Co Branding

Product Brand Management

CO BRANDING CONCEPT

Definition:• “The term 'co-branding' is relatively new to the business

vocabulary and is used to encompass a wide range of marketing activity involving the use of two (and sometimes more) brands. – Thus co-branding could be considered to include sponsorships,

where Marlboro lends it name to Ferrari or accountants Ernst and Young support the Monet exhibition.“

"Competing for Customers and Capital". Southwest Airlines: Put a Little LUV in Your Logo!. customersandcapital.com

Kotler defines co-branding as, "two or more well-known brands combined in an offer" and each brand sponsors expect that the other brand name will strengthen the brand preference or purchase intention and hope to reach a new audience

Investopedia

“A marketing partnership between at least two different brands of goods or services. Co-branding encompasses several different types of branding partnerships, such as sponsorships. This strategy typically associates the brands of at least two companies with a specific good or service”.

http://www.investopedia.com/terms/c/cobranding.asp#ixzz1X6w9FEOw

INTENT

• There are three levels of co-branding: market share, brand extension, and global branding.

• Level 1 includes joining with another company to penetrate the market

• Level 2 is working to extend the brand based on the company's current market share

• Level 3 tries to achieve a global strategy by combining the two brands

Wei-Lun Chang, “Roadmap of Co-branding Positions and Strategies,” Journal of American Academy of Business ,Vol. 15, September, pp. 77-84, 2009.

Ingredient co-branding: Creating brand equity for materials, components or parts that are contained within other products.Examples:• Betty Crocker’s brownie mix includes Hershey’s chocolate syrup Slide 7

Same-company co-branding. This is when a company with more than one product promotes their own brands together simultaneously.

Promotional CoBranding:. Co-branding with persons or events. Eg Tiger Accenture

Joint venture co-branding is another form of co-branding defined as two or more companies going for a strategic alliance to present a product to the target audience. Slide 10Example:• British Airways and Citibank formed a partnership offering a credit

Multiple sponsor co-branding. This form of co-branding involves two or more companies working together to form a strategic alliance in technology, promotions, sales, etc.

FORMS

• Betty Crocker – Hershey (Ingredient co-branding)• Betty Crocker, the brand introduced in 1921 and owned by

General Mills (GIS), is the queen of partnerships. The company has combined the likes of Hershey (HSY) and Sunkist to create easy-to-make food products.

• http://images.businessweek.com/ss/09/07/0710_cobranded/9.htm

• Adidas - Polar Electro• Adidas (ADDDY) and Polar Electro created Project Fusion, which integrates heart

rate and speed and distance monitoring equipment into sports apparel.

• http://images.businessweek.com/ss/09/07/0710_cobranded/2.htm

CO-BRANDING IN INDIA

• 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.

• P&G, India, undertook a co-branding exercise with the National Association for Blind in the form of Project Drishti , "The Power of Partnership", Utpal Bhaskar, "The Brand Reporter", Oct 16-31 2005.http://www.afaqsreporter.com/perl/tbr/story.html?id=1316

• Boots-Piramal and Saregama-Records jointly producing a series of music albums of old Hindi songs.

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".

Disadvantages

- If a brand has too many Brand Liabilities this can be detrimental to the other brand.- Customer dissatisfaction- Environmental problems- Product or service failures- Questionable business practices- Devaluation- If one partner files for bankruptcy – an unexpected challