Question

Ralph Lauren, a designer of fine clothing, authorized Dan River Mills to market its product line of sheets under the Ralph Lauren brand name. In this business dealing, Dan River mills is contractually obligated to pay Ralph Lauren a % of sales of all Ralph Lauren branded sheet it sells. This type of business arrangement is an example of _________________________.

Answer 1

Brand licensing.

Step-by-step explanation:

Brand licensing can be defined as the leasing of a brand name to a different company for a particular period of time. It is very essential for product development and it also improves the marketing efforts.

Building a new brand name can be a very tedious task because it requires a lot of capital, therefore brand licensing is very important to the licensees because it gives them access to immediate entry into the market.

Brand licensing helps to create new channels of distribution of the product, or also paves way for the product to enter into new regions.