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Introduction to Co- branding Is Co-branding new? Why there is rise in co- branding? Objectives of co- branding Sources and type of co branding Promotional/sponsorship co-branding Ingredient co-branding Alliance co-branding Innovation-based co-branding Focusing on Process Dilution Devaluation Measuring co branding Benefits and disadvantages of co branding Co branding in India Brand Flavoring Conclusion of Co branding in India
-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 others products so they can speak more loudly in their markets. The 1980s 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. Weve all seen the big brands combine their stengthsthink 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 LOreal, the first nutritional pill to prevent hair loss, launched in
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 companys 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 1960s Kelloggs Betty Crocket added Sunkist lemon cake as a line extension. Finally, Grand Marnier flavored ice creams are well known. What is new is todays 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 publics 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 Unilevers Lipton range. Nestle would create and market the product, and Coca Cola would distribute it. The product, called Nestea, is not cobranded, though the Coca Cola Company gets only a small mention on the back of the packaging.
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 brands specificity and companys 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 cobranding: 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.
- Many line extensions capitalize on a partner brands equity. Haagen Dazs, for example, launched a Baileys flavored ice cream. In the same vein, delicious brand cookies now includes a Chiquita banana taste in its line, Yoplait sells a Cote dOr 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 Kelloggs 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 Bacardis market penetration strategy because the ads demonstrate another way to drink Bacardi. Moreover, Bacardis 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 sugars 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 Birds Eye coupons in its refrigerator owners 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 collectors booklet that includes all of its brands (from Kit Kat to Buitoni, Perrier and Findus).
- 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 McDonalds. 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 Nestles Yoghurts, Nescafe, Nesquik Hertas pork and bacon). To compete against Kelloggs and increase i