Co - Branding

 | June 17,2010 10:50 am IST

Co-branding

To put in the words of inter-brand definition, "Co-branding is a form of co-operation, in which all the participants' brand names are retained."

 

And Kotler defines co-branding as, "two or more well-known brands combined in an offer" and each brand sponsors expect that the other brand name will strengthen the brand preference or purchase intention and hope to reach a new audience.

 

Most companies have explored co-branding at one time or another. But few have realized its full potential. While there are many forms of co-branding; before a company can decide which option makes the most sense for its situation, it must fully explore four main types of co-branding.

 

Each is differentiated by its level of customer value creation, by its expected duration, and perhaps most important, by the risks it poses to the company. These risks include the loss of investment, the diminution of brand equity and the value lost by failing to focus on a more rewarding strategy.

 

Reach & Awareness Co-branding

This is the lowest level of shared cooperation in a co branding exercise and its objective is to rapidly increase the awareness of the sharing brands through each other's strength in the respective domains. The example for this type of co-branding is found in the credit cards.

 

In fact co-branding of this type finds the maximum utility of co-branding. In the Indian context, we have already observed a spate of co-branded credit cards between Citibank and Jet Airways, Standard Chartered Bank and Indian Railways, Indian Oil and Citibank, and Citibank and The Times of India.

 

The benefits of co-branded cards to the cardholder is that he gets points whenever he uses it and he can get these points redeemed for additional products or services for free. Thus, it builds loyalty to the brand or service in use by the customer. This is a sort of affiliate marketing between three brands, viz., a payment service franchiser (Mastercard, VISA), a bank and a product or service.

Value Endorsement Co-branding

This is the second level in the co-branding hierarchy wherein the shared value creation and the strength of relationship is such as to have endorsement of one brand values to the other with a strong affinity towards the other.

 

The most appropriate example here would be of the companies getting involved with a cause with some non-government organization, e.g., the co branding exercise between P&G and National Association for Blind in the form of Project Drishti where one rupee per pack of Whisper purchased by the customer was diverted towards the cause of a blind female child.

 

Thus, here one of the brands gives a small proportion of its transaction revenue to charity and the brand comes to be associated in the public mind with a worthy cause and with a good citizen brand values. The essence of this type of branding is that the two participants cooperate because they have, or want to achieve an alignment of their brand values in the customer's mind. Some of the other examples of two commercial brands coming together would include endorsement of Ariel by Vimal.

 

Ingredient Co-branding

Intel Inside on a Compaq Personal Computer explains the basis of ingredient co-branding. In this form, there is a physical identifiable ingredient brand which has a high brand value for the customer and with it the value of the final product greatly increases. Here, one of the strong brands is an ingredient to another strong brand adding value to the final product. The potential of value created in this cooperation is tremendous and without it the value of the product will be diminished significantly. Another example here can be of Nutrasweet as an ingredient in Diet Coke.

 

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