Can Make Money - Co-Branding

It is instrumental to handle almost every marketing matter from creating initial awareness to building customer loyalty, concisely. A well executed co-branding strategy can lead to win-win situation for both co-brand partners and can help in realizing unexplored markets or untapped opportunities. It is becoming a popular business practice to strive for a positive association between different brands that can develop synergy. Companies engage in co-branding to leverage strong brand. Co-branding involves combining two or more brands into a single product or service.

Companies form co-branding alliance to fulfill following goals:

Expanding customer base ►

To make financial benefits ►

Respond to the expressed and latent needs of customers ►

To strengthen its competitive position ►

Introduce a new product with a strong image ►

Creating a new customer perceived value ►

To gain operational benefits ►

Distributing through branded retailer etc, for using logos, to use cartoons on t-shirts, co-branding can be used for promotion campaigns. Some of the examples of co-branding are between Nike - Phillips (Electronics Manufacturer) and Adidas -Porsche (car manufacturer). Co-branding is a frequently practised in fashion and apparel industry.

Co-branding Agreements

Both companies should have a relationship that has potential to be commercially beneficial to both parties, in a co-branding alliance.

It includes important provisions and needs to be carefully drafted to give clear guidelines to the parities involved. Obligations and restrictions that are binding on both the parties, co-branding agreement includes rights.

Person involved in campaign must be very clear about these issues. Term and termination, disclaimers, indemnification, payments and royalties, warranties, licensing specifications, confidentiality issues, brand specifications, agreement also explains about marketing strategy.

Co-branding can take following forms:

Promotion

Sponsorship can provide with ample opportunities. It can enhance brand image. Co- branding starts with endorsements with celebrities and institutions. Promotional co-branding is the most common type of co-branding practiced by companies.

Agreement with Supplier

Distinctiveness is very important for such co-branding which is possible through patent protection. Alliance with suppliers gives easy access to offerings and long lasting relationships which leads to low level of investment.

Agreement with Value Chain members

Companies offering similar product or service or between product and service provider, such co-branding can be between supplier-retailer. Members in a distribution channel both horizontally and vertically linked form alliance, in value chain co-branding. It aims to give customers altogether new experience and enhance customer value.

Innovation

Top level management co-operation and organizational collaboration is essential for a successful agreement. Risk and return are two important aspects which need to be considered. In such alliance companies come together to create new offerings for customers. This approach offer opportunity of growth in existing market and exploring new markets.

Benefits of Co-branding

Increased sales revenue; ►.

Exploring new markets with minimum expenditure; ►.

Appropriate approach when company seeks quicker response; ►.

Access to new source of financing; ►.

Technological collaboration between two companies give better results than what could be achieved by single company's efforts; ►.

Royalty income; ►.

Sharing of risk; ►.

Companies can fetch higher price for value added by additional brands associated with it; ►.

Improved product image and credibility with another brand association; ►.

Increased customer confidence on product; ►.

Increased coverage and exposure from joint advertising; ►.

Prospects to develop working relationships leading to future joint undertakings ►

Problems with Co-branding

Greed to fetch too much in short time may spoil the relations and even result in failure. Proper understanding between co-brand partners is must; ►.

It becomes difficult to dismantle co-brand and even more difficult to reestablish the brand alone; once a co-brand take position in market, ►.

Companies having different visions and culture are in-compatible for co-branding; ►.

It can negatively affect the other partner's brand; if brand don't possess sufficient credibility in market, ►.

Repositioning of brand by one party may adversely influence the other party's brand or campaign; ►.

Co-branding may not work; when two products are totally different and have different set of customers, ►.

Inability to meet the requirements of other party may result in termination of co-branding agreement; ►.

Legal requirements; ►.

Mergers and takeovers of one party may prove detrimental to other party; ►.

And technological or changes in consumer preferences may give unexpected outcomes; social, legal, future environmental changes like political, ►.

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