In order to achieve certain goals, brands sometimes unite and delve into co-branding so as to name a new product. However, for the product to be a success, brands have to be in sync and always do what’s best for it. But what is co-branding? Let us show you an example.
One of the best co-branding examples is that of Citibank and MTV. Together, they’ve created a debit card. The card allowed the customers not only to pay with it but also take advantage of the benefits at the MTV Citibank clubs.
Co-branding: types
We recognise only two types of co-branding — ingredient and composite co-branding.
Ingredient co-branding
Ingredient co-branding is one of the two co-branding types which relates to the use of a famous brand to help another not-so-famous brand gain recognition. Furthermore, it relates to the development of brand equity for parts and materials that other products also include.
However, for this co-branding to work, the primary brand has to be more powerful than the subordinate one. For example, Dell and Intel. Dell, a well-known computer manufacturer, has created a co-branding strategy with Intel, which deals with processors.
More often than not, the ingredient brands (two or more of them) are the biggest buyers of the primary brand. Nevertheless, they have to be unique, a major brand, or protected by a patent.
There are many clear benefits to ingredient co-branding, such as better quality products and access to additional distribution channels. Furthermore, the brands can also hope for superior promotions and higher profits when working together. What’s more, those who sell the ingredient brand will also get a chance to enjoy long-term customer relations. Their manufacturer can get a competitive edge, while the retailer can enjoy promotional help, courtesy of the ingredient brand.
Composite co-branding
In contrast to ingredient co-branding, composite co-branding, a.k.a. composite branding, calls for the use of two famous brand names. These brands act together to offer a unique product or service, which they wouldn’t be able to offer individually. Of course, the success of this endeavour depends on their popularity and on how much they complement each other.
The advantages and disadvantages of co-branding
As with everything business-related, even co-branding has certain pros and cons.
The advantages:
- Brands can share the risk.
- They can generate a royalty income.
- Bigger sales incomes.
- The customers would trust the product more.
- Joint advertising, which gives them a wider scope.
- Technological benefits.
- Product image enhancement, since they are associated with another renowned brand.
- More financial sources.
The disadvantages:
- If the two products that the brands are using to develop their co-branding strategy are entirely different or popular in different markets, the co-branding might be a total failure.
- If the companies don’t share the same missions and visions, composite branding is a no-go.
- Co-branding can also have an adverse effect on partner brands.
- If the customers associate bad traits and experiences with one of the brands, the total brand equity might get damaged.
Related content:
Brand Management Knowhow – learn more about branding with our collection of educational articles.
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FAQs
By co-branding, brands can associate themselves with positive attributes and values of their partners, access new markets and customers, create unique and innovative products, and share the costs and risks of product development, marketing, and distribution.
What are the advantages of co-branding? ›
By co-branding, brands can associate themselves with positive attributes and values of their partners, access new markets and customers, create unique and innovative products, and share the costs and risks of product development, marketing, and distribution.
What are the disadvantages of co-branding? ›
The disadvantages:
If the companies don't share the same missions and visions, composite branding is a no-go. Co-branding can also have an adverse effect on partner brands. If the customers associate bad traits and experiences with one of the brands, the total brand equity might get damaged.
What are the risks of co brand? ›
Risks of Co-branding
If the partner brands don't share the same values and beliefs, customers may become frustrated with the partnership.
What are the advantages and disadvantages of brand? ›
A company's identity in the marketplace can easily make or break its profitability as a whole.
- Advantage: Awareness. ...
- Advantage: Consistency in the Marketplace. ...
- Advantage: Customer Loyalty. ...
- Disadvantage: Can Become Commonplace. ...
- Disadvantage: Negative Attributes. ...
- Disadvantage: Pigeonholes.
It involves creating a partnership or collaboration between two or more brands or brand ambassadors to promote a product, service, or campaign. By combining the power and resources of different brands, co-branding can help reach a wider audience, generate buzz, and increase brand visibility.
What is co-branding is it effective? ›
Co-branding is a marketing strategy that utilizes multiple brand names on a good or service as part of a strategic alliance. Co-branding can boost the reputation of two or more brands, depending on the strategy employed.
What are the disadvantages of co-branding and licensing? ›
Because the brands are tying their reputations and goodwill together when they co-brand, they need to be prepared to share not only the positives but also the potential negatives of the partnership. Dual-branded products/services create the risk of brand tarnishment if one partner draws social or political criticism.
What is an example of failed co-branding? ›
The co-branding campaign between Apple and U2 in 2014 can be considered unsuccessful. While both brands are iconic and have collaborated successfully in the past, this particular campaign faced significant backlash.
Will co-branding confuse consumers? ›
Imbalanced branding can damage the relationship between partners and cause confusion among customers. Consider the Needs of Your Partner.
Co-branding
Licensing enables the possibility of different types of strategic partnerships such as co-branding – where both parties are licensing their brand to each other, with the aim for these brands to be used together. Co-branding can help both parties to increase their brand recognition and reputation.
What are advantages and disadvantages? ›
A disadvantage is the opposite of an advantage, a lucky or favorable circ*mstance. At the root of both words is the Old French avant, "at the front." Definitions of disadvantage. the quality of having an inferior or less favorable position. antonyms: advantage, vantage.
What are the risks of co marketing? ›
Competitive Concerns: If one partner competes with another partner's products or services, it can create conflicts of interest and may not be well-received by customers. Risk of Overexposure: Engaging in too many co-marketing partnerships can lead to overexposure, diluting your message and brand identity.
What is the biggest potential drawback to the co-branding strategy? ›
The biggest potential drawback to the co-branding strategy is: The risk of damaging a brand name if the cooperative endeavor fails. The possibility that the new co-branded product does not "fit" with the consumers' the image of either partnering brand.
