What is Co-branding
Co-branding is a marketing strategy that utilizes multiple brand names on a good or service as part of a strategic alliance. Also known as a brand partnership, co-branding (or "cobranding") encompasses several different types of branding collaborations typically involving the brands of at least two companies. Each brand in such a strategic alliance contributes its own identity to create a melded brand with the help of unique logos, brand identifiers and color schemes.
The point of co-branding is to combine the market strength, brand awareness, positive associations and cachet of two or more brands to compel consumers to pay a greater premium for them. It can also make a product less susceptible to copying by private label competition.
Breaking Down Co-branding
Co-branding is a useful strategy for many businesses seeking to increase their customer bases, profitability, market share, customer loyalty, brand image, perceived value and cost savings. Many different types of businesses, such as retailers, restaurants, car makers and electronics manufacturers, use co-branding to create synergies based on the unique strengths of each brand. Simply put, co-branding as a strategy seeks to gain market share, increase revenue streams, and capitalize on increased customer awareness.
Co-branding can be spurred by two (or more) parties consciously deciding to collaborate on a specialized product. It can also result from a company merger or acquisition as a way to transfer a brand associated with a well-known manufacturer or service provider to a better-known company and brand. Co-branding can see more than just name and brand associations; there may also be a sharing of technologies and expertise, capitalizing on unique advantages of each co-branding partner.
A co-branded product is more limited in terms of audience than a broad, single-name corporate product. The image it conveys is more specific so companies must consider whether co-branding can yield benefits or if it would alienate customers accustomed to a single name with a familiar product identity.
Companies should choose co-branding partners very carefully. As much as a company can benefit from a relationship with another brand, there can also be risks. A good strategy is to slowly roll out a co-branded product or service before publicizing and promoting it, thereby giving the marketplace time to vet it.
According to branding and marketing experts there are four distinct co-branding strategies:
- Market penetration strategy: A conservative strategy that seeks to preserve the existing market share and brand names of two partnered or merged firms.
- Global brand strategy: Seeks to serve all customers with a single, existing global co-brand.
- Brand reinforcement strategy: Exemplified by the use of a new brand name.
- Brand extension strategy: The creation of a new co-branded name to be used only in a new market.
Co-branding vs. Co-marketing
Co-branding and co-marketing are similar concepts in that both involve partnerships between brands that seek to bolster their marketing efforts, but they differ in how they are executed. Co-marketing aligns the marketing efforts of two partners, but does not result in the creation of a new product or service. Co-branding, by design, is based on the creation of a new product or service.
Co-branding is all around you. Consider these examples:
- Taco Bell's Doritos Locos Tacos: Specialty food item co-developed by Yum! Brands, Inc. and PepsiCo subsidiary Frito-Lay, Inc.
- "Your favorite music, one tap away": An Uber and Pandora Media collaboration that lets Uber riders create Pandora playlists to use during trips
- Citi AAdvantage cards: Citi credit cards that earn American Airlines miles with qualifying purchases
- Supermarket foods: Pillsbury baking mixes with Hershey's chocolate; Kellogg's cereal with Smucker's Jif peanut butter
- Nike+: A Nike Inc and Apple Inc partnership that has connected activity tracking technology in athletic gear with iPhone apps and the Apple Watch.