Professional Documents
Culture Documents
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2 Is Co-branding new? 2
a Promotional/sponsorship co-branding 7
b Ingredient co-branding 8
c Alliance co-branding 10
d Innovation-based co-branding 10
6 Focusing on Process 11
7 Dilution 11
8 Devaluation 12
9 Measuring co branding 17
11 Co branding in India 23
12 Brand Flavoring 25
-By
Pinky Dulera
RN: 19
Sec A1
S-S/09-11
Submission date: 6th Nov ‘09
Introduction
pharmacies in November 2006. Philips created a revolution with its cool skin razor,
with a moisturizing cream, entrusted to Nivea world wide- a fact that appears on
all the razors packaging and in advertising. Similar logic goes for ‘Intel Inside’
signature that appears on all computers that use Intel, and in their advertising.
Co-branding is a brand management tactic that brings together two or more
brands, creating a stronger brand presence than can be provided by either brand
alone.
The rise of co- branding is symptomatic of our era, with its culture of networking
and partnerships. It is also the result of a desire to remain within the company’s
key competences, to the point of looking elsewhere for those competences that
are missing. It therefore merits an in- depth discussion.
Is co-branding new?
No. There are early classics- detergents endorsed by white goods brands, and oil
brands endorsed by car manufacturers. Later, in the 1960’s Kellogg’s Betty
Crocket added Sunkist lemon cake as a line extension. Finally, Grand Marnier
flavored ice creams are well known.
What is new is today’s corporate awareness that strategic alliances are essential to
acquiring and maintaining a competitive edge. Coopetition, a new word coined by
Brandenburger and Nalebuff (1996), illustrates this new attitude. The idea:
sometimes corporations may have to cooperate with and compete against the
same company. From this standpoint, co-branding is an alliance made visible;
furthermore, co branding involves recognizing that the public’s knowledge of an
alliance is added value.
Even though co branding has become fashionable, not all alliances should be made
visible.
- In the photocopy market, many products sold by, say, Canon are actually made
by Ricoh.
- In the car industry, although the rover company is now owned by BMW, at the
product level Rover cars show no BMW insignia. Mercedes and Swatch have
created a joint venture to produce and market a revolutionary new car, called
Smart, to which each company will add its specific expertise. However, Mercedes is
unlikely to put its trademark on the smart!
- To conquer the iced tea market (despite late entry), Nestle and coca Cola decided
to unite against Unilever’s Lipton range. Nestle would create and market the
product, and Coca Cola would distribute it. The product, called Nestea, is not co-
branded, though the Coca Cola Company gets only a small mention on the back of
the packaging.
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In west, the brand is the name for a specific expertise or state of mind (in Asia, the
brand is far less specialized). When trying to grow, the brand can reach the limits
of its own identity and its specificity: it therefore has need of an ally to fill the gaps
where it is not competent but not legitimate. When this ally is competent but not
legitimate, the partnership does not give rise to co- branding.
We can see therefore several strategic questions arise on the subject of co-
branding:
➢ Will the visible alliance of two brands create a favorable impression among
customers?
➢ Is there a high degree of complementarities between two brand images that
will create value?
➢ Is there a good ’fit’ between these two brands, given the perceived status of
each?
As with any successful marriage, of course there must be complementarities,
but also a common vision and shared values.
➢ Will the innovation be attributed to both partners, or only to one of them?
- Many line extensions capitalize on a partner brand’s equity. Haagen Dazs, for
example, launched a Bailey’s flavored ice cream. In the same vein, delicious brand
cookies now includes a Chiquita banana taste in its line, Yoplait sells a Cote d’Or
chocolate cream and new Doritos ads tout ‘the great taste of Taco Bell’ or ‘Pizza
Hut’.
- To maximize their brand extension success rates, many companies seek help
from other companies’ brands, whose established reputation in the new market
might price decisive. Hence Kellogg’s co branded its cereals for health-oriented
adults with Healthy choice.
- Co-branding may help usage extension. In Europe, for instance, Bacardi and coke
advertise together. This helps Bacardi’s market penetration strategy because the
ads demonstrate another way to drink Bacardi. Moreover, Bacardi’s status is a
powerful endorsement for Coke as the ideal mixer. Thus the pairing also benefits
Coke, which wants to remain the number one adult soft drink.
- Co-branding may signal a trade marketing operation. For instance, the product
may be designed specifically for a distributor and signed by both manufacturer and
retailer. Thus Danone created a special yogurt for Quick, the European fast food
chain that competes against McDonald’s. Yoplait did the same for McDonalds.
