BLOGS & THOUGHTS

Co-branding is a form of partnership, where two companies or brands share their brand names, logos, etc., on one project, one product, or one piece of software. Co-branding presents one offer, using the combined resources and marketing power of two (or more) brands to sell it. Co-branding can also be the unification of several products from multiple brands or organizations under a single marketing campaign or strategy, essentially linking several products in one package.

Co-Branding is the strategy that strives to capture the synergism of combining two well-known brands into a third, unique branded product.
Rao and Ruekert, 1994

Types of Co-Branding
There are two popular types of co-branding that you can consider:

Product Based
is a marketing strategy that involves linking of multiple brands from different companies in order to create a product indicative of their individual identities.

Communication Based
is a marketing strategy that involves linking of multiple brands from different companies in order to jointly communicate and promote their brands.

A partnership between two companies aims to build both brands and break into new, unexplored market opportunities. The whole premise is that by partnering with someone, you are creating a win-win situation where both parties can benefit. Here are some reasons why you should consider a co-branding partnership with other small businesses.

1.Two heads are better than one.

Brainstorming may be more productive. Because a partner would have the same incentive as you for making this partnership a success, they may be more critical of the ideas you present.

2.Your partner may have skill that you lack.

By collaborating with another business, you can virtually eliminate the weakness that you have while focusing on your strengths. You can give priorities to things that matter instead of thinking of ways to compensate for your flaws.

3.You can reach new market segments

A partnership between two companies aims to build both brands and break into new, unexplored market opportunities.

4. A Co-branding partnership minimizes your risk.

For example, if you enter a partnership with a manufacturer, you may be able to develop your product line efficiently while minimizing the cost. 

5. Learning Experience

You can observe how your partner manages their business and ask them to share management techniques or organizational methods.

If the above discusses why you should choose Co-branding as a business strategy, it turns out that there are advantages and disadvantages of Co-branding as below.

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.

-Product image enhancement

-More financial sources.

The Disadvantages

Reduced risk doesn’t mean zero risk.

There will always be risks involved when marketing new products or services. Being able to combine resources through co-branding can help companies be able to reduce the amount of risk they are taking, but it won’t completely eliminate it.

Some cultures just aren’t compatible.

Some companies might be a good match from a product or service standpoint, but their internal cultures might not be compatible. Sometimes co-branding just isn’t a good fit, which means it takes time to develop the relationships necessary to understand the full potential of this venture.

• 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.

#1 Case Study : Kanye x Adidas

Kanye West, best known for his Grammy-winning rap albums, partnered with Adidas to develop a high-end footwear line called Yeezy. Kanye a well-established platform to build his high-end clothing line. One of the strongest draws of Yeezy -- and most notably its shoes is its exclusivity: Kanye's celebrity status, extremely scarce roll-outs, and the high price tag make the lucky few to own Yeezy sneakers feel a little famous by association. Adidas' co-branding relationship with Kanye and the resulting cult-like Yeezy following led to a stellar year for the company. 

In 2019, Adidas' net income climbed 19.5% to $1.9 billion.

#2 Case Study : Starbucks x Kraft

Kraft was able to help Starbucks grow by offering distribution services and helping the coffee brand build a presence in grocery stores.  A partnership that had lasted for years ended in a major court battle. The war of words has been escalating for days, as the two sides traded charges and countercharges. Kraft claims that Starbucks unilaterally decided to end their agreement, and Starbucks says that Kraft failed to aggressively promote its brands, which include Seattle’s Best Coffee, in stores. The bitterness has also spilled into the fast-growing market for single-serve coffee machines, with Kraft accusing Starbucks of undermining sales of its Tassimo coffee system ahead of the peak holiday season.

Ultimately, this brand partnership failed because of poor communication, and possibly poor execution as well.

This is an explanation of co-branding. So, co-branding is a strategy that can utilize various product or service brands as part of a strategic business alliance.

This form of cooperation has its own advantages and disadvantages, and there are some products that have succeeded in carrying out this strategy and some have failed.

Kreatiklan’s team can guide you into the right steps in your collaborative branding to achieve the results that you wanted with your customers. Consider yourself to get a right collaborative marketing strategy by contacting us info@kreatiklan.com or simply hit (+62) 87-780-561-569.