A Global Business Needs Local Knowledge
This post appears in the current issue of Total Licensing
The notion that “all politics is local” is most often credited to a former Speaker of the U.S. House of Representatives, Thomas “Tip” O’Neill, accentuating the idea that politicians need to intimately understand the nuances of what makes their constituents tick in order to win elections and stay in office.
The licensing version – “All licensing is local” – is an excellent thought to keep in mind as one views the increasingly global business in which most of us are working. While it’s necessary to have an appreciation of the global trends and industry segments, it’s also vital to appreciate the market-by-market differences that drive consumer behavior and purchases.
First, the global perspective. According to results of LIMA’s annual Global Licensing Survey, which was released this summer, free to all LIMA members, the worldwide business jumped 4.4% to US$262.9B. Some 45% of that ($118.3B) was generated by the entertainment/character sector, and the next largest area was revenue based on corporate brands 921% of the total, or $54.6B).
Sliced another way, 58% of the business ($152.3B) was done in the U.S. and Canada, and 20% ($52.4B) was done in Western Europe.
But few if any companies think of licensing in such massive global or even regional terms. Those numbers mask a host of local patterns, preferences and particulars that define how a brand owner or licensee needs to approach the business.
For example, if you’re trying to figure out a distribution approach, it’s helpful to have a sense of the role that e-commerce plays in a particular country.
Our survey shows that on-line sales now account for 21% of all licensed retail sales worldwide, up from 18% a year earlier and 16% reported in our first survey in 2014. In the U.S., 28% of licensed product sales come through on-line channels. But, the report notes, “that’s much less than in China, where 41% of sales now come from on-line purchases – the highest for any country for which we developed figures. A clear shift occurred in Alibaba’s China strategy in 2016 from a traditional transactional e-commerce platform to moving the site toward being much more content driven and focused on experiential social engagement, such as livestreaming & virtual reality.”
In Japan and France, on the other hand, physical retail is still the dominant mode, accounting for 81% and 80% of sales of licensed goods in their markets, respectively.
Local knowledge is also provided in another series of reports that LIMA publishes free for members. More than 40 countries are covered in the Kidz Global reports assembled for LIMA by Brand Trends, which conducts regular online surveys of kids (for the youngest age segments, parents are asked on behalf of their children) about the characters, brands, celebrities, TV shows, athletes they prefer. The responses are segments by gender and age group. Reports for each country are released twice a year; the most recent sets of data were put onto0 the LIMA site in August, covering responses taken in April.
Contrasts among countries can be striking. For example, let’s take the youngest age group (age 0-2) in the BRIC countries, in which parents were surveyed (unaided) about their kids’ favorite brands. In each case, locally developed characters dominated. In Brazil, the top six cited were Monica’s Gang, Peppa Pig, Galinha Pintadinha, Patati & Patata, Fisher-Price and Bom Dia &Cia. In Russia, it was Masha & The Bear, Lego, Smeshariki, Luntik, Fiksiki and Winnie the Pooh & Friends. In India, the top names were Chhota Bheem, Tom and Jerry, Doraemon, Spider-Man, Motu Patlu and Krishna. In China, they were Boonie Bears, Pleasant Goat and Big Big Woolf, Lego and Ultraman.
For anyone going into those countries with baby products, it’s important to understand the competitive set.
Another truism holds that “knowledge is power.” These reports, along with LIMA’s other information resources, can only help companies become more powerful competitors in the increasingly localized global marketplace.