Even small auto companies can get big results in licensing. Just ask Ken Enders, the recently appointed vice president of marketing for Mercedes-Benz USA Inc. Enders' organization looks over a huge licensing enterprise for Mercedes-Benz products in the United States, covering everything from Mercedes logos on golf bags to T-shirts to mountain bikes. Automotive Marketer Contributing Editor Laura Clark Geist spoke to Enders about Mercedes' licensing business. What follows is an edited transcript of their conversation.
How do you look at licensing? What are your criteria for companies that approach you?
Let me start with the bike. When we got into the M class, we looked for a bike. It's a sport-utility vehicle, and we felt a bike would work for the brand if we found the right type of bike. We found a very small-production guy. He wasn't selling complete bikes, just components. He was an engineer with Porsche. The company is called AMP.
Do you look for products that are a similar quality to your cars?
Absolutely. We look for products that are very high quality, very high-end, very exclusive and image-commensurate. When we did the watches (with Tourneau), we wanted something that would be custom. We didn't want to grab something off the shelf and slap a star (logo) onto it.
How does the financial arrangement work with you and your dealers in the area of licensed products?
For instance, with the bikes, we buy the bikes from AMP, then sell them at a wholesale price to the dealers. Then they sell them at retail to the customer. The watches are the same way.
What are the margins on these licensed products?
They are consistent with parts. Retail margins range from 15 to 30 percent. It's a heck of a lot lower than the watch business. I'd rather not talk about the wholesale markup.
What do one of these bikes cost?
The retail price for the bikes ranges from $1,700 to $3,800. The watches top off at a little less than $1,000.
Do Mercedes-Benz customers buy a lot of these licensed products?
It's blossomed tremendously for us. It's been a crazy increase for us for the last five years. It's not because we've become really slick in the way we do it. We've really just gotten into the business. We weren't really doing anything five years ago.
Are there a lot of people who approach you on licensing deals?
Yes. It's constant. That's because we've become so active in it. We have a catalog and an Internet site where Mercedes' licensed products are sold.
How about annual sales volumes for Mercedes-Benz licensed products?
On the personal side we do over $10 million annually in U.S. sales. That's clothing, watches and bikes, etc. On automotive accessories, we do over $100 million in U.S. sales.
Do you go through another company for licensing, as some of the domestic manufacturers have done?
We've dealt with companies on a one-on-one basis. If the relationship feels good for us, we'll strike an agreement. We have an in-house legal counsel, so we do all the contracts in-house. We don't have someone go out and pursue opportunities for us.
How do you feel about co-branding a Mercedes-Benz vehicle?
I don't think so. It doesn't appeal to us to have a 'Eddie Bauer'-type edition of one of our cars. We were approached by Bill Blass and some others to do that. We looked at it and we just don't see where it adds value to the brand. Mercedes-Benz is a very special brand to manage. We don't want to destroy what makes it special. Personal accessories is where we see the opportunity for co-branding.