In today’s highly competitive market, all brands seek innovative and stimulating marketing tactics to distinguish their products. One effective approach to enhance brand attractiveness and draw in additional customers is through partnering with multiple brands.
Co-branding refers to a strategic partnership between two or more brands to create a new and captivating marketing strategy. This approach is often considered mutually beneficial as each partner brand can showcase their own strengths while also learning from each other’s strengths.
Co-Branding
The definition of co-branding involves two or more companies collaborating to link multiple brand names to a product or service in order to generate greater marketing impact. The key highlights of this explanation are:
Strategic partnership involves the collaboration of brands to achieve financial gain from their joint efforts. This gain may encompass advantages such as enhanced attractiveness, expanded customer outreach, publicity, conversions, and more.
The idea of marketing synergy is centered around the belief that the combined effort of multiple brands should result in a greater outcome than each working alone. In practical terms, this involves brands collaborating and leveraging their resources, creativity, and established brand identities to create a superior product or service.
Co-branding vs. co-marketing
On the Sprout Social blog, we have previously touched on the concept of co-marketing; however, it is important to understand that despite the similarity between the two terms, they represent distinct approaches. Co-branding involves collaborating between two brands to develop a novel product that bears the names of both entities.
Alternatively, co-marketing is a tactic in which two companies collaborate on a single marketing campaign or promotion, representing the opposite end of the spectrum.
Pottery Barn and Sherwin Williams are a prime illustration of this. These two compatible brands have established promotional campaigns that assist clients in finding suitable furniture and paint tones for their residences.
Benefits of co-branding
Considering co-branding as an investment? Incorporating this marketing strategy can offer several benefits and advantages to your business.
Exposes your brand to new audiences
Partnering with a brand that is equal or superior to your own through co-branding provides a means to access a broader audience. This benefit makes the promotion of co-branded merchandise simpler and more exciting.
Improves brand credibility and reputation
By teaming up with a trustworthy brand, there is a natural boost in your brand’s trustworthiness. Enhance your brand’s standing by collaborating with established brands that possess favorable perceptions. Simultaneously, exercise precaution when collaborating with brands that could potentially have an unfavorable perception.
Generates more sales
Increasing sales for your business is possible through co-branded products. The survey we referred to earlier indicates that 43% of consumers are willing to try a co-branded product from a brand they already have an affinity towards, effectively doubling the potential audience.
Saves costs on marketing
The collaboration of two brands to promote a new product generally results in reduced marketing expenses. This is because ad campaigns, branded materials and other expenses will be shared between both brands.
Why Do Brands Co-brand
There are multiple benefits to co-branding such as increasing market share, enhancing revenue streams, establishing customer recognition and minimizing individual risks. Additionally, co-branding holds significance due to the following factors:
Combine Strengths To Push Growth
Partner brands can strategically integrate the best aspects of their brand with each other through co-branding. By collaborating in a strategic manner, brands have the opportunity to select the most superior elements of creativity and innovation to form a partnership.
In the end, collaborators can contribute their top selling points and produce a more esteemed marketing plan.
Form Better Acceptance And Receptivity
Brand loyal customers frequently avoid trying the offerings of other brands. Hence, co-branding is crucial to reach out to them and enhance the likelihood of acceptance and receptiveness.
The process of co-branding allows for the merging of two brands’ identities, leading to higher levels of acceptance and openness towards a new joint product among the customers of one brand. It may also introduce customers to products offered by the other brand that were previously unknown to them.
Build Innovation And Value Addition
In the business industry, keeping up with the pace of innovation is crucial for brand success. Customers are always seeking out brands with improved offerings and distinctive, innovative personalities. Co-branding is a valuable strategy for meeting these demands.
Partnering brands can obtain the necessary innovation and value-added benefits via co-branding.
For instance, consider RedBull and GoPro.
One of the largest co-branding efforts was undertaken by GoPro and RedBull through the Stratos event. For this activity, an astronomer wearing a spacesuit covered in GoPro cameras jumped from Earth’s surface. This promotional event effectively communicated to viewers that the brands represented not only basic cameras and energy beverages, but also challenges, innovation, and modernity.
Establish Credibility
Small brands can benefit from partnering with established brands in a process known as co-branding, which can elevate their credibility and reliability. This is achieved by the mutual highlighting and showcasing of each other’s strengths, which results in a strengthened foothold within the industry.
Types Of Co-Branding
The process of co-branding varies depending on the industry, product or service, and branding objectives of each company. There is no one-size-fits-all solution for co-branding.
Ingredient Co-Branding
Co-branding with ingredients refers to brands partnering together based on compatible components. The objective is to identify a corresponding feature, merge the brand identities, and advertise the product as a superior solution to a problem.
National To Local Co-Branding
National to local co-branding is when national brands collaborate with local brands. The focus here is for the national brand to reach a local audience, and the local brand can reach a national audience. Since both those customer bases are extreme, the only way to reach them together is through national to local co-branding.
Composite Co-Branding
When well-known and established brands collaborate strategically in order to develop a more robust marketing plan, it is referred to as composite co-branding. The main goal of composite co-branding is to add value and maintain the loyalty of current customers, rather than targeting new ones.