Types of Co-branding
The uncomplicated type of co-branding can create significant value for companies and their customers,
the potential of more durable and innovative co-branding approaches—those that focus on combining
the real capabilities of partner companies to create new customer-perceived value—is far greater. And in
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the current economic environment, with its burdensome spending constraints, co-branding is an
increasingly important tool for generating additional value.
Besides reducing costs—including many R&D and marketing expenses—co-branding is attractive for its
ability to quickly transfer the stature, imagery and approbation of one brand to another. In short, it can
rapidly improve almost every aspect of the marketing funnel, from creating initial awareness to building
loyalty.
Most companies have explored co-branding at one time or another. But few have realized its full
potential. While there are many forms of co-branding, before a company can decide which option makes
the most sense for its situation, it must fully explore four main types of co-branding.
Each is differentiated by its level of customer value creation, by its expected duration and, perhaps most
important, by the risks it poses to the company. These risks include the loss of investment, the
diminution of brand equity and the value lost by failing to focus on a more rewarding strategy
✔ Promotional/Sponsorship Co-Branding
✔ Ingredient Co-Branding
✔ Value Chain Co-Branding
• Product Service Co-Branding,
• Supplier-retailer, and
• Alliance Co-Branding.
✔ Innovation-Based Co-Branding
I. Promotional/sponsorship co-branding:
At the most basic level, a company co-brands by participating in activities
that link its image to particular events in consumers’ minds—ExxonMobil
Masterpiece Theatre, for example; Qualcomm Stadium; Conseco, “the
official financial services provider of NASCAR"; or, in the case of this
company, the Accenture Match Play Championship round of the World Golf
Championships.
Endorsements are where co-branding got its start, and they can be a natural
place for many organizations to begin a co-branding campaign. Whether it’s
with celebrities, like Tiger Woods and GM’s Buick line, or with trusted
institutions, like the American Dental Association and Crest toothpaste, the
approach keeps the relationship simple. It remains at the level of fees and
marketing activities, yet it can result in significant brand enhancement.
Sponsorship sometimes leads to unplanned opportunity. Motorola’s
sponsorship of the National Football League in the United States led to a
request to create a more effective and comfortable set of headphones for
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upscale coffee shops on Main Streets around the world, while Starbucks gets
publicity for being on the cutting edge of technology.
What does this have to do with selling coffee, which is, of course, Starbuck’s
core business? The company believes wireless Internet access will bring in
additional revenue by attracting more paying customers outside the morning
hours, when Starbucks does the bulk of its business.
Co-branding can even bring traditional rivals together to meet important
strategic objectives—like gaining a new position within the value chain or
leading a financial turnaround.
Offline bookselling giant Borders recently teamed with its online competitor,
Amazon.com, to create a co-branded website. Before partnering with
Amazon.com, the Borders Online website had lost more than $18 million.
After the launch, however, the co-branded site, called Borders teamed with
Amazon.com, quickly became profitable.
Though the two companies are still fierce competitors, the deal helped both
advance toward their strategic goals. Borders gained an online presence that
serves its customers well and drops profits, not losses, to its bottom line.
Amazon, for its part, gained an additional revenue source, and also took a
valuable step toward establishing itself as a viable supplier of outsourced
online retailing capability. And both companies have ended up better
positioned against common entrenched rivals.
• Alliance co-branding.:
Another potential source of value chain co-branding is vertical co-branding—
forming alliances with similar companies. Airline alliances one world and
Star Alliance are examples, as is FTD in flower delivery. Companies must ask
themselves whether globalization, or simply the chance to create a better,
broader offering through cooperation, is making this a critical time to
consider co-branding opportunities in their industry. This is almost certainly
the case in rapidly consolidating industries like health care and financial
services.
I. Innovation-based co-branding.
In this approach to co-branding, partners co-create entirely new offerings to
provide substantial increases in customer and corporate value. More than
other approaches, it offers the potential to grow existing markets and create
entirely new ones. Because both partners are seeking a higher level of value
creation, the rewards and risks are often an order of magnitude larger than
those created by other co-branding approaches. For that reason, innovation-
based co-branding requires a higher level of senior executive attention and
organizational collaboration.
