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Brand Management Branding Basics

Of Co-Branding And Competition

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Usually, we only look at other brands as competitors. But the marketing world is changing: many marketers now perceive other brands not simply as rivals, but as potential partners in mutually beneficial projects.

There has been enormous growth in co-branding over the past three years:

Puma has worked with Mini to produce a special-edition car; Acer has worked with Ferrari to create a laptop computer; Volkswagen has partnered with Apple to create an iPod-compatible Beetle.

Unexpected partnerships are springing up all over the world, transforming co-branding from a vague notion into a key marketing strategy for many major brands. Academic research on co-branding can help to explain its sudden attraction.

Typically, academic marketing research is the last place marketers should look for inspiration. Most of it is arcane, pointless and over-complex. But the literature on co-branding is the exception. One of the earliest papers on the topic is still one of the most interesting.

Park, Jun and Shocker ran laboratory experiments in which subjects were asked to rate a fictional co-branded cake-mix product from Slim-Fast (known for bland-tasting, low-calorie slimming food) and Godiva (known for rich-tasting, high-calorie chocolates). The co-branded mix was rated far higher than a single-branded offering from either brand. It was also rated higher than a Godiva and Haagen-Dazs co-branded product, as the two were perceived as similar.

It appears that only positive brand associations are perceived by consumers who encounter a co-branded offering. Research has also uncovered the existence of 'positive spillover effects' on the contributing brands. For example, it is likely that Slim-Fast products would be perceived as less bland-tasting by those who had experienced the co-branded cake mix, while Godiva would have reduced the perception of its products as high-calorie. This opens up the tantalizing possibility of using co-branding as a way to modify and improve brand equity while still making money from the co-branded product or service.

Then there are the practical advantages. When two brands work together there are enormous potential insights to be gleaned from working with a different organisation: both brands can bring their own loyal customers into the target market, thus increasing the potential attraction of the new offering; the product development and marketing costs are shared between the organisations; and the co-brand is eminently buzz-worthy.

Consumers, the media and retailers are intrigued when they encounter two brands working together.

What's the catch? As usual, it is not the brands but the brand managers that are letting the side down. UK brand management has rarely distinguished itself in ambition or creativity (despite the crap that is spouted at marketing conferences). So while US brand managers have embraced co-branding to a remarkable degree in recent years, we have yet to see any major examples in the UK.

One notable exception is the partnership between the Ralph Lauren perfume Romance and Lindt's exclusive chocolates Petites Merveilles. The two brands were offered together as a Valentine's Day promotion in a rare example of two big brands stepping out of the marketing bunkers that most inhabit and driving awareness, sales and possibly brand equity through co-branding.

This alliance was initiated by ZenithOptimedia, the media agency for both companies; its growing client list could signal a developing role as a dating agency for those looking for co-branding relationships. The potential for the practice to grow brand equity while increasing sales should ensure that there will be plenty of suitors.

30 SECONDS ON … RALPH LAUREN AND LINDT

- Zurich chocolatier Lindt & Sprungli was formed by the merger of two family confectionery companies at the end of the 19th century. Ralph Lauren has built his fashion, fragrance and home furnishings empire since opening a tie shop in 1967.

- The co-branded promotion between Petites Merveilles and Ralph Lauren Romance ran last year in UK fragrance stores and department stores.

- Lindt and L'Oreal (which produces the Romance perfume under licence) worked together to ensure the brands were presented in a consistent and unified way in-store.

- During the promotional period Romance was one of the five top-selling female fragrances in most of the stores where the co-brand was offered. This is despite the fact that in 2005, 220 fragrance brands advertised, and the perfume has been on the market since 1999.

Courtesy of Marketing Magazine

Sponsored By: The Brand Positioning Workshop

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1 Comment

Rick Wilson on September 12th, 2007 said

Signs are everywhere that a sea change is occurring in how branded product makers and their channel partners chart growth strategies together. Many will start moving away form old-school adversarial relationships to find new ways to re-focus on providing consumers with the benefits of trusted brands.

For too long, manufacturers and their dominant distribution partners have danced around the trade-offs that price- and cost-only systems create. The trade-offs are especially acute when a marketplace is supplied by long, overseas supply chains where oversight and quality control are more difficult to assure. While long supply chains are an important part of the global economy, they still demand operating oversight which drives up costs and investment. Contract manufacturers (and distribution channels building their own store brands) are finding out there’s more to sourcing than “spec and buy”.

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