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Co-Branding


 

What is co-branding?


Co-branding is a type of marketing strategy that uses two or more different brand names on a product or service. In such a strategic partnership, each brand contributes its own identity to create a joint brand, or joint venture with unique logos and identifiers. Co-branding is used to combine the brand awareness and market strength of each company and leverage them to attract more consumers.


Why do companies use co-branding?


Many different types of companies use co-branding in their marketing strategies. These may include restaurants, retailers, carmakers, and snack food and electronics manufacturers, among many others. Such companies use co-branding to combine the unique strengths of each other’s brands. Doing so boosts the reputation of their respective brands as well as consumer awareness and brand loyalty for them. Increased brand recognition plus brand loyalty may also increase consumers’ willingness to pay a higher premium for the co-branded product or service.


Overall, co-branding is a useful strategy for businesses that want to increase the following:

  • customer awareness & loyalty

  • customer base

  • profitability

  • market share

  • competitive advantage

  • revenue streams

  • brand image

  • perceived value

  • cost savings


Co-branding strategies tend to be motivated by the desire of two or more companies wanting to collaborate on an exclusive product. The strategy is also applied after a merger or acquisition, as a way for one of the partners wants to transfer its brand to a more familiar company or service provider. Co-branding can result in more than just an alliance of brand names. The partners may also share expertise or technology, complementing and strengthening their own resources with those of each partner. It can also be used as a part of strengthening personal branding.


 

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Are there risks involved in co-branding?


The key to successful co-branding is to make it beneficial to all partners involved. Usually, each partner has something to give to and gain from the other. After all, the point of a brand partnership is to benefit both or all parties involved. This doesn’t always happen, though. Sometimes, there are unintended consequences of co-branding.

For instance, co-branding a product typically has a more limited audience reach than a product featuring a single corporate name. This is because the image a co-branded product relays is more specific and may resonate with a more narrow consumer segment. Therefore, companies should consider whether co-branding will be beneficial for them and their customers or could perhaps alienate customers who are used to a single brand name and product identity.

Another potential risk of co-branding involves who you partner with. If both (or all) partners don’t share and understand your specific target audience, you won’t reach the right people. Sharing a product branding guide is one way to avoid disputes. Other partnership-related risks could include:

  • Financial issues could unexpectedly arise regarding profit-sharing

  • One brand’s reputation could get a boost at the expense of the other

  • If one brand can’t keep up with the surge in sales, it can hurt the reputation of both

  • It can create confusion among customers

A way to potentially avoid or minimize these risks is to introduce the co-branded product or service slowly, before publicity or promotions are involved. This way, you give the market some time to get used to it and can get a feel of how things may develop moving forward.


Examples of co-branding and co-branding strategies

Examples of co-branding are everywhere, whether we are aware of the strategy or not. Take GoPro and Red Bull. The former brand equips athletes with cameras and funds them to capture all sorts of global sports events and races on camera while Red Bull sponsors and manages these events. Music lovers will recognize the co-branding efforts between Kanye West and Adidas to develop and market high-end footwear Yeezy. And anyone in a supermarket may be tempted to buy Pillsbury baking mixes that use Hershey’s chocolate.



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