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Co-branding involves combining two or more brands into a single product or service. Companies engage in co-branding to leverage strong brand. It is becoming a popular business practice to strive for a positive association between different brands that can develop synergy. A well executed co-branding strategy can lead to win-win situation for both co-brand partners and can help in realizing unexplored markets or untapped opportunities. Concisely, it is instrumental to handle almost every marketing matter from creating initial awareness to building customer loyalty.
Companies form co-branding alliance to fulfill following goals:
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
Co-branding is a frequently practised in fashion and apparel industry. Some of the examples of co-branding are between Nike Phillips (Electronics Manufacturer) and Adidas -Porsche (car manufacturer). Co-branding can be used for promotion campaigns, to use cartoons on t-shirts, for using logos, distributing through branded retailer etc.
Co-branding Agreements
In a co-branding alliance, both companies should have a relationship that has potential to be commercially beneficial to both parties.
Co-branding agreement includes rights, obligations and restrictions that are binding on both the parties. It includes important provisions and needs to be carefully drafted to give clear guidelines to the parities involved.
Agreement also explains about marketing strategy, brand specifications, confidentiality issues, licensing specifications, warranties, payments and royalties, indemnification, disclaimers, term and termination. Person involved in campaign must be very clear about these issues.
Co-branding can take following forms:
Promotion Promotional co-branding is the most common type of co-branding practiced by companies. Co- branding starts with endorsements with celebrities and institutions. It can enhance brand image. Sponsorship can provide with ample opportunities.
Agreement with Supplier Alliance with suppliers gives easy access to offerings and long lasting relationships which leads to low level of investment. Distinctiveness is very important for such co-branding which is possible through patent protection.
Agreement with Value Chain members It aims to give customers altogether new experience and enhance customer value. In value chain co-branding, members in a distribution channel both horizontally and vertically linked form alliance. Such co-branding can be between supplier-retailer, companies offering similar product or service or between product and service provider.
Innovation This approach offer opportunity of growth in existing market and exploring new markets. In such alliance companies come together to create new offerings for customers. Risk and return are two important aspects which need to be considered. Top level management co-operation and organizational collaboration is essential for a successful agreement.
