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Sr.n Topic Page


o number

1 Introduction to Co- branding 2

2 Is Co-branding new? 2

3 Why there is rise in co- branding? 3

4 Objectives of co- branding 4

5 Sources and type of co branding 6

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

10 Benefits and disadvantages of co branding 20

11 Co branding in India 23

12 Brand Flavoring 25

13 Conclusion of Co branding in India 27


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-By
Pinky Dulera
RN: 19
Sec A1
S-S/09-11
Submission date: 6th Nov ‘09

Introduction

Companies competing for attention in a noisy marketplace cluttered with


electronic and print messages increasingly are turning to another weapon in their
marketing arsenal: co-branding. From credit cards to cereal to cars, more and
more companies in the past decade have cooperated in their marketing to
leverage each other’s products so they can speak more loudly in their markets.
The 1980’s marked a turning point in the conception of brands. Management came
to realize that the principal asset of a company was in fact its brand names. For
decades the value of a company was measured in terms of its buildings and land,
and then in tangible assets. It is only recently that we have realized that its real
value lies outside the business itself, in the minds of potential buyers. In July 1990,
the buyer of Adidas summarized his reasons in one sentence, after coca cola and
Marlboro; adidas was the best known brand in the world.

When does 1+1=3? When two synergistic companies


create a joint marketing juggernaut. We’ve all seen the big brands combine their
stengths—think of Martha Stewart and K-Mart, or Dell computers with those Intel
Inside stickers on every box. In todays world products have two creators, and
advertise the fact on double branding are on increase: for example Inneov by
Nestle’ and L’Oreal, the first nutritional pill to prevent hair loss, launched in
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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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Why there is rise in co- branding?

Co-branding is fundamentally a response to the need for continual growth.


However, whereas yesterday companies would have sought at any prices to
acquire the new competences that were missing and restricting their ability to
innovate, today they seek to find a partner with which to co-create. This is the era
of alliances, partnerships and networked economy, where each party retains its
specialization and its key competence, and utilizes those others to the fullest
extent. In the pursuit of growth, it is not long before we encounter the difficulty in
reconciling this with maintaining the brand’s specificity and company’s expertise.

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?

The Logic of Co- Branding (Objectives)


With increasing frequency, companies today are undertaking joint marketing
projects. That is, two different companies pair their respective brands in a
collaborative marketing effort:
- New product launches clearly identify the brands that cooperated to create and
market them. Thus Danone and Motta introduced ‘Yolka’, a yogurt ice cream with
packaging that uses both brands to endorse it. Similarly, M&Ms and Pilsbury
invented a new cookie concept, and Compaq and Mattel combined their respective
expertise to bring out a line of hi-tech, interactive toys.
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- 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.

- Ingredient co-branding has now become commonplace. NutraSweet, for example,


wanted to bolster its image, so it encouraged and co-financed advertising
campaigns by its client brands. In turn, these client brands endorsed NutraSweet
and endowed it with connotations of pleasure and affective values, until now
sugar’s exclusive domain. The same holds true for Lycra, Wool mark and Intel,
these ingredient brands are eager to promote co-branding, both on the product
itself and in advertising and promotion.

- Image reinforcement may also be an objective of co-branding. In the detergent


industry, for instance, famous white goods brands endorse particular detergents,
and vice versa. Thus, in India, Ariel and Whirlpool recently launched a co-branded
advertising campaign, whose claim is the “The art of washing’ illustrated by a
famous 1914 Renoir painting. By these means, Ariel seeks to reinforce its market
leader status and gain a more affective image.

- Co-branding appears in sales promotions too. Whirlpool, for instance, includes


Findus or Bird’s Eye coupons in its refrigerator owner’s manuals. Similarly,
companies find that prizes, such as club Med vacations, work better than cash
awards in promotional consumer contests or sweepstakes.

- Loyalty programmes, increasingly, include co-branding arrangements. Although


co-branded loyalty programmes are not new (GM initiated the concept, with co
branded credit cards), a new twist has appeared. That is, corporations are sharing
the cost of loyalty programmes between their own brands, for example, Nestle
issued a collector’s booklet that includes all of its brands (from Kit Kat to Buitoni,
Perrier and Findus).
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- 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.

