Adidas + Yohji Yamamoto, Intel Inside + Compaq
Personal Computer, D&G + Motorola, British Airways and
Citibank, Adidas + McCartney, Mercedes and Swatch, Bacardi and Coca
Cola, Danone and Quick, GOME and Motorola, Industrial and Commercial
Bank of China and American Express...these are only few among the most
famous examples of co-branding we have seen emerging in the latest
years.
Is co-branding a new phenomenon? Not really. There are classic examples
of this sort of branding strategy adopted by detergents and white goods
brand as well as by oil brands and car manufacturers starting in the
early nineteen sixties.
Until the eighties, however, since the value of a company had just been
measured on the bases of its revenues and tangible assets, not many
companies had really paid attention to any sort of branding strategy,
not to mention co-branding strategy. It is only in the last thirty
years that companies have understood that the real value of a business
resides in the minds of its consumers: in the brand.
But how can co-branding enhance this value? Why do brands invest in
interlocking their identities to create co-branded products?
Co-branding, as it has been defined by Tom Blackett and Bob Boad in
their book (Co-Branding: the Science of Alliance, St Martin’s Press,
1999) is:
“…used to encompass a wide range of marketing
activities involving the use of two (and sometimes more) brands. Thus
co-branding could be considered to include sponsorships, where Marlboro
lends its name to Ferrari or accountants Ernst and Young support the
Monet exhibition.”
The ultimate objective of any co-branded strategy would be to combine
the strengths of involved parties to increase respective brands value.
In order to be successful, the co-branding effort needs to be directed
to:
1. Increase brands distinctiveness by
capitalizing on the values embedded in the cooperating brands.
Product and services life cycle shorten by the day, and distinctive
products and services features and innovations are easily copied among
brands in the same industry. This is a reality of today’s business that
co-branded products can withstand to. By merging values and identities
of brands originally engaged in different industries, co-branded
products and services can gain consumer choices, loyalty and ultimately
make the brand unique and distinctive.
In this category Labbrand includes:
Loyalty programs co-branding,
where the involved parties share the cost of customer loyalty programs
or other CRM marketing programs to deliver extra benefits and
eventually strengthen the relationship among consumers and the two
brands
British Airways and Citibank, for instance, co-branded a credit card
allowing the owner to automatically become a member of the British
Airways Executive Club.
Trade marketing co-branding,
where the involved parties cooperate in designing co-branded products
made specifically for a certain distributor or facility. Danone
provides a good example in this sense as it has produced a special
yogurt for Quick, the European fast food chain.
By increasing their distinctiveness, involved brands get to occupy a
unique place in consumers minds and eventually gain customer loyalty by
providing them with merged benefits.
2. Deliver consumers greater value
by creating highly relevant products or services:
Due to the increasing amount of choices available and in order to cut
through all other offerings brands have to custom design added value
products and services to meet variable individual needs.
As brands research and uncover these specific customers’ needs, they
also find that a single brand may not be able to meet the demands of
such profoundly segmented market.
In this category Labbrand includes:
Usage extension co-branding.
Bacardi and Coca Cola, for instance have co-branded Bacardi Mixers
range to demonstrate and spur other ways to consume the two brands.
Multiple sponsors co-branding,
where more than two companies unify their effort to form a strategic
alliance and create a specific co-branded technologically enhanced
product.
Market niche co-branding.
Take for instance the cooperation between Adidas and Stella McCartney.
This brought about a women-oriented, stylish and casual sport design
collection: Adidas by Stella McCartney. This co-branded line manages to
satisfy the demand of female buyers looking for sportswear that blends
functionality and style while being able to deliver “products that both
perform and look great”1
Moreover, having a high end designer create a sport range for women
translated into practical benefits for both the collaborating parties:
new consumers, willing to pay a premium to get the “special”
sportswear, and buzz advertising around a range of products that was,
back in 2004, the first ever sportswear collection signed by a high-end
designer.
Look also at Smart car: a joint creation of Mercedes and Swatch
designed especially for young consumers of big metropolis. In this case
signatures of cooperating brands do not even appear on the car but in
fact this is the result of each company’s specific expertise.
3. Increase the esteem consumers
have toward participating brands
As consumers became ever more environmental and social aware it becomes
essential for brands to create new touch points and build images
consistent to the brand promise in consumer’s mind while aligning
participating brand values.
In this category Labbrand includes:
Image reinforcement co-branding.
A very good example to explain this form of co-branding can be seen in
companies getting involved with NGOs to direct a percentage of their
revenue toward a worthy cause. P&G and the National Association
for Blinds, Starbucks and the African Wildlife foundation are just a
few examples of companies cooperating with charities and fundraising
organizations to align their brand values in consumers mind.
