Co-branding gains popularity. The concept is used to refer to a type of tactical and eventual alliance between two or more companies. The purpose is none other than to enhance profits and gain in positioning. The basis for the success of this technique is based on power and brand equity.
What is Co-branding?
The years of the economic crisis have hit companies hard. Ingenuity has served as a lifeline for organizations to get ahead. This is the case of Co-branding or Alliance between Brands. This B2B bet is current, although the tactic is not new. In fact, some go back to the 50s of the last century to refer to a very specific case.
The synergy occurred between Renault and the Van Cleef & Arpels jewelers. The result was a luxurious dashboard and gemstone steering wheel for a legendary car: the Dauphine Ondine.
However, since the 1990s trademark association has been practiced with some regularity. Some sectors were pushed by the result of the collaborative experience of the synergistic process of a competing brand.
The euphoria that came after the success of the alliance between two giants in their sector stands out: one of the kings of the NBA, Michael Jordan, and the sportswear brand Nike. You have to go back to 1984, with an efficient and charismatic player … and with enormous business acumen.
In fact, it was not long before he accepted Nike’s proposal to create one of the most famous sneakers on the market, the Nike Air Jordan. They are still setting trends and producing huge profits. The sector was notably influenced. The brand between partners, with the presence of sports footwear, is one of the most productive strategies on the market.
Palpable examples that have managed to move the customer to pay more to show off the result: Converse / Coca – Cola, Kangaroos / Jägermeister, Puma / Ferrari, Nike Air Jordan / Levi’s or Vans / Nintendo are just some of the successful results of the collaboration between signatures.
The basis of the alliance between brands
It is clear that cobranding is a marketing tactic that involves a strategic alliance of multiple brand names. They must be used collectively for a common purpose. Collaboration allows, under the protection of partner companies, to crystallize the launch of a new product or service.
This collaborative experience has resurfaced strongly at a time of crisis. Added to these macroeconomic circumstances is the enormous competitiveness of a global market.
New Technologies (NNTT) and an increasingly hyper-connected user are some of the battles that companies face on a daily basis. The digital market threatens to engulf any business that is not willing to seek formulas that increase its visibility.
At the same time, the number of native users and the ability of the regular customer to adapt to NNTT has grown. They know how to find what they want, where and how to do it. At the same time, they demand an excellent User Experience (UX) that is pleasant, comfortable, non-invasive, accessible, effective and efficient. They love to be surprised with custom actions.
These factors, among many others, have fueled a volatile and difficult environment for sellers. One of the responses has been a return to this co-branding effort. It can lead to various types of actions, such as sponsorships or advertisements. But the association will benefit the united companies more than if they were promoted individually.
In short, the temporary or permanent agreement between two or more partners aims to solve this critical phase. Your association aims to achieve a significant increase in your profitability.
In addition, the synergistic process will help them consolidate their positioning. This possibility is reinforced by the robustness and brand value of each of the participants. The combination of powers can achieve several incentives:
- That consumers pay more than they were initially willing.
- Promote the resistance of the product or service against white marks.
- Combine, in a single product, the added value of each partner.
In any event, what cannot be forgotten at any time is that it is a win-to-win tactic. The objective is that all the associates obtain benefits. To do this, it will be essential that they draw up a joint strategy. This must achieve the necessary visibility among the public or target on which they have focused.
Types of Co-branding
As cobranding was consolidated as a reliable, acceptable and productive practice, the diversification of the methodology began. It was found that the use of a generic typology did not work universally.
Each case required modifications and adaptive processes for its type of product or service. Each association needs to plan its own roadmap. In this way, the guarantees of achieving success and the objectives sought with the alliance increase.
The first division established the difference between cobranding vertically and cobranding horizontal. The first consisted of one of the companies providing its partner with an element of its production process. The second business implemented that component in its product formula.
The result of the collaboration was translated into a completely new article to launch on the market and surprise the public. Over time, and tying up a few loose ends, it would become known as ingredient cobranding.
Continuing with the storyline, it is the turn of horizontal cobranding. The main characteristic is that a product devised by companies of the same value scale is produced and distributed.
In this case, it should be noted that the result may be destined for a sector with the presence of all the partners. But it may also be the case that only one of them is settled in that category or that none has a presence in it.
The most used formulas in current alliances
Contemporary companies have opted for various forms of cooperation. The existing types of cobranding are included in the following classification:
1. Support cobranding. In this case, one partner predominates over the other. The main reason is usually related to the fact that one brand has more weight than the other. Usually, the predominant invites a high school to collaborate.
The lesser known business uses the notoriety of a more recognized business. This opportunity allows you to take actions to strengthen your database, your distribution channels and your sales.
It is the opportune strategy for entrepreneurs and startups that have just arrived on the market. It is important that the starting company choose a consolidated company in its ideal target .
2. Complementary cobranding. Perhaps this alliance is the favorite of large organizations. Innovation and technological advances are the great pillars of these collaborations. The idea is to contribute elements together, so that the result is a product that affects the market due to its innovative nature.
Each brand participates in this reciprocal relationship with win-to-win as its goal. All parties get involved contributing the best they have. They not only look for new consumers for each participant, each one tries to attract the attention of the client portfolio of their collaborators.
3. Ingredient cobranding. It is perhaps the most popular strategy. Each member retains their status and identification in the final article. During the collaboration, work partners who share values and market.
In the process, they exchange gender, elements and production processes. The intention is to launch new products to the market that preserve the identity of each company. Success is pursued for all parties.
What to consider before entering into an alliance between brands
Synergies are proven to be a good way to strengthen brand image. It also favors expansion into other markets. However, it doesn’t always work out. There are even high- profile cases in which cobranding has failed miserably.
This is what happened with the collaboration of two well-known companies: Philadelphia and Milka. The first was listed as a host and the second as a guest. Both companies enjoyed prestige.
However, the first was assimilated to products that cared for the consumer’s diet. Milka, despite being recognized for her social background, was a chocolate maker.
The union of both products into a new one was affected by public rejection. The new proposal was perceived as unhealthy. So you need to ask yourself some questions before joining forces.
1. Study your brand image. Assess whether it would be beneficial for you to undertake a branding tactic with another company.
2. What will your position be? You will have to pursue the same objectives, under a common strategy. It is not a simple task. It is necessary to maintain a very well coordinated communication. From the beginning it should be clarified what will be the role of each one and what will be the communication planning.
3. Analyze expenses and income. The cobranding means sharing expenses. But, you can also act the same way on profits. Consider whether the association will prove positive.
4. Create a metric strategy. Define the parameters with which you will constantly evaluate the progress of the process.
5. Make an alternative plan. It is important that you have a way out. It will help you if the collaboration period is over or if the plan is hurting you.