- Capitalizing on synergies among a number of brands is another co-branding


objective. Nestle is a case in point, and it has a number of brands that could gain
from a joint marketing action (eg Nestle’s Yoghurts, Nescafe, Nesquik Herta’s pork
and bacon). To compete against Kellogg’s and increase its market shares in the
breakfast market, therefore. Nestle launched joint advertising campaigns,
showcasing all these brands around a healthy breakfast’ theme.

In strategic terms, an alliance is an alternative to acquisition and fusion. Later is


common type of company growth, buying out key competences or market shares
through sacrosanct critical mass. All of the following companies are result of
fusions or acquisitions: Novartis, Aventis, Vinci, Vivendi, Aviva, Arcelor, Entenial
and Sony Ericsson. As for the alliance it preserves the cultures, identities and legal
forms of companies that come together in a common large scale project.

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

‘One of the most successful and well-known innovators of co-branding is VISA


card. With selective partnering, VISA has gained worldwide recognition with over a
billion cards in use today spanning across more than 130 countries!’
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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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coaches to wear on the sidelines. The new headphones, with a prominent


logo placement, increased Motorola’s visibility as a company capable of
solving communications problems.

II. Ingredient co-branding:

When many executives think co-branding, they think ingredient. This is


partly because the partners in ingredient co-branding tend to be distinct, and
partly because the logical partners for this type of co-branding are readily
apparent: the company’s current suppliers or largest buyers. Easy access to
offerings and well-established relationships keep the level of investment
required lower than for other types of more creative co-branding.
This kind of co-branding can be critical to the enduring success of certain
ingredients. Intel’s partnership with computer makers is a classic example,
particularly the company’s Intel Inside campaign. Many people are familiar
with it, but fewer know that before 1989, the chipmaker marketed its
product directly to computer manufacturers and design engineers, not to
consumers.
Noticing that chips were increasingly playing a defining role in personal
computing, Intel marketing executive Dennis Carter decided that the
company needed a better way to communicate with end users. But Carter’s
efforts to find and bring to market an approach that really met this objective
were stymied for two years while the company attempted traditional
umbrella branding approaches across its line of processors.
After failing to secure trademark protection for its 386 and 486 processors,
Carter went back to the drawing board and, in a single weekend in 1991,
came up with “Intel Inside." This ingredient co-branding approach garnered
quick support—first from the company, then from customers. Partners such
as Dell and Compaq reaped the benefits of newly generated consumer
awareness and demand for Intel components by taking advantage of the
chipmaker’s offer of co-marketing dollars for companies that included the
Intel Inside logo in their advertising. To date, more than $7 billion has been
spent on this advertising program by the more than 2,700 computer makers
licensed to use the Intel Inside logo.
The success of an ingredient brand relies on being distinct, either through
patent protection, like NutraSweet or LYCRA, or by being a dominant brand,
like Ocean Spray in the cranberry market. NutraSweet has been so
successful as an ingredient in other products that it has retained consumer
demand long after its label has come off most packaging.
In undifferentiated markets, however, being first mover
can be a big advantage. An attempt at ingredient co-
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branding by a second leading chip company—which focused on the


videogame market, as well as on personal computers—met with dramatically
less success than the Intel campaign.

