Brands today are looking for marketing strategies to gain market share, increase brand appeal, and engage with potential consumers, and many are considering collaborating with another brand. A strategy called “co-branding” is successfully used by marketers as it can significantly reduce the cost of an advertising campaign by dividing the costs between partner brands. What does co-branding mean, how does it work, and is it suitable for your business? Let’s talk about this in our article.
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What Is the Main Idea of Co-Branding?
Combining two or more brands to create a common marketing plan allows them to showcase their strengths and capitalize on the strengths of partners. To successfully implement such a strategy, companies must have similar values, missions, and target consumer markets. Partner companies combine their experience, technology, and funding to create a new product with a unique name and logo.
It is the job of marketers to identify the right partners so that their firm or market complements your own, so such an undertaking is inevitably associated with risks. Negative associations with one of the partners will inevitably be transmitted to other participants. However, with the right strategy, companies only benefit from co-branding, sharing costs and responsibilities, and, at the same time, expanding their audience.
Application of Сo-branding
By uniting, brands create a common strategy, which can be expressed in the following directions:
- Interpenetration strategy. Such a strategy is aimed at strengthening the existing market share of large, recognizable brands in their industry. At the same time, the ingredients or components of one brand are used in the product of another brand, mutually reinforcing each other’s positions in the minds of consumers.
- Same-company co-branding. In this case, it is planned to create a global co-brand through the development and promotion of one product. Typically, such a strategy is used by giant food companies to promote new types of products.
- National-to-local co-branding uses the name of a major national brand to collaborate with smaller local companies. The former benefit from such cooperation by increasing awareness, and the latter — by increasing income. By effectively reaching out to local and national audiences, this collaboration has a rapid and massive effect.
- Composite co-branding. This strategy implies the creation of a fundamentally new product or service that could not exist without the merger of well-known and well-established companies. Also, with the help of this strategy, it is possible to improve an existing product by adding the properties of a partner brand product to it.
- Multiple sponsor co-branding. In this strategy, companies come together to create a joint advertising campaign or use a particular technology. By acting on the market together, each of the partners has the opportunity to increase the awareness and reputation of their brand.
All of these types of strategies can be aimed at either strengthening brands, by using a new common name, or broadening the scope of brands, by creating a separate brand exclusively for use in a new market.
Pros and Cons of Co-branding
Like any other marketing strategy, co-branding has its advantages and disadvantages. The following factors speak about the benefits of co-branding:
- Sharing marketing costs and, as a result, the opportunity to get a greater return on investment in the promotion of a new product or service;
- Reduction of competitive and operational risks, as they are done between partners;
- Working with a wider client audience and expanding reach and visibility.
However, there is a possibility of:
- manipulation of agreements in favor of one of the partners;
- distribution of negative associations from one brand to all partners;
- the discrepancy between the goals and messages of partner brands with each other.
That’s why you need to be very careful in choosing partners for the joint implementation of the co-branding strategy.