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Few businesses have made co-branding work like payment-card leader Visa,
which has leveraged each of the four types of co-branding described here to
place its offerings everywhere its customers want to be. With more than a
billion cards in use today in 130-plus countries and territories, Visa’s shared
network supports nearly $2 trillion in transactions annually. This level of
global success makes Visa—a name chosen because it is pronounced the
same in almost every language—a highly potent co-brand.
Visa, whose sponsorships have helped it gained worldwide recognition as a
brand—most notably with the Olympics, but also with others such as the
National Football League and horse racing’s Triple Crown—is continuing to
build its stable of sponsor relationships. Visa also serves as the key
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Earlier the marketers were just bothered about how to promote their brand.
But now they have graduated to a more "defining their customer" approach.
This approach though tedious makes branding and eventually co -branding
easier for them.
Let’s take a small example: Consider that there is a manufacturer who is into
apparel and fashion accessories for the young, urban working class segment.
In such a case, we can certainly identify some items that he/she might be
interested in:
Latest cellphones
MP3 Players
Cars / bikes
Branded clothing
Fashion accessories
Personal Grooming products
Restaurants
Non-traditional cuisine
Non- traditional recreational places
Travel
So it becomes easy for a marketer to select products which help him shape
his target group. This is basically the first step for any co-branding exercise
where the marketer identifies the products/benefits which when clubbed
would provide the consumer more advantages than the both of them put
together.
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Whenever brands go in for co branding, they must ensure that there is a strategic fit,
especially in the consumer's mind. The above model shows the options a particular co
branding exercise can result in. Needless to say the best option is when there is a positive
change in attitude for both the products. Successful co-branding occurs when both brands
add value to a partnership. The value-added potential should be assessed by examining
both the complementarily between the two brands and the potential customer base for the
co-brand. A great deal of attention has been given to the potential for interbrand effects in
co-branding, that is, the potential for enhancement or diminishment of the brand equity of
either partner. Much of this attention has been directed to effects on brand attitudes. In
general, research suggests that consumers tend to respond favorably to co-brands in which
each partner appears to have a legitimate fit with the product category, and the attitudes
towards the parent brands will be reinforced, or at least maintained, as a result of the
partnership.
E.g. consider an alliance between brand Amitabh and Dabur. After they get together, it is
important for the manufacturer to realise whether the perceived brand value of either of the
two brands has increased. In case there is a genuine fit between the two, it will be accepted
by the consumers.
Retail Co-Branding: The future ahead
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In India, retail is poised to be the next big thing. Apart from the growth prospects, it gives
retailers a lot of opportunities to create alliances to strengthen their marketing offers. With
a lot of companies entering the retail scenario, it becomes imperative they resort to co
branding and/or strategic alliances in order to strengthen their consumer base. E.g. when a
giant like Wal-Mart enters India, for the Indian retailers to fight back, they will have to go
the co branding way to increase or maintain their customers.
* Outsource to experts
* Introduce a new culture change through a new organization
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* Changing Consumer
* New entrants from overseas or different market sectors
* Consumer confusion
* Safety scares and product recalls
➢ Benefits of Co branding
According to an article written by Juliette Boone about co-branding, at least five reasons
exist for forming an alliance:
- If a brand has too many Brand Liabilities this can be detrimental to the
other brand.
- Customer dissatisfaction
- Environmental problems
- Product or service failures
- Lawsuits and boycotts
- Questionable business practices
- Devaluation
- If one partner files for bankruptcy – an unexpected challenge
- Bad press re criminal activity – if made public this can be detrimental
- Threats to operation – the partnering organizations may not be able to work
well together
- Conflict of interest if two organizations are looking to attract the same
customer, this can be detrimental to sales of one or both partners
- Believing the partner brand is omnipotent
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1) Preparation of a forecast of the expected net sales and economic earnings of the co –
branded business.
2) Identification of the importance of the role that each brand plays in driving demand for
the co branded business in order to determine brand earnings for the co branded offer as
well as for each of the co brands.
3) Assessment of the risk profile of expected brand earnings to determine the appropriate
discount rate for the calculating the net present value of the brand earnings of the co –
branded business.
An economic model example to gauge the economic viability of co branding
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This model depicts various attributes that could affect the brand can be numerically mapped
and then each factor contributing to the extent can be measured and also the strength of
the same factor for co branded product can also be numerically measured and thus the
total brand strength score can be calculated . For ex : let us suppose there are two brands
Brand A and Brand B and the co branded Brand as Brand C . If the total brand strength
score for Brand A is 69 and Brand B is 59 and that of co branded brand C is 82 then this
suggests that the co branding is economically viable and is mutually beneficial also because
brand strength score of the co branded product is greater than both the brand strength
score of brand A as well as Brand B.
