Licensing enables companies with brands that have high preference to unlock their brands’ latent value and satisfy pent-up demand.
When Apple launched the iPod a number of years ago they revolutionized how people listen to their music.
Apple could have chosen to manufacture and distribute these accessories themselves.
By licensing the iPod brand, Apple enabled a tremendous number of companies to produce all kinds of terrific products to make the iPod more user-friendly and to enhance the listening experience.
Examples of licensed products for the iPod include the Bose Sound System with iPod docking station, the Nike+ running shoe, auto adaptor kits, armbands and many other products.
Some licensors see licensing as an opportunity to “test” the viability of a new category without making a major investment in new manufacturing processes, machinery or facilities.