III. Value chain co-branding:


A third kind of co-branding opportunity can come from other players in the
value chain, both horizontally across links and vertically within a link. These
players often combine to create new experiences for the customer—as
opposed to simply new flavors of product—generating a level of customer
value and differentiation not possible with promotional or ingredient co-
branding. Among the many possibilities, three forms of value chain co-
branding are important for companies to consider: product-service, supplier-
retailer and alliance co-branding
• Product-service co-branding.
Product-service co-branding allows partners to share industry-specific
competencies, while at the same time opening previously inaccessible
customer bases.
• Yahoo! and SBC Communications are combining their
brands to make their shared value chain shorter and
stronger. The deal combines Yahoo’s brand name and
high-speed Internet portal service with SBC’s phone lines
and know-how in running data networks. This fits Yahoo’s new strategy of
diversifying its revenue base and reducing its dependence on advertising
sales. Yahoo! plans to grow its number of paying customers in the coming
years 20-fold—from 500,000 to 10 million—with co-brand customers from
partners like SBC promising to be a significant portion of these.
• Supplier-retailer co-branding.
Some co-branding partnerships seem so natural that executives might
wonder why they didn’t initiate those years earlier. The US retailer Target
had established itself as a purveyor of attractive, good-quality products, but
it wasn’t until a few years ago that Target asked designer and architect
Michael Graves to create a new line of co-branded products with the store.
The Target-Graves co-brand has been a significant revenue generator for
both partners, and Target’s association with a world-class design talent has
enhanced its brand.
Other value-chain co-branding partnerships might be less obvious. Espresso
and high-speed wireless Internet access may seem like an odd couple. But
Starbucks has recently partnered with wireless provider T-Mobile and
Hewlett-Packard to offer customers cable-free broadband Internet
connection in its participating stores. T-Mobile and HP now get exposure in
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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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Virgin Mobile USA and high-tech conglomerate Kyocera Wireless recently


sought to capture a new market by co-creating and co-branding a wireless
phone aimed at the 15-to-30-year-old customer segment, which analysts
have described as the last un penetrated wireless market in the United
States. The phones are tailored to the target market’s entertainment and
social interests through innovative functionality. For example, the phones
include “rescue rings," an automated feature that calls a customer’s phone
at a selected time to provide an easy excuse for exiting a disappointing date
or party.
The phone partnership was also designed to enable additional partners to
piggyback onto the offering to create subsequent co-branding partnerships.
For example, since the UK-based Virgin Group didn’t own a telephone
network, an additional partnership with Sprint positioned the company to
enter the US market as the first virtual network operator—a business model
already highly successful in Europe.
Because co-branding enables partners to gain competencies rapidly, it is
particularly well suited for targeting the mercurial, fashion-conscious under-
20 market segment. For example, research conducted by boating-shoe
manufacturer Sperry Top-Sider revealed that an increasing number of
younger boaters were wearing sneakers instead of the company’s classic
boat shoes. Sperry knew it had little in-house capability to come up with the
innovation its customers demanded, so it quickly turned to New Balance, the
athletic-shoe maker, as a co-branding partner. The result? A co-created
athletic boat shoe that was quick to market.
➢ Focusing on Process
As Peter Drucker has pointed out, innovation is hard work. Whether it is
sought by a lone inventor in a garage, by an R&D organization in a large
pharmaceutical company or through a co-branding partnership, potential
innovators need to focus on process, not just results. While even the most
auspicious partnerships cannot guarantee innovation, they can build upsides
into processes before deals are inked.
In an effort to capture a larger share of Japan’s youth market, Toyota and
several partners, including consumer-products giant Kao and Japan’s largest
brewer, Asahi Breweries, co-created the WiLL marketing program. WiLL
brought a range of Japanese lifestyle products, from candy to cars to beer,
under a single brand name.
Since its launch in 1999, however, the concept has yet to achieve the
expected level of attention and cross-product tie-ins. But while two of the
original partners are now opting out of WiLL for this reason, both proclaim
that the program achieved another valuable strategic objective. Significant
partner collaboration—a process goal programmed into the initial deal—
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enabled departing Asahi “to learn marketing targeted at the younger


