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Cartoon brands hook marketing gurus

Surajeet Das Gupta | March 06, 2004

They are strange creatures with amazing magical powers. They have weird names like Pikachu, Weedle and Zubat, and they exercise their powers on children between the ages of six and 14.

They can be seen on the back of everything from cards to interactive toys to books, DVDs, movies and a range of other products.

That's right. Pokemon fever -- which has already swept the globe, generating worldwide revenues of an astonishing $30 billion -- is now playing at a toyshop near your home.

And it isn't only toyshops. Grocery shops and kiosks are selling products like Cheetos with Pokemon cards that are making them the hottest munch in town.

But Pokemon isn't the only cartoon power brand which has caught the fancy of the marketing gurus of modern India. There are numerous other licensing companies which are capitalising on the demands of a new generation of pester power kids.

Out in front is Cartoon Network which has set trends and is licensing the cartoon characters who have attained cult-like status on the channel. The top draws on Cartoon Network include favourites like the ever popular Tom and Jerry, the young girl's favourite Power Puff girls, Dexter and last but not least, Scooby Doo, the dog who's a hit with pre-teens.

These stars of the small screen are being pulled into service to sell everything from music, to chocolates, books, fuel, biscuits and even tea.

Says Funskool India CEO Raphael Kuriyan, one of the leading toy manufacturers in the country: "The market in terms of the characters is divided between the staple ones like Tom and Jerry and Mickey Mouse, and non-staple ones like Pokemon which do not have a long shelf life. Warner and Disney are two major licencers in the market."

So how big is the cartoon character merchandising market? It's tough to pin down numbers. But some industry experts reckon that merchandising by the cartoon power brands is already worth between $60 million and $75 million. And they insist the market is just taking off.

Says Jiggy George, executive director, Cartoon Network Enterprise in Hong Kong, which overseas the Indian market: "We have only scratched the surface of the potential of these cartoon brands. The market is in an embryonic stage."

Take a look at what Pokemon is hoping for in the local market. CB Media Ventures, which owns the licence for Pokemon in India, is convinced that the brand has a long way to go and could be a $15 million to $30 million merchandising opportunity in this country. That's chickenfeed compared to its sales in other parts of the world.

Says Mervyn Fernandez, managing director, CB Media Ventures: "Pokemon is a high-impact phenomenon which could be very cyclical. So in terms of the amount sales per annum in the mode years, no property can ever compare to the Pokemon phenomenon."

The popularity of the cartoon brands is reflected in any metropolitan toyshop. Pokemon is a top-selling favourite. At Souvenirs, a toy and bookshop in Mumbai, the proprietor reckons that around 5 per cent to 8 per cent of sales are from Pokemon products. Says proprietor Abdul Kadir: "The range is very affordable because the playing cards are for as little as Rs 20."

Sensing the growing popularity of these products, the licensees are furiously looking for ways to quickly extend the cartoon brands into other product ranges. Cartoon Network, for instance, has tied up with Universal Music and launched a music album for kids that has already sold 10,000 copies in the last two months.

CB Ventures is also looking at extending the Pokemon brand name to an array of products. Says Fernandez: "We have as many as 2,000 brand extensions of Pokemon. But in India we hope to have at least 15 such categories by the end of this year". Areas being considered include gifts and novelty items, apparel, houseware and school items.

The company is also looking at the potential of tapping the regional market through Pokemon films. There are already six Pokemon movies and the plan is to bring them into India and dub them in regional languages.

But why are companies jumping in to licence cartoon power brands to sell their products? One reason is that it clearly increases sales, especially as they are targeted at kids.

Take Frito Lay, one of the companies which is offering Pokemon give-aways with each of its snack packs. Says Manu Anand, managing director, Frito Lay India: "We have seen 100 per cent-plus growth on the promoted brands in our key markets post-Pokemon."

Similarly, Kwality Walls, which tied up with Cartoon Network to market Scooby Doo promotions, has seen its sales improve dramatically.

Cartoon Network says that its research indicates that Kwality Walls ice cream market share shot up from 48.7 per cent in March 2002 to 52.3 per cent in March 2003. And overall sales jumped by 19.3 per cent.

Or, look at what happened to Bournvita. The channel insists that Bournvita sales zoomed by 20 per cent and that's a key reason why the company is extending the same relationship for other brands which includes chocolates.

Of course, brand fit is crucial to ensure that a licensing agreement is successful. For instance, Hindustan Lever has used Pokemon give-aways to sell its Kissan ketchup.

Says a Lever spokesperson: "The reason Pokemon was used for the promotion is because it targets the same audience -- schoolgoing kids."

Fernandez goes even further. He points out that the increase in sales of products using Pokemon has varied from 50 per cent to 100 per cent during the period of promotion.

But its is not only companies which have products consumed by kids that are experimenting with cartoon characters. Tea brand Red Label from the Hindustan Lever stable is using Tom and Jerry toys as give-aways with every purchase of a tea pack.

Points out George: "Here the whole idea was to address the kid through the mother and create a bond."

A similar reason prompted BPCL to tie up with Cartoon Network. BPCL has been offering scratch cards on which various gifts were given including cartoon cards, Power Puff girl toys and pencil pouches amongst others. The promotions were run across six cities in as many as 460 outlets.

Says S Ramesh, general manager, retail strategy, BPCL: "We felt we should see if interest could be generated through another group of influencers -- children." BPCL has been overwhelmed by the response of the experiment and there is demand now to extend the offer to other cities.

But if companies find cartoon characters attractive, the licensees of the brands are also hitting the jackpot. While no one is ready to divulge figures, the user of the licence generally has to make an upfront non-refundable advance royalty payment which is known as a minimum guarantee.

And the minimum guarantees are as much as $100,000 plus levels. Companies also typically fork out about 6 per cent to 8 per cent of the cost of the product on the promotional material.

Funskool points out that average licence fee for Disney and Warner Bros is around 15 per cent to 18 per cent of the topline. And for the popular Popeye of King Syndicate it is around 5 per cent.

But the value of the cartoon brand varies from one character to another. Funskool, for instance, points out that unlike evergreen characters like Tom and Jerry the life of brands like Pokemon are short-lived -- a maximum of two years.

But that should not be a cause for bother. As long as kids continue to lap up products with their favourite cartoon characters the market can only go in one direction-northwards.

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