Co-Branding Disadvantages
Although co-branding has become increasingly popular, it should not be considered the ultimate marketing strategy due to the disadvantages it may have.
Agreement Fallouts
Complicated agreements are involved in co-branding. Brands may try to influence the agreements in their favor. If partner brands become aware of this, there may be a negative outcome instead of a positive one. The causes for these disputes may include:
- Investment amounts
- Profit percentage
- Authority disputes
- Company objective disputes
Confused Brand Messages
Both instances and cases can occur wherein co-branding can cause a greater level of confusion rather than coherence.
- When the brands’ ideals align with each other
- When the brands’ ideals don’t align with each other
Varied brand ideals
When co-brands possess differing brand personalities, they typically struggle to create a cohesive business proposition for their target market. This is frequently due to a lack of strategic alignment, as their pieces don’t fit together seamlessly like a puzzle.
The Target + Neiman Marcus collaboration is a prime illustration of unsuccessful co-branding. Target sought to boost its revenue between the black Friday and Christmas sales and teamed up with Neiman Marcus to launch a holiday collection.
The co-branding between Target and Neiman Marcus was a complete failure due to their mismatching brand personalities. Target is known for providing affordable clothing, electronics, and lifestyle products, whereas Neiman Marcus is a high-end luxury clothing brand. As a result, Target’s customers were not keen on Neiman’s expensive, excessively fashionable clothing, and Neiman’s customers were not comfortable shopping for luxury apparel in an ordinary retail store.
Same Brand Ideals
The collaboration of brands with identical personalities may result in customer confusion. This is due to the fact that brands within the same industry see each other as competitors, not allies. For instance, a joint product from Adidas and Nike may cause confusion among their respective audiences.
Reputation Imbalance
Having disparate levels of reputation among partner brands can have a negative impact on the rest of them.
Co-branding examples
You may not have noticed the numerous examples of co-branding around you, but we will explore some popular co-branded products to assist you in determining the best co-branding approach for your brand and potential partner.
Nike and PlayStation
The collaboration between Nike and PlayStation is a fresh alliance. The massive craze around the newly-launched PS5 is well-known. People have been attempting to acquire one of these state-of-the-art gaming consoles for the 2020 festive period, and yet even two years on, they remain elusive.
PlayStation collaborated with Nike to produce a unique edition of PS5 branded Paul George sneakers, taking advantage of the buzz.
The release of these sneakers happened in the middle of 2021, which was only seven months after the launch of the Playstation 5. This well-timed debut greatly piqued the curiosity of those who were into the Playstation 5 and increased their interest in this collaborative product.
Coca-Cola and Lip Smackers
In 1975, Bonne Bell, now known as Lip Smackers, began its co-branding collaborations by teaming up with Dr. Pepper to produce their inaugural soda-flavored lip balm.
Yet, a co-branding partnership that has endured over time for Lip Smackers is with Coca-Cola, as evidenced by their current line of lip balms exclusively featuring the flavors of Coca-Cola, Cherry or Vanilla Coke, Sprite, Root Beer, and Fanta.
Since the 1990s, this co-branding collaboration has been popular among Millennials and shows no signs of losing its appeal soon. Certain brands endure over time; therefore, attempt to collaborate with one that appears to be similarly enduringly well-liked.
Hershey’s and Betty Crocker
As previously stated, co-branding involving ingredients is a well-liked strategy and here’s another example. Betty Crocker, known for their cake mixes, frostings, and other sweets that can be prepared at home, collaborated with Hershey’s to produce cookie mixes, cupcake mixes, and frosting cans inspired by different Hershey’s desserts.
It is evident from the following that Reese’s, Hershey’s Cookies ‘n’ Creme, Hershey’s Chocolate Chunk, and Almond Joy were among the top picks.
Due to their shared focus on sweets and desserts, a co-branding collaboration between these two brands is highly logical. When selecting prospective collaborators, ensure that they offer complementary or comparable goods, but are not direct rivals.
If Hershey’s and Nestle were to form a co-branding alliance, it would be unlikely as they both offer similar products, making this collaboration illogical. On the other hand, the collaboration between Hershey’s and Betty Crocker can be seen as a combination of two distinct dessert categories, candy and cookies/cake, resulting in a lovely amalgamation.
Clorox and Proctor and Gamble
This is a bit of a loaded example simply due to the sheer number of brands under both the Clorox name and the Proctor & Gamble name. However, there are a couple of well-known co-branded products thanks to this partnership.
Brands such as Glad (known for garbage bags) and Fresh Step (known for cat litter) are under Clorox, while Febreze, a well-known air freshener brand under Proctor & Gamble (P&G), has collaborated with both Glad and Fresh Step in order to combat unpleasant smells from those two products.
The partnership between Glad and Fresh Step is clever since they are both involved in an area with unpleasant odors – trash and pet refuse. Nevertheless, by utilizing Febreze’s ability to mask odors, the two brands can present a highly appealing unique selling point (USP).
Take into account the potential applications of your product. Could collaborating with another brand enhance its appeal? While you can continue selling your product separately, partnering with another brand to offer a co-branded product at a higher price point could be advantageous for both parties.
Create your own co-branding strategy
You may want to explore potential co-branding collaborations by contacting other brands. Compile a roster of suitable brands and get in touch with their marketing departments.