generation, horizontally," according to a spokesperson.
Although upfront investments are often small for co-branding activities, the
associated risks can be much greater. Celebrity endorsements, for example,
which sometimes require no more than a quantity of free product, can
quickly become a liability if the celebrity, trimmed from headband to sweat
socks in the sponsor’s logo, behaves badly on camera.
Co-branding creates at least two other, more significant types of brand risk:
dilution and devaluation.
➢ Dilution
Dilution occurs when a brand loses its meaning to
customers. This was the risk the Cleveland Clinic
recognized and mitigated when it merged with 10 local
community hospitals in the 1990s to create the Cleveland
Clinic Health System. Concerned with how best to lend its
superior brand recognition to these institutions, without
diluting its reputation for excellence, the Cleveland Clinic developed a highly
structured, four-tiered program. The first tier is made up of core entities with
full rights to the brand; the second tier includes owned entities with their
own brands. These partners are allowed to use the system’s Cleveland Clinic
Health System logo, but only at half size and under their own logos.
Third-tier partners, which include Cleveland Clinic departments in non-owned
hospitals, are prohibited from using the logo, significantly reducing the
brand’s exposure. The fourth tier recognizes outside affiliations of the
Cleveland Clinic and allows logo usage, but only in conjunction with other
partners’ logos, thereby limiting the implied level of association. Because co-
branding so often covers multiple offerings and entities, companies would do
well to emulate the Cleveland Clinic’s granular approach toward mitigating
dilution risks.
➢ Devaluation
Brands are also exposed to the risk of devaluation, sometimes virtually
overnight. At times, both companies can be affected, as in the case of a
partnership between a discount chain and an upscale house wares company.
At first, the co-brand created significant earnings for both companies—in one
year generating more than $1 billion in sales. But when the discounter filed
for bankruptcy the announcement depressed the partner company’s stock. It
also caused the investment community to question the partner about its
contingency plans—an unexpected challenge for a co-brand.
Subsequent bad press about possible criminal activity by the house ware
brand’s CEO had similar effects and raised similar questions for the
discounter’s managers. Shortly after the allegations were made public, a
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consumer tracking firm reported that nearly 20 percent of the upscale


manufacturer’s customers said that now, because of the negative media
attention, they would be less likely to buy the company’s products.
Beyond brand risk, leading practitioners have also learned to look for threats
to operations, and to address those risks with flexibility. Though brands can
be the best of friends, it can often be much harder to make the underlying
organizations work well together.
One fast-food chain that serves mostly sandwich fare had unsuccessfully
tried co-branding with Italian and Mexican restaurant chains. While these
partnerships created great brand synergies, operational friction was created
because the co-branded restaurants attracted customers at the same time of
day—during the lunch and dinner rushes. The chain went ahead with the
deals anyway, overburdening its staff and diminishing the in-store customer
dining experience. Finally, the company learned its lesson, and its most
recent co-branding partner is a breakfast-food chain.
Another risk of co-branding believes that the partner brand is omnipotent,
particularly when taking on entrenched competitors. One large beverage
maker, hoping to successfully enter the children’s boxed-juice market,
partnered with a global entertainment company to use its cartoon character
brands. Nevertheless, the co-branding agreement yielded disappointing
results. One brand manager at the beverage company noted the co-brand’s
pronounced difficulty in gaining consumer trial when challenging well-
entrenched, competitively priced alternatives. As a result, the drink maker
has given up hopes of achieving significant margins, cut its product line by
one-third and slashed the cost of some offerings from $2.99 to 99 cents.
Though not all contingencies are foreseeable, many can be overcome with a
strategy that’s a surefire winner in almost any relationship: choosing a
flexible partner. Virgin credits Kyocera’s willingness to create an entirely new
product—as opposed to repositioning existing products—with making that
deal work.
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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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ingredient in numerous affinity-card products, like United Air Lines’ Mileage


Plus Visa. These highly successful programs offer reward points and air-line
miles tied to purchases, and include partners ranging from hotel chains and
airlines to universities and charities.
Visa created innovation-based co-brand value when it partnered in January
2001 with Palm, VeriFone and French point-of-sale terminal maker Group
Ingenico to enable purchase transactions without a Visa card—using instead
the infrared port on a Palm handheld computer. This kind of partnering is
helping Visa prepare for a time when carrying a plastic card may no longer
be the way people shop.
➢ Side by Side
Many benefits from co-branding are hard to quantify,
including the in-crease in brand equity created in the
consumer’s mind when one brand is associated with
another. Take the Ford-Eddie Bauer relationship. A
spokesperson for sportswear retailer Eddie Bauer has said
that while the company is unable to put a dollar figure on
the payback, he is sure the chain’s exposure has improved as a result of the
partnership. In fact, the relationship is so strong that it just recently passed
the 20-year mark, surviving more than 16 model changes at Ford and selling
more than a million rolling billboards. Other benefits of co-branding are seen
immediately in top- and bottom-line improvement. Allied Domecq has seen
annual sales at stand alone stores jump to more than $1 million after it
combined its Dunkin’ Donuts, Baskin Robbins and Togo’s brands under one
roof, from an average of roughly half that when they are separate stores.
Other co-branders, from credit cards to catalogers, have reported similar
results, sometimes crediting co-branding with saving their companies.

