Disruption: The Only Constant
Did you ever think you would buy toilet paper on your phone? Neither did supermarkets. Did you ever think you would be sleeping in a total stranger’s apartment when you travel? Neither did hotels.
Over the last 30 years, every global industry has been disrupted by technology. Toys, travel, retail, fashion, entertainment – in each of these spaces we now learn about and buy products and services differently than we did before.
The licensing industry has been slow to adapt to these disruptions, even when it meant allowing licensees to sell products via e-commerce or to market their products by social media. But the biggest failure in licensing has come from a narrow sense of what licensing can do, viewing it as a promotional tool only and not as a strategy to help any industry in disruption overcome its deepest challenges – reaching customers in new ways.
Auto industry is in the throes of it
In general, capital-intensive industries have taken longer to disrupt; they have bigger moats around them. Airbnb, to take one example, has had to spend over $4 billion to upend the hospitality industry.
No industry is more capital-intensive than auto manufacturing, and after many years technology is finally disrupting the auto industry in singular ways, the largest of which is the fact that the single, owned automobile is no longer the only way for Americans to achieve their mobility needs. They can take an Uber at night, use a Zipcar to run errands, access a bikeshare program to get to lunch, use an electric car for shorter trips, and rent a car for vacation; and that’s all before we have driverless cars to complicate things even further. And it doesn’t say anything about upending the manufacturer/dealer relationship that has been central to selling cars for almost 100 years. The image below illustrates this shift.
The auto industry is not the first industry to tackle this kind of disruption, or to use licensing to solve some of the problems it creates. When I was growing up, AT&T owned telephonic communication, from the phone itself to the lines that connected us all. The quality was very high; so were the prices.
AT&T lost its monopoly first from legal challenges and second from technology. Consumers used to turn to one business – and one brand – to provide all of our connectedness. Now we have a range of options for staying connected to each other and to the world: smartphones, the internet (via multiple devices), television, etc.
AT&T itself offers many of the new services that have replaced its old monopoly. You can buy high-speed internet from AT&T for your home or office, and of course AT&T was the launch partner for the original iPhone. It turns out that even monopolistic companies can adapt.
But licensing also offers opportunities for companies and brands to fill gaps created by technological disruption. AT&T (an IMC client) has been a leader in this work. They even licensed telephones – the product that created the company to begin with.
But that’s not all. A range of new products, from headphones to credit cards to baby monitors (a deal that IMC did) serve to reinforce the AT&T brand’s core equities and to fill gaps created by disruption. The AT&T brand is different from what it once was; but licensing has helped it remain a dominant force – and the most respected brand in telecommunications.
Technology isn’t the only Disruption
Technology has provided the greatest source of disruption in the last 30 years. But disruption comes from many sources – including your own consumers.
30 years ago, people used scent products (from brands like Glade or Renuzit) in one form: a spray can that let you refresh a room. Since then, consumers have learned to look for scent in new ways.
This shift caused serious disruption for established companies. It even allowed Procter & Gamble to create a new billion-dollar brand (Febreze) to address new consumer expectations. But it also created opportunities for scent brands to use licensing to deliver their benefits in new places and in new ways.
Do you want scent in your car, in your kitty-litter, even in your paint? The Glade brand now works with licensees in each of these categories.
What about your trash bags, closets, candles and carpet cleaners? Febreze has found licensing partners to offer its fresh scent in all of them.
Even the Arm & Hammer brand – once associated with the absence of scent – now works with licensees to deliver products well outside its own core space in categories likes air filters, diaper pails, and paint.
If you are a brand, responding to disruption is always difficult if you use only the tools you already have at hand. Licensees are often one or more steps ahead of you, and they have their own tools to reach your consumers in their own way.
Back to the Auto Industry: Disruption (and Licensing) in Action
In the auto industry, licensing has generally been a byproduct of market dominance (from the pre-disruption era), offering after-market products or diecast models or toys that reflected the dominance of the auto brands and their business model.
What can licensing deliver when auto brands no longer dominate consumer lives in the same way?
At IMC we’re thinking a lot about this challenge. And there are a few examples we like a lot.
One is Volvo LifePaint, a product developed NOT for auto use at all. It’s a reflective spray-paint that can be used on bicycles or the clothing of a biker or runner. It doesn’t make cars safer but it makes driving safer by making it easier to see bikers and pedestrians. It also supports Volvo’s goal of reducing all deaths caused by its cars by 2020, and it enhances Volvo’s greatest brand promise, for safety.
Another example from real estate: Porsche has a licensing partnership with a real-estate developer who is building the world’s first “Porsche Tower” in Miami, a high-rise condo building for super-rich buyers who like the idea of an in-house “car concierge” and designated elevator for their cars.
Sometimes the best way to respond to disruption is . . . more disruption, and American brands have unique opportunities to break out of very US-focused licensing programs to conquer the world. In China, BMW opened retail outlets for lifestyle-oriented licensed products, then partnered with Alibaba to sell similar accessories via e-commerce, and now sells cars to Chinese consumers online. Licensing created a new relationship with consumers and paved the way for a new way to do business.
Like other brands challenged by disruption, auto brands need to stop looking only at accessories as appropriate categories for licensing, and they need to look beyond the uber-challenged (pun intended) US marketplace. They need to look completely outside their traditional categories and their traditional markets. They need to follow consumers as they manage mobility in new ways. And they need to let the digital world show them the way.
After all, the fastest place to reach car buyers today may not be a dealership; it may be Instagram.
IMC is the solution to your licensing challenges. Contact Emily Wickerham for more information.