Outlook Journal, January 2003
Co-branding is an increasingly important tool for generating value. It can be an asset in nearly all aspects of marketing, from creating
initial awareness to building loyalty. There are four main approaches to
co-branding that companies should consider.
Promotional/sponsorship co-branding.
Co-branding began with endorsements. This approach can be a good beginning
point for organizations; the relationship is simple (fees and marketing
activities), but it can result in significant brand enhancement and sometimes
even an unplanned opportunity.
Ingredient co-branding. Partners in
ingredient co-branding are usually the company's current suppliers or largest
buyers. Easy access to offerings and a well-established relationship translates
into a lower level of investment required than in other forms of co-branding.
An ingredient brand's success relies on being distinct, either through patent
protection or by being a dominant brand.
Value chain co-branding. Other players
in the value chain can create new experiences for the consumer, which, in turn,
can create a level of customer value and differentiation not possible with promotional or ingredient co-branding. There are three types of value-chain
co-branding:
- Product-service co-branding. This approach allows partners to share industry-specific competencies while at the
same time opening previously unavailable customer bases.
- Supplier-retailer co-branding. These
relationships can range from the natural to the less obvious—even to traditional rivals, which can help both partners become better positioned
against well-entrenched competitors.
- Alliance co-branding. Globalization and
better, broader offerings through cooperation aside, forming alliances with similar companies may be crucial for rapidly consolidating industries.
Innovation-based co-branding. In this approach, partners create entirely new offerings to provide substantial
increases in customer and corporate value. It offers the potential to grow
existing markets and create entirely new ones. Because both partners are
seeking a high level of value creation, the rewards and risks are often an
order of magnitude larger than those created by other co-branding approaches.
Although upfront investments are often small, the associated
risks of co-branding can be much greater. A celebrity endorser could behave
poorly while promoting the brand; dilution could make the brand lose its
meaning to consumers; devaluation is always a risk, and it can happen
overnight. Partner companies must work well together along with their brands to
avoid an operational threat. And companies must remember that no partner brand
is omnipotent, especially when taking on entrenched competitors. The best
protection against these risks is choosing a flexible partner.
Many co-branding benefits are difficult to quantify, such as
the increase in brand equity created in the consumer's mind when one brand is
associated with another. Other benefits are seen immediately in top- and
bottom-line improvements.
Read the
full online article
Download the print version (PDF, 410K)
PDF
Help Back to
Contents
To Top |