➢ Promotional co-branding, ingredient co-branding, value chain co-branding


and innovation based co-branding have contributed to companies' kitties to
varying degrees. But now, marketers need to go a step further in order to
grab the customers' attention. It is here that 'brand flavouring', a concept
that I have introduced, will give marketers that extra mindshare of the
consumers.
'Brand flavouring' requires a careful amalgamation of two or more brands,
wherein the overall product has a unique appeal, while the participating
brands' values are still the same. It is like the unique taste that you get when
you have an ice cream with a gulab jamun or an ice cream with Pepsi. Note
that the individual tastes are still retained here. Add a few nuts to the above
combination and the experience can get even better!
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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.

Customer Profiling – Urban Indian youth


Demographics: Age group 18 to 30, SEC A & B max (SEC = Socio Economic
Classification), college educated
Psychographics: Fashion conscious, has his own distinct style, wants to be
updated with the latest gizmos in town -cell phones, fashion accessories,
computer and media related gadgets, ready to pay for a premium product
which makes him look exclusive.

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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Need for a strategic fit

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.

Need for co branding in retail sector in coming future:


Modern consumer's will be discerning and will demand their needs be met all of the time
and at the right price. Information about consumer shopping habits has never before been
better and technology is improving all of the time to increase marketer's knowledge. The
traditional retailers will find consolidation in buying habits and will find it tough. For example
consumers will find it easier to buy fresh vegetables from a food retailer on Sunday rather
than going to traditional vegetable seller in a mandi. The market shares of traditional
retailers will be gobbled up once the majors like Wal-Mart enter into Indian retail space. The
superstores of the supermarket chains provide a perfect host environment for a plethora of
co-branding opportunities. But the question that arises here is
Will a consumer buy a car from them?
The key issue in place would not be whether or not they have the skills to serve these
markets profitably and for a long term. The question here is can they do it on their or do
they need to bring some expertise or provide some more value propositions.
The possible answer to the problem in the form of co branding where in leveraging on the
strengths of the co – partner. For example : If the supermarket store owner co brands with
a car manufacturer and a finance provider there is a very high possibility of him to get into
these domain where it will be a win – win situation for all the three that is : the
supermarket , the car manufacturer and the financial institution.
Some of the possible workable structures in retail co-branding would be the "joint
development agreement" or the "franchise agreement".
SWOT Analysis for Co- Branding in Retail
Strengths

* Ability to adapt to the change


* markets
* Provide one service in exchange of
* The other
* Benefit by association
* Building of two in house brands
Weaknesses

* Long term association with poor performer or weaker brand


* Dropping of standard because of the inability of the poor franchisees.
Opportunities

* Outsource to experts
* Introduce a new culture change through a new organization
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* Learn a new trade


* Improve consumer trust
* Increase market penetration
Threats

* 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:

1. to create financial benefits;


2. to provide customers with greater value;
3. to improve on a property's overall image;
4. to strengthen an operation's competitive position; and
5. to create operational advantages.
Disney worldwide has an agreement with McDonalds whereby the characters from its new
films are distributed as toys with McDonalds "Happy Meals". This is a win -win situation for
both parties as it ensures publicity for Disney within its relevant target audience and an
increase in sales for McDonalds. With the McDonald's partnership, Disney also uses the
extraordinary reach of the chain to promote and advertise new movies both in stores and
through ads the fast-food company funds. That's especially valuable to a studio at a time
when the costs to make and sell films are soaring.
➢ Disadvantages of Co-branding

- 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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➢ Economic viability for Co -Branding


The economic viability of a co branded venture is the most important task as for any
company to know the economic aspect and impact of the co branding is very important and
if a correct valuation of the economic specifications are made then it would be possible to
answer these questions:
Whether or not to enter the co- branded venture?
How to select the most appropriate partner brand?
How to allocate profits between the co branded brands?
How to split the initial marketing investments?
According to Interbrand the value of the brand is reflected not only in the amount of
earnings it is capable of generating in the future but also in the likelihood of those earnings
actually being realised. The brand evaluation therefore comprises of three elements

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)

* B.S.S = Brand Strength Score


So, the equation for economic viability comes out to be :
B.S.S ( A) <= B.S.S (C)
B.S.S ( B) <= B.S.S (C)
Similarly if let us suppose there are 4 choices or alternatives with Brand A to co brand with
let us suppose say in this case Brand B, D , E , F then it is possible to calculate the B.S.S
of
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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.

