Brands are always looking for new ways to create, innovate and grow their audiences. Co-branding is one of the strategies brands are turning to achieve audience growth. Co-branding is when two or more brands collaborate in a shared venture resulting in the creation of a new product or the promotion of an event. Both brands will be looking to leverage on their brand equity and reputation to the audience of the other brand.
They come together and with each other through their shared values, for example the collaboration between BMW and Toyota to create a new product “Lexu”. If the brands are well aligned and the idea and execution is solid then the outcome should enhance the reputation, reach, exposure, market share and sales of both companies.
Co-branding versus Co-marketing
Co-marketing is when two separate brands promote multiple products through a combined campaign whereas in co-branding companies co-create a new unique product.
Why use a co-branding strategy?
Co-branding can be a very effective activation that bolsters both brands working together rather than acting independently. It helps extend reach, awareness and sales potential by capturing prospective customers of each brand. This strategy essentially is when two brands that are well aligned and who share the same values collaborate and leverage on each other’s reputation and brand equity. This allows them to lean on each other and this is almost like the two brands endorsing each other. Who wouldn’t want an endorsement from another big brand?
The Benefits of co-branding.
1. Increased reputation. If the co-branding is successful, the reputation of both companies will be increased.
2. Increased credibility
Co-branding with another well-respected brand will result in the increase in credibility of your brand. For example, Kanye West’s credibility as an entrepreneur increased after his partnership with Adidas to create “Yeezy”.
3. Increased reach.
A result of co-branding is that each brand will be able to access each brand’s audience. Toyota was able to appeal to the affluent BMW audience while BMW also appealed to Toyota’s everyday-man audience through Lexus.
4. Shared pool of talent.
People from both brands can share ideas and increase their creativity dramatically.
5. Premium pricing. For example, Fiat and Gucci came together to create the limited edition Fiat 500 which could fetch a premium price.
6. Increased marketing budget.
7. Brands can move into a different market.
Types of co-branding.
1. Component co-branding
Combining two products together to create a new product. For example, taco bell and doritos coming to create a new product.
2. Joint venture co-branding
An alliance between two or more well-known brands to create a new service or product that wouldn’t be possible individually. This includes creating an entirely new service/product or improving an existing one. an example is the collaboration between Adidas and Kanye West to create “Yeezy”.
3. Ingredient co-branding
The most common type of co-branding. A new or emerging company collaborates with a well established partnering company to gain recognition and develop brand equity. For example, a new Laptop manufacturer using Microsoft software will put stickers on their products indicating that they use a Microsoft Windows operating system.
4. Same company co-branding
This is used by companies to promote multiple in house brands under one product. Large food conglomerates often use same company co-branding to promote their products. This form of co-branding only involves one company but may feature collaborations with subsidiaries. For example, Innscor Holdings offered a free “Fizzy” drink manufactured by one of their companies “Pro-brands” to anyone who bought a two piecer Chicken Inn meal.
5. National to Local co-branding
This occurs when small local businesses team up with a nationally known brand. The goal of this partnership is to increase national brand awareness while increasing small business revenue. Visa often co-brands credit cards with department stores and other small retailers. vehicle manufacturers often co-brand with local car dealerships.
6. Multiple sponsor co-branding
When two or more companies pair up to share technology or promotional events. Professionals use multiple sponsor co-branding in athletic events, concerts and other attention grabbing stunts. each company involved often earns an opportunity for increased sales, brand recognition and reputation.
Examples of co-branding
Telecel and Opera mini
The opera mini browser was automatically pushed to Telecel subscriber’s mobile phones. At that time, Opera was one of the best mobile browsers for feature phones. this allowed Opera to benefit from Telecel’s subscriber base while Telecel also benefited from Opera’s brand equity.
Kanye West and Adidas
The combination of Kanye’s celebrity and the Adidas brand and the fact that the products were exclusive (few rollouts a year) made this partnership a huge success. The Yeezy brand amased a cult-like following. Adidas gave Kanye a well established platform to express his creativity and build his high end clothing line.
Nike and Apple
The two brands collaborated to develop fitness Apps, clothing and tracker products. Nike plus iPod was a fitness clothing and workout brand which allowed users to send their workouts to their iPod while listening to music. This developed to Nike plus which is a brand that produces active tracking, sportswear, sports equipment, apps and wearables that enable users to store loads of fitness data on their devices.
Starbucks and Spotify
Spotify gave a premium subscription to all Starbucks employees. This allowed the employees to curate playlists to play in their stores which the customers could access through the Starbucks app while Spotify provided them with a discount for the premium subscription. This music ecosystem is designed to expand the coffee house environment that Starbucks is known for while giving artists greater exposure to Starbucks customers. The “music ecosystem” partnership is mutually beneficial and an opportunity for the companies to reach each other’s audiences without sacrificing their brand.
Disadvantages of co-branding
1. If the companies don’t share the same missions and visions, co-branding is a no-go.
2. If customers associate bad traits and experiences with one of the brands, the total brand equity might get damaged.
3. It can create confusion since many customers like to have competitive products from which they can choose. When there are too many products however, what tends to happen to the consumer is a feeling of confusion. They lose their confidence and this will lead them to shift to a completely different brand.
4. Incompatible cultures
The companies might have products which can qualify for co-branding but might have completely different internal cultures which may be difficult for a good fit.
5. One brand might not be able to keep up.
◆ Leslie Mupeti is a graphic designer and brand strategy expert. He can be contacted on +263 785 324 230 and [email protected] for feedback.