2025 iCore Marketing Practice Exam – Your Complete All-in-One Guide to Exam Success!

Licensing is a market entry strategy that enables firms to minimize risks and costs while quickly gaining benefits. In a licensing agreement, a company (the licensor) allows another company (the licensee) to use its intellectual property, brand, or technology in exchange for a fee or royalty. This approach involves relatively low investment since the licensee takes on the cost of production and marketing in the local market, significantly reducing the financial risk for the licensor.

Additionally, licensing allows companies to enter new markets with greater speed, capitalizing on existing brand recognition and reducing the time required to establish operations independently. It’s a particularly effective strategy for leveraging intellectual property in foreign markets where a firm may not have the resources or expertise to enter directly, while also providing a steady revenue stream with minimal investment.