The popularity of these cards in India is on the increase as the 'price


conscious' consumers get to enjoy extra exclusive benefits from multiple
recognised brands at no extra cost. Co-branded credit cards spur spending
as they reward loyal customers with rewards, encashable bonus points,
discounts, cash-back offers and a host of such schemes. Ease and
convenience during shopping, payment of bills and transacting at petrol or
retail outlets are other reasons.
For the card issuers, it is an easy way to directly expand their consumer base
and increase customer loyalty. For the other partner, there is an access to a
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database with complete details of a large number of customers which can


make their segmentation and targeting of customers much more systematic,
thus increasing their profitability.
According to an ICICI estimate, about 30 per cent of the credit cards issued
by it are of the co-branded variety. This is because most of the new issues
are co-branded since they are actually stimulating sales.1
Marry the Right Person
Co-branding can be an interesting way for companies to venture into new
areas. Boots-Piramal and Saregama-Records are jointly producing a series of
music albums of old Hindi songs. Boots-Piramal fits in perfectly in this
alliance as Strepsils from Boots Piramal has always been marketed on the
'voice' platform. Boots-Piramal has taken Strepsils from the 'smooth voice'
platform to a next level of 'sweet voice' platform by its arrangement with
Saregama. Both of them will also co-promote each other's products at their
respective outlets, and thus increase their brand visibility.
Co-branding has helped MTV India enter new territories apart from television
programming. The MTV brand has lent its youthful 'funky' character to
Citibank credit cards, Airtel SIM cards and Fastrack watches. MTV has had
reasonable success in its co-branding ventures with Airtel SIM cards and
Citibank credit cards.2

Here, the participants cooperate because they have, or want to consciously


achieve, an alignment of their brand values in the customer's mind. As is
evident, Airtel and Fastrack have re-asserted their youthful character with
their MTV partnership.
Marriages are Made in Heaven - Keep Them Good & They'll Do You
Good
P&G, India, undertook a co-branding exercise with the National Association
for Blind in the form of Project Drishti 3, where one rupee per pack of Whisper
purchased by the customer was diverted towards the cause of a blind female
child. Using the funds so collected, P&G arranged for the restoration of eye-
sight of two hundred and fifty blind girls through corneal transplant
operations. This deal gave P&G much more than it invested. By associating
itself with a noble cause, it came to be associated in the public mind with a
worthy cause.
Cause-related marketing is a form of co-branding. The 1983 partnership
between American Express and the project to restore the Statue of Liberty
demonstrated the benefits associated with an effective cause-related
marketing strategy. The result of the campaign was a 28% increase in AMEX
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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.

3 "Co-Branding", Sachin Mehta, www.indiainfoline.com/bisc/art4250101.html

4 "Mutual Interest: Options for Cause-Related Marketing with the Mutual


Fund Industry", Tessa Hebb,
http://www.unitedway.ca/english/docs/mutual_interest.pdf
5 "Dedicated To The Public Good", B.S. Padmanabhan,
http://www.flonnet.com/fl2219/stories/20050923005011400.htm
6 Year End Review 2004 - Ministry of SSI & ARI Report, Govt. of India.

7 "Rane Brake Eyeing Commercial Aviation", The Hindu Business Line,


August 25, 2005
http://www.thehindubusinessline.com/2005/08/25/stories/200508250271020
0.htm
8 "Pakistan, India Losing $900m Share Of World Tourism Market", Report by
Farman Ali,
http://www.dawn.com/2004/10/01/nat13.htm

9.Aaker, D. A. (1996) 'Building Strong Brands'

10. Blackett, T. and Boad, B. (1997) 'Co-Branding: The Science of Alliance'

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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