Co Branding: Effective or a damp squib ?

The other day, as I went in to buy a new watch at Shopper’s Stop, I was a bit overwhelmed by the sheer number of advertising gimmicks being employed by the companies. At the purchase counter, I was greeted by a First Citizen Card Membership, which made me eligible for discounts for a whole lot of other brands like Barista, Pizza Hut etc.

It has become a norm for brands to co-opt for other brands to build a strong image in the market. This phenomenon, called co- branding, is a rage in the current market scenario. Various methods are employed by brands to superimpose themselves on another to give a ‘package’ to the consumers. Given the current market complexity and consumer demands, brand managers have to plan out methods to position their brand on a superior level. Co- Branding, thus, is considered an important marketing tool of brand positioning.

Co- Branding is almost omnipresent. Your laptop, for example, bears the logo of Windows, Intel, NVidia, ATI Radeon and other brands, is good example of effective co-branding. Never thought so, eh! Capturing the customer’s attention was a major part of any brand’s marketing strategy, but the customer’s buying behavior has now gained the centerpiece in the brand manager’s deepest thoughts. That is the reason why you see a VISA tying up with Big Bazaar to give you a cash back offer, but not with your local kirana shop.

But the real question is why would a brand risk association with another brand of a similar stature to acquire a customer? Why are the brands so desperate to poach into territories to ambush people like you and me? Are we worth the effort? The answer is a resounding YES.

 Theory requires us to believe that brands need to innovate themselves to remain relevant to the market situation. But the perceived desperation results from the brands realizing that the traditional methods of marketing are well past their prime and are not buying enough traction into the market. Realizing this fact enabled the companies to change their branding strategies and delve into the consumer’s mind.

A product is identified with a company by its brand, and usually consists of some type of identifier. The concept of co-branding consists of taking a product developed for one company, and changing the look and feel to match that of another company. The detailed co-branding process results in a product that is fully customized to meet the particular needs of a specific company, with minimal change to the underlying functionality.

It is at this juncture that I introduce two terms, target brand and the influencer brand. In a co-branding process, the stalwart between the two brands is considered the influencer and the other is called the target brand. To illustrate my point, Best Western runs an exclusive rewards program for Harley Davidson enthusiasts. Riders who participate get special treatment at the hotel including a clean wipe-down towel at check-in. Clearly, Harley Davidson is the influencer brand here, while Best Western is ‘poaching’ on Harley enthusiasts.

There are several advantages of such a strategy, like instant brand recognition and superior brand recall. Like the computer brands like HP, Lenovo and Dell,advertise “Intel inside” to validate their computer processors. The very fact that they are associated with Intel lends credibility and reliability to their machines. Also, co-branding may also be used to help one company tap into the market of the other and vice versa. Nike and Apple brought music and exercise together when they developed the Sports Kit, a wireless system that allows shoes to talk to an iPod. So Nike enthusiasts were inspired to try Apple and Apple enthusiasts were enticed to try Nike.  Private branding is a part of this marketing strategy too. For instance, as far back as 1984 Nike paired with Michael Jordan for a special line of products, like the famous Air Jordans.

There are several approaches in trying to define different forms of co-branding. The first of its kind is by the process of differentiation in co-branding forms. There are four different forms of co-branding. The first form is ingredient co-branding. A representative example could be Honda advertising that it uses MRF tires. Another form of co-branding is same-company co-branding. A Star Bazar from the house of TATAs is an example of the second kind.

Joint venture co-branding is yet another form of dual branding.  To quote an example,in 2006, Aston Martin and Nokia collaborated to produce the Nokia 8800. The sleek phone came with a stainless steel slider case and ring tones that were composed by Ryuichi Sakamoto. We are going to experience more number of joint venture branding in near future, at least in India. Finally, there is multiple-sponsor form of co-branding as in the case of one of the largest partnership efforts ever, the Global Fund joined forces with American Express, Apple, Converse, Dell, Emporio Armani, Gap, Hallmark, and Starbucks to fight AIDS in Africa. The effort is known as Red and has raised more than $130 million. 

Although the benefits of co-branding are immense, especially in a complex market like that of India but there are also some risks which are inherent in the concept. Co-branding may fail when the two products have different market and are entirely different. If there is difference in visions and missions of the two companies, then also composite branding may fail. Co-branding may affect partner brands in adverse manner. If the customers associate any adverse experience with a constituent brand, then it may damage the total brand equity.

Even though we have analyzed the pros and cons of co- branding to a certain extent, it is highly advisable for the managers to weigh their options before using this strategy to market their products. As Samuel Butler put it quite beautifully, “Union may be strength, but it is mere blind brute strength unless wisely directed.” Some food for thought for the brand managers, isn’t it?

[The article has been written by Manas Ranjan Kar. He is an MBA from NMIMS,Mumbai. He graduated in B.Sc. (Chemistry) from St. Xaviers College, Kolkata . While he is intrigued by the marketing strategies of the various companies, he wishes to build upon his theoretical readings and evolve into a good marketeer.]