Co-branded in the luxury industry, Motorola mobile phone designed by
D&G merges the image of the Italian luxurious brand with the
high quality technological brand promise of the American mobile phone
manufacturer.
Complementary brands co-branding,
refers to brands in the same or complementary industries that cooperate
to strengthen respective brand images in consumers’ mind. Credit cards
such as Visa and Mastercard are a perfect example of complementary
alliances as they merge the customer service skills of payment services
franchisers with the image of reliability of banks.
Danone and Motta, both in the food industry, co-branded a yogurt
ice-cream called Yolka that successfully satisfied the desires of
healthy conscious gourmand and avoided direct competition to their
respective brand portfolio.
Global co-branding,
consisting mainly in alliances among MNCs and local players. Typically,
the local player will provide an already established distribution
network and local brand image while the MNC will bring technical
know-how and international brand attachment.
For example, in 2004 Industrial and Commercial Bank of China and
American Express Co. co-branded a credit card issued by the bank and
bearing the American Express logo designed to sustain the nation’s
effort to build a national credit-card system.
4. Increase the knowledge consumers
have toward cooperating brands through the merger of each other’s
strength in the respective domains.
In this category Labbrand includes:
Ingredient co-branding,whose
appellation refers to the fact that a material,adding value ingredient
is created by the cooperation of the two involved brands. This greatly
increases the ultimate products value for consumers, and consequently
the brand value in consumers’ minds.
Intel and Compaq Personal Computer, for instance, represent a perfect
example of synergy in this sense as the value created in their
cooperation is great and without it the ultimate value of the product
will be tremendously diminished. .
Coopetition,
as this has been defined by Brandenburger and Nalebuff in their homonym
book (1996, Co-Opetition : A Revolution Mindset That Combines
Competition and Cooperation), which dictates that in order to dominate
the market companies may need to cooperate with and compete against the
same company.
Examples in coopetion are found in the co-branded city cars Toyota
Aygo, Peugeot 107, and Citroen C1 by Peugeot and Citroen launched in
direct competition to the Ford Ka, the Volkswagen Lupo and the
Mercedes/Swatch Smart
The direction co-branding takes should not be considered unambiguous
but rather as a comprehensive value creation process that might combine
one or all of the four co-brand equity enhancement process
aforementioned.
Very often the value pursued by each party may be different from one
other, and the benefits that are likely to be achieved by the parties
are usually in more than one field.
Adidas and the Japanese designer brand Yamamoto, for instance, have
successfully created Adidas Y3 by matching very different goals. In
this cooperation Adidas benefits in brand image from the “coolness” of
Yamamoto and steps into the style arena while Yamamoto benefits from
the size and network of Adidas to increase brand awareness.
That being said, crossover branding cannot represent an easy made
strategy for every brand. Such kind of cooperation needs careful
coordination among the parties involved and attentive care in
realization. In fact over 90% of co-branding ventures fail.
Co-branding must, indeed, create equal value for both cooperating
brands. No cooperation based on an unequal relationship has proved to
be successful.
Moreover, no co-branding strategy can be feasible if the brands
involved do not share core values and brand belief with each other.
Interlocking two brands identities can indeed be tricky as you need to
look at your brand message and make sure that its perception will not
be diluted in consumers’ minds.
Otherwise, the brands original consumer can be lost and disputes may
arise between the partners.
Co-branding needs careful coordination, attentive communication among
parties and detailed performing analysis. This complicates day to day
operations and can cause one or both brands to under perform and fail
to meet each others standards.
Respective brand goals and objectives being brought to the cooperation
should clearly coincide with each others ultimate partnership
strategies.
With the increased sophistication of today’s consumers it becomes vital
for brands to understand their audiences’ needs and desires as
consumers decide, in fact, the life or death of a brand. Consumers in
the 21st century have become increasingly aware of the quality of the
products and services they seek and now search for added value in these
items.
Crossover branding, if rightly conceived and managed, can provide an
attractive 1+1>2 formulas which creates added value for both
participating brands and consumers.
1.Bill Sweeney, Project Leader and Head
of Apparel at Adidas Sport Performance Division.
Article Source:
http://www.articlesbase.com/marketing-articles/
cobranding-a-112-formula-881542.html About the Author
Vladimir Djurovic is the founder and Managing
Director of Labbrand, a Shanghai based innovative brand agency
specialized in brand research, strategic and creative services.
Labbrand website at: http://labbrand.com/
is also the portal to Labbrand branding blog: http://labbrand.com/english/news_and_articles.php/
and reviews of branding related hot topics, with a special focus on
China. |