For each parameter the brands are given a numerical score and similarly the co branded
product is also given a numerical score.
The outermost circle represents Brand A which has a total score of
69 ( 7+6+10+8+5+14+6+13)
The second circle represents Brand B which has a total score of
59( 6+8+12+3+3+12+4+11)
The innermost circle is the co branded offer which has a score of
82(8+9+13+9+6+15+8+14)
A+ B
A+ D
A+E
A+F
And then the resultant B.S.S whichever is the highest and is well over the B.S.S of both the
individual brands will suggest the right partner to co brand with.
The Future of Co branding in India
In future companies planning to engage in co – branding activities will increasingly adopt
more systematic processes for identifying 'brand' partners and strategies for mutual brand
enhancement. In any situation where two brands are made alongside each other the values
embodied by each brand can be expected to cross fertilized the other. if this cross
fertilization is successful then the brands will benefit . This, exchange however needs to be
managed and objectives need to be established at the outset of any initiative in order to
ensure that the exchange is meaningful and beneficial. In case of the retail sector which will
be on a boom in the coming years we may see large retail chains becoming increasingly
assertive in requiring special co – branded packs of leading brand name products rather
than pursuing the supermarkets tactic of developing look-alikes own label products which
mimic the get up of the brand leader.
➢ Co-Branding in India
Co-branding is now increasingly featuring in the marketing strategies of
many Indian companies. Companies have realized that smart co-branding
can help them boost their brand image, improve sales through sharing of
distribution networks, enhance customer loyalty, increase customer base,
enter new segments and garner a host of such advantages with little extra
expenses.
Co-Branding - Marry & Make Merry
Aggressive marketing companies have sparked off a new trend of
purchasing, by issuing co-branded credit cards with banks and financial
institutions. Co-branded credit cards from LG and SBI, ICICI and HPCL, Air-
Sahara and Standard-Chartered Bank, HSBC and Star India Bazaar, show that
these have spread across to all possible business sectors in India.
card use, with a 17% rise in new card applications, while raising $1.7 million
for the Statue of Liberty repairs.4
Corporations need to pursue this strategy effectively as this will boost their
brand image tremendously in today's world of Corporate Social
Responsibility. Co-branding in this way can change consumers' perceptions
about the companies' products or services, and increase employee
satisfaction. Combining their operational expertise with the human resources
and knowledge of an NGO, companies can achieve both individual and social
goals.
➢ Brand Flavoring - The Next Step
Brand flavoring is about presenting the picture in a different way. Building
and nurturing new brands takes a lot of time and effort. Also, at a time when
product life cycles have shortened tremendously and lost meaning, creating
new brands at the same pace is definitely not an option. It is here that brand
flavouring can be an option.
Brand flavoring is a kind of extension of co-branding, wherein the attempt is
to bring diverse partners together. Different brands can come together to
lend different flavors to a unique final product. Flavors are distinctive brand
attributes. The strength of such an exercise will depend on how well the
partner brand values can contribute to the overall product/service. The
concept is limited in the sense that only strong brands can really contribute
in such an environment without diluting their individual brand equity.
Using this concept, I have presented some ideas, some highly ambitious
ones, but whoever said that anything was impossible. (Some of them are
pure co-branding solutions, though.)
Of the people... for the... AIR has an approximate coverage of 92% of the
Indian sub-continent while Doordarshan reaches approximately 90% of the
population, which is far more than the combined reach of all the satellite
channels put together.5 Yet, no co-branding arrangements exist between
public and private enterprises.
Co-branding will help media houses share content and technology, increase
their household reach and revenues and do much more to their image. More
than just increasing revenues, such arrangements will increase the quality of
content and do social good.
Helping Hand: The Indian SME sector's contribution to GDP was about 40%
in 2004 and over 11.4 million SSI units provided employment to about 27.1
million people. Also, SME's contributed to about 40% of the country's
industrial production and 34% of the country's exports.6
Now, the twist in the story. Rane Brakes Linings Ltd. demonstrated its world
class quality by winning the Deming award in 2003. Yet, even today only 3%
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of its total revenues come from overseas exports.7 Co-branding with auto
majors like TATA, Hyundai or Toyota, will help it improve its brand image and
market share in the global market. This is just a single example. Co-branding
arrangements are possible between Arvind Brands, Versace and an
established cotton supplier in Coimbatore. What about a local food processor
tying up with Amul or Haldirams? How about extending the alliance of one
with Heinz or Kraft?
