Box? What Box?

On Co-Branding

Posted in Uncategorized by uhniche on November 14, 2009

Co-Branding, as defined by Philip Kotler, is “Two or more well-known brands combined in an offer”. Co-Branding refers to a situation where a product or service offering holds the brand names of both the participants to influence brand preference and incentivise purchase of the product or service in concern by delivering a perception of the existence of the brand values of both the brands involved to the consumer of the product or service. This essentially tries to incorporate the advantages or brand associations of both the brands involved into one product or service offering.

Co-Branding carries a strong list of advantages, partly relating to brand associations and values, and partly with the product or service offering itself. The former is done to enhance customer experience and influence behaviour, the latter is done to incorporate usage of technology or brand attributes like design, aesthetics et al in the product or service in order to offer an enhanced or augmented product or service. New product launches often depend on Co-Branding for establishing market position by having customer identify new brands and their offerings through an already existing brand. This can often be combined with Synergies offered by particular brands. An example of this would be, although in its nascent stage, the Mahindra-Renault partnership where Mahindra’s expertise in the Indian market was used to develop distribution and service channels, and Renault’s product portfolio is used to produce and design cars. Mahindra benefits through Renault’s expertise in producing sedans and hatchbacks for their future portfolios, and Renault benefits in saving huge dealer development costs and having its current mid-size offering, the Logan, being identified as a cheap to run, frugal and reliable automobile, all values housed by Mahindra brands such as the Scorpio and the Bolero. Image re-enforcement has become another common trend in the marketplace where two complementary brands come together and market their offerings together. A very apt example of this would be Jack Daniel’s and Coca-Cola, or as they call it, ‘Jack & Coke’. When this campaign was carried out in pubs and bars across the United States, Jack Daniel’s was perceived more as a rugged brand or rednecks, and coke has a wider appeal to the youth. The middle ground was the newly legal adults who had experienced Coke for decades, but hadn’t experienced Jack Daniel’s whiskey. This Co-Branding exercise was carried out to appeal to the market in between the typical Coke and Jack Daniel’s markets, i.e., 21 to 35 year olds. It became such a success that Jack & Coke has become a favourite amongst not only the targeted segments of the market, but also with older, more mature audiences. In a nutshell, Co-Branding essentially has to take into consideration the brand partnership that the customer perceives (purpose, advantages), the common values the brands and its customers share and what the co-branding offering means to the target audiences.

Brand Loyalty, when it comes to Co-Branding, is a tricky business. When a service or product offering is similar to the brand value or image offered by the Co-Branded offering, success is often witnessed. An example of this would be the limited edition Tonino Lamborghini Espresso Machine. Only 1000 units were produced, priced at about $1750. Since the offering appealed directly to the Lamborghini target market, it was sold-out within a matter of days. The buyers were not just Lamborghini car owners, they were also people who admired the Lamborghini brand and couldn’t own the car, so the association created with the espresso machine goes a long way in delivering customer delight, even without owning a Lamborghini is truly astounding. However, this can be often fatal to the image of brands as well. The formerly GM owned SUV cult brand Hummer had launched a mobile phone with a company named ‘Fly’. The product was, for lack of a better phrase, inadequate. Where the Hummer brand stood for rugged looks and go-anywhere attitude, the Fly Hummer phone stood for neither. The phone was perceived by the market as flimsy and basic, whereas the Hummer brand stood for all else. The Co-Branding was a failure where even Hummer car owners were also turned off by the entire exercise.

Famous examples of fairly successful Co-Branding include ICICI and Hindustan Petroleum Credit Cards, Lease-Plan and Mondial assistance, Intel with major computer manufacturers like Hewellet-Packard, Dell etc., Acer-Ferrari Laptops, Asus-Lamborghini Laptops, Puma-Ferrari merchandise, Fiat-Mattel Barbie Fiat 500, TataSky digital Dish TV, The Global Fund (Red) with various brands like Apple, American Express, Dell, Starbucks, Hallmark, Converse etc., Jack Daniel’s and TGI Friday’s with multiple Jack Daniel dishes, and the list goes on and on. However, failures have included British Telecom and AT&T, Mahindra-Renault, Braun-Gillette Body Shavers, Fly Hummer Mobile Phones, and many more.

Co-Branding, hence, is a double edged sword, with each side being sharp enough to cut through titanium. Organisations have to be very careful while co-branding and aiming for success simply because of the fact that a wrong move can result in stupendous disasters that may plague the brands involved for a long period of time where the organisation may end up spending millions to revive the brand.


2 Responses

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  1. Toby said, on November 23, 2009 at 14:46

    Not sure I really understand the motives behind large brands such as Lamborghini wanting to be invloved in co-branding when they are already cemented into the marketplace as a luxury brand. How does convergence with an expensive espresso machine help this?? Saw an interesting interview the other day with Manfred Fitzgerald, brand director at Lamborghini, who discusses the importance of brand identity and diversification (link in my name). Interestingly he doesn’t mention anything about co operations with espresso companies!

    • uhniche said, on November 23, 2009 at 15:35

      I think the espresso machine was more of a ‘give it to the one’s who cant afford the real thing’ item. As an Automobile enthusiast, I would put my money on a coffee machine branded with my favorite Automobile maker, especially one with as much aspirational value as a Lamborghini. Anyway, the point of the espresso machine had much more to do with sustaining visibility and possibly extending it into someones house. You have to remember that the people who can afford to purchase coffee machines at that price point obviously have high amounts of disposable income, and a possible conversion in the future would be more beneficial to Lamborghini in the long run, even if they only manage to convert one customer!

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