Branding

Co-Branding

Co-branding refers to the combination of multiple brands into one product or service. Co-branding is a way for companies to build a strong brand. Co-branding is becoming more popular as a business strategy to create positive associations between brands. Co-branding strategies that are well executed can create win-win situations for both partners. It can also help to unlock untapped markets and opportunities. It is essential to manage almost all marketing matters, from building customer loyalty to creating awareness.

Co-branding alliances are formed by companies to achieve the following:

► Expanding customer base

► To make financial benefits

► Respond to the expressed and latent needs of customers

► To strengthen its competitive position

► Introduce a new product with a strong image

► Creating a new customer perceived value

► To gain operational benefits

Fashion and apparel industries are accustomed to co-branding. There are many examples of cobranding, such as between Nike – Phillips (electronics manufacturer) and Adidas-Porsche (car maker). You can use co-branding for promotional campaigns, such as using cartoons on tshirts or logos to distribute through branded retailers.

Co-branding Agreements

Both companies must have the potential to benefit from a co-branding alliance.

A co-branding arrangement includes rights, obligations, restrictions and conditions that are binding for both parties. It contains important provisions, and must be carefully written to provide clear guidelines to all parties.

An agreement also covers marketing strategy, brand specifications and confidentiality issues. It also includes licensing specifications, warranties and payments. These issues must be understood by all parties involved in the campaign.

The following are examples of co-branding

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Promotion

Co-branding with companies is the most popular type of co branding. Companies can co-brand by obtaining endorsements from celebrities or institutions. This can help to improve brand image. There are many benefits to sponsoring.

A contract with the supplier

Alliances with suppliers provide easy access and lasting relationships that lead to lower investment. For such co-branding, it is important to be distinctive. Patent protection makes this possible.

Agreement with Value Chain members

It is designed to offer customers a completely new experience and increase customer value. In value chain branding, members who are vertically or horizontally connected form an alliance. This co-branding could be between suppliers-retailers, companies offering the same product or service, or between service providers and product.

Innovation

This approach offers growth opportunities in existing markets as well as the possibility of exploring new markets. These alliances allow companies to come together and create new products for their customers. Both return and risk are important considerations. A successful agreement requires top-level management cooperation and organizational collaboration.

Benefits of co-branding

► Increased sales revenue.

► Exploring new markets with minimum expenditure.

► Appropriate approach when company seeks quicker response.

► Access to new source of financing.

► Technological collaboration between two companies give better results than what could be achieved by single company’s efforts.

► Royalty income.

► Sharing of risk.

► Companies can fetch higher price for value added by additional brands associated with it.

► Improved product image and credibility with another brand association.

► Increased customer confidence on product.

► Increased coverage and exposure from joint advertising.

► Prospects to develop working relationships leading to future joint undertakings

Co-branding: Problems

► Proper understanding between co-brand partners is must. Greed to get too much in a short time can cause problems and even lead to failure.

► Once a co-brand take position in market, it becomes difficult to dismantle co-brand and even more difficult to reestablish the brand alone.

► Companies having different visions and culture are in-compatible for co-branding.

► If brand don’t possess sufficient credibility in market, it can negatively affect the other partner’s brand.

► Repositioning of brand by one party may adversely influence the other party’s brand or campaign.

► When two products are totally different and have different set of customers, co-branding may not work.

► Inability to meet the requirements of other party may result in termination of co-branding agreement.

► Legal requirements.

► Mergers and takeovers of one party may prove detrimental to other party.

► Future environmental changes like political, legal, social, and technological or changes in consumer preferences may give unexpected outcomes.

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We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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