What is the logic behind Co- Branding?

The 1980’s marked a turning point in the conception of brands. Management came to realize that the principal asset of a company was in fact its brand names. Several articles in both the American and European press dealt with the discovery of brand equity, or the financial value of the brand. In fact, the emergence of brands in activities which previously had resisted or were foreign to such concepts (industry, banking the service sector, etc) vouched for the new importance of brands. This is confirmed by the importance that so many distributors place on the promotion of their own brands.



For decades the value of a company was measured in terms of its buildings and land, and then in tangible assets. It is only recently that we have realized that its real value lies outside the business itself, in the minds of potential buyers. In July 1990, the buyer of Adidas summarized his reasons in one sentence, after coca cola and Marlboro; adidas was the best known brand in the world.

The Logic of Co- Branding:

With increasing frequency, companies today are undertaking joint marketing projects. That is, two different companies pair their respective brands in a collaborative marketing effort:

- New product launches clearly identify the brands that cooperated to create and market them. Thus Danone and Motta introduced ‘Yolka’, a yogurt ice cream with packaging that uses both brands to endorse it. Similarly, M&Ms and Pilsbury invented a new cookie concept, and Compaq and Mattel combined their respective expertise to bring out a line of hi-tech, interactive toys.

- Many line extensions capitalize on a partner brand’s equity. Haagen Dazs, for example, launched a Bailey’s flavored ice cream. In the same vein, delicious brand cookies now includes a Chiquita banana taste in its line, Yoplait sells a Cote d’Or choclate cream and new Doritos ads tout ‘the great taste of Taco Bell’ or ‘Pizza Hut’.

- To maximize their brand extension success rates, many companies seek help from other companies’ brands, whose established reputation in the new market might proce decisive. Hence Kellogg’s co branded its cereals for health-oriented adults with Healthy choice.

- Co-branding may help usage extension. Ineurope, for instance, Bacardi and coke advertise together. This helps Bacardi’s market penetration strategy because the ads demonstrate another way to drink Bacardi. Moreover, Bacardi’s status is a powerful endorsement for Coke as the ideal mixer. Thus the pairing also benefits Coke, which wants to remain the number one adult soft drink.

- Ingredient co-branding has now become commonplace. NutraSweet, for example, wanted to bolster its image, so it encouraged and co-financed advertising campaigns by its client brands. In turn, these client brands endorsed NutraSweet and endowed it with connotations of pleasure and affective values, until now sugar’s exclusive domain. The same holds true for Lycra, Wool mark and Intel, these ingredient brands are eager to promote co-branding, both on the product itself and in advertising and promotion.

- Image reinforcement may also be an objective of co-branding. In the detergent industry, for instance, famous white goods brands endorse particular detergents, and vice versa. Thus, in India, Ariel and Whirlpool recently launched a co-branded advertising campaign, whose claim is the “The art of washing’ illustrated by a famous 1914 Renoir painting. By these means, Ariel seeks to reinforce its market leader status and gain a more affective image. As for Whirlpool, the campaign bolsters its European launching strategy, and creates a caring image. Orangina and Renault provide two more examples. To get closer to the youth market, Orangina launched specially designed cans, co-branded with famous youth brands (eg Lee cooper). For its part, Renault launched limited series of its Twingo car, endowing them with famous designer names – Twingo kenzo and Twingo Easy.

- Co-branding appears in sales promotions too. Whirlpool, for instance, includes findus or Bird’s Eye coupons in its refrigerator owner’s manuals. Similarly, companies find that prizes, such as club Med vacations, work better than cash awards in promotional consumer contests or sweepstakes.

- Loyalty programmes, increasingly, include co-branding arrangements. Although co-branded loyalty programmes are not new (GM initiated the concept, with co branded credit cards), a new twist has appeared. That is, corporations are sharing the cost of loyalty programmes between their own brands, for example, Nestle issued a collector’s booklet that includes all of its brands (from Kit Kat to Buitoni, Perrier and Findus).

- Co-branding may signal a trade marketing operation. For instance, the product may be designe specifically for a distributor and signed by both manufacturer and retailer. Thus Danone created a special yogurt for Quick, the European fast food chain that competes against McDonald’s. Yoplait did the same for McDonalds.

- Capitalising on synergies among a number of brands is another co-branding objective. Nestle is a case in point, and it has a number of brands that could gain from a joint marketing action (eg Nestle’s Yoghurts, Nescafe, Nesquik Herta’s pork and bacon). To compete against Kellogg’s and increase its market shares in the breakfast market, therefore. Nestle launched joint advertising campaigns, showcasing all these brands around a healthy breakfast’ theme.

Is co-branding new? No. There are early classics- detergents endorsed by white goods brands, and oil brands endorsed by car manufacturers. Later, in the 1960’s Kellogg’s Betty Crocket added Sunkist lemon cake as a line extension. Finally, Grand Marnier flavored ice creams are well known.

What is new is today’s corporate awareness that strategic alliances are essential to acquiring and maintaining a competitive edge. Coopetition, a new word coined by Brandenburger and Nalebuff (1996), illustrates this new attitude. The idea: sometimes corporations may have to cooperate with and compete against the same company. From this standpoint, co-branding is an alliance made visible; furthermore, co branding involves recognizing that the public’s knowledge of an alliance is added value.

Even though co branding has become fashionable, not all alliances should be made visible.

- In the photocopy market, many products sold by, say, Canon are actually made by Ricoh.

- In the car industry, although the rover company is now owned by BMW, at the product level Rover cars show no BMW insignia. Mercedes and Swatch have created a joint venture to produce and market a revolutionary new car, called Smart, to which each company will add its specific expertise. However, Mercedes is unlikely to put its trademark on the smart!

- To conquer the iced tea market (depite late entry), Nestle and coca Cola decided to unite against Unilever’s Lipton range. Nestle would create and market the product, and Coca Cola would distribute it. The product, called Nestea, is not co-branded, though the Coca Cola company gets only a small mention on the back of the packaging.


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