Co-branding in such a way will help local companies develop a global image.
In this age of SCM and CRM, co-branding must be used to increase
operational efficiency and profitability. All this will finally lead to a huge
growth in GDP, as the SME's are major players in our economy.
Brand India: Thailand and Malaysia being smaller than MP attract more
foreign tourists than the whole of India!! We now have an "Incredible India"
brand, but that is not enough. Private-public co-branding is very essential
here. Which foreign tourist will not be lured by an Incredible India package
co-branded with a hospitality partner in Taj-Hotels, an airliner in Jet-Airways,
a travel partner in Cox & Kings, and a wireless mobile-cum-internet provider
in Airtel?
Taking this to a next level, how about co-branding arrangements with SAARC
or ASEAN countries? How about a business trip arranged in Singapore,
followed by a business agreement signed in Hyderabad, and then a relaxing
evening in Phuket? Why should we lose $ 900 million annually, due to lack of
co-branding arrangements between India and Pakistan?8
While in Rome... At a time when Indian companies are making a mark on
the world stage, smaller companies will find co-branding a very convenient
tool to capture new markets. Titan, being a world class company, is still
facing a lot of problems in expanding into the European market. Would co-
branding with Swatch or Tissot be an alternate solution? It always helps to
be-friend a Roman while in Rome. On the same lines, ethnic Tanishq
jewellery co-branded with Swarowski would definitely lure any European
lady.
Of Superpowers and more... How about a convergence enabled product
from Lenovo of China, TCS & Airtel of India and NTT DoCoMo of Japan? For all
this to happen, the talent pool needs to be developed. We need to foster
partnerships in education where students learn the best from an IIT in India,
Harvard in USA and an NTU in Singapore. Think of the brand appeal of these
students! This is very important, as India's large talent pool needs to be well
tapped and encouraged, for India to become a superpower.
Rural-Urban divide... Even in the twenty first century, companies struggle
to capture similar market shares in urban and rural India. Co-branding will
help share each others distribution networks, increase each others' visibility
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and so on. Not just that, quality local brands like MTR and Priya-Pickles can
drastically increase their national presence by having an arrangement with
Haldirams or Fritolays. Haldirams or Fritolays will only gain from venturing
into new areas of pickles or papads with regional expertise. See the synergy
of brand values?
Conclusion
Indian enterprises need to realize that they now operate in an environment
where they need to fight while co-operating with their competitors, to
increase the market size and their market-shares. Globalization has led to a
proliferation of brands where the consumer has been spoilt for choice. Smart
co-branding is one way to survive and grow.
As India grows up to the new status that it has acquired, co-branding and
further such developments will increasingly help its companies re-affirm its
status.
A Microsoft-Apple happened in the US. Similarly, co-branded products /
services from Coke-Pepsi-Haldirams-MTR; Sundaram-Fasteners-Bajaj-M&M-
Ashok-Leyland-Toyota; Infosys-TCS-Satyam-Wipro-Accenture-IBM, Star-India-
Bazar-Wal Mart-Metro-Pepsi Foods-Arvind Mills; Airtel-STAR-Reliance-Adlabs-
FOX-Studios will all happen in India.
When differentiation is no longer possible, come together and mix the old
wines in a newer bottle!!!
Bibliography
1 "The Power of Partnership", Utpal Bhaskar, "The Brand Reporter", Oct 16-
31 2005.
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2 http://www.indiantelevision.com/headline/y2k4/feb/feb150.htm.
11. Leuthesser L, Chiranjeev Kohli and Rajneesh Suri (2003) '2+2=5? a framework for
using co-branding to leverage a brand' brand management vol. 11, no. 1, 35–47
Paul F. Nunes, Stephen F. Dull and Patrick D. Lynch 'When two Brands are better than
one', Outlook 2003
12. Park, C. W., Jun, S. Y. and Shocker, A. D. (1996) 'Composite branding alliances: An
investigation of extension and feedback effects', Journal of Marketing Research, Vol.33,
November, pp. 453–466.
13. Washburn, J. H., Till, B. D. and Priluck, R. (2000) 'Co-branding: Brand equity and trial
effects', Journal of Consumer Marketing
Website References
(1) http://www.cobranding.com
(2) http://www.interbrand.com
(3) http://www.poolonline.com/archive/issue24/iss24fea2.pdf
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