You might not know this, but there are many ways for brands to combine forces. Some choose to combine resources and leverage individual core competencies, others can negotiate to use current resources within one company to promote multiple products at once.
In the end, the goal is to play for the win-win; putting together both brands strengths for everyone’s benefit. The difference is how you go about it. Let’s take a look at some of the most popular co-branding strategies.
Types of Co-branding Strategies
Co-branding or brand partnerships happen when two companies form an alliance to work together. It’s associating a single product or service with more than one brand name, or otherwise associates a product with someone other than the principal producer.
Typically, a co-branding agreement involves two or more companies cooperating to include various logos, color schemes, and/or brand identifiers to a specific product that is contractually designated for this purpose. You can think of it as the child of these two brands, highlighting each brand’s strengths. The objectives are simple: Increase the value perception in the consumers’ eyes, differentiate the product in a competitive environment, or to combine specific brand properties on a single product.
Product-based co-branding
Product-based co-branding entails putting forces together to create a new product. Within product-based co-branding, the strategy can be either parallel or ingredient based. Think of Nike’s Apple Watch line when you think about parallel, think about Hershey’s Chocolate Syrup in Betty Crocker’s brownie mix when you think about ingredient co-branding.
Some of the benefits of product-based co-branding are: Value addition and differentiation, access to new customers, integrated communication, better positioning and less product introduction costs for each brand. But there are some disadvantages as well, such as loss of control and the risk of the co-brand performing badly and negatively affecting the original brands.
Communications-based co-branding
On the other hand, communications-based co-branding is the act of joining forces to promote brands from different companies. Think of the current Target Run campaign in which you see different brands of the products they sell.
A few advantages of communications-based co-branding are: Endorsement opportunities, sharing advertising costs and resources and enhancing consumer awareness. Some disadvantages are: Having too many cooks in the kitchen, the possibility of being dragged down by another brand’s negative image or their poor performance.
Other types of co-branding include same-company co-branding in which one company combines incorporates one product in another one. One example is the hotel industry, where certain brands are presented under the umbrella of a bigger brand (Courtyard by Marriott).
National to local co-branding is when local brands team up with known names to leverage some of their strengths, such as distribution. Hello, Amazon!
Joint ventures are when two or more brands strategically combine forces to offer consumers additional value (credit cards/airlines and hotels).
We’ve mentioned a lot of big names in this blog post but think of these as strategies that can be adapted to every business level. Whatever your goal is, there surely is a brand out there that fits in perfectly to within your world.
Wishing you successful joint ventures, Greg Sausaman