each season. But, notes Smith, the real challenge is getting product out into the market for those who aren't necessarily core enthusiasts.
Yamaha showcases its high-performance YZ250 and YZ450F on the racetrack by owning and operating Yamaha Factory Racing, which consists of four riders. "At this time," says Steadman, "we do not have any major sponsors for our factory team, but it's something we may do in the near future. Our racing bikes currently do not have any other sponsor logos on the main areas of the bike. In addition, Yamaha provides support for individual privateer riders and teams." Yamaha targets the next generation of enthusiasts with licensed products such as toys, ride-on toys, video games, and image apparel. One of Yamaha's newer products, says Steadman, is the TT-R50, a 50cc off-road motorcycle that a 6-year-old can ride. The company also is pursuing boys' lifestyle items, such as bedding and room decorations, in mainstream retail, plus apparel, back-to-school items, cake decorations, birthday party goods, food, QSR promotions, mobile entertainment, and publishing. "Smooth Industries sells several of these items to our dealer network and retail direct, and we want to expand that effort with mainstream distribution such as mid-tier and/or mass retail," Steadman says.
Like Yamaha, Honda owns and operates a professional racing team—Honda Racing—and also is the team's primary sponsor. "We pulled together an entire sports property, which includes the equipment, riders, team technicians, and sponsors," Stillman says. "This means there aren't as many hoops for our licensees to jump through, and product hits shelves much quicker."
Suzuki's Makita Suzuki Race Team allows its racers to primarily retain their own licensing royalties. "On occasion, Suzuki's motorcycle race department may not be able to offer a potential new racer as large a salary as another motorcycle manufacturer," says Cwieka, "but as long as the racer's licensing deals don't conflict with any of the primary Suzuki race teams' licensing arrangements, we'll let the new racer keep the licensing revenue."
Suzuki's main toy licensing focus at this time is video games and die-cast products. "RC2's brand of ATV die-cast and drag bikes is huge for us, while Jakks Pacific and Mattel handle most of our motorcycle-based toy products. THQ is the primary video game company Suzuki currently works with," says Cwieka, who adds that Suzuki continually looks to expand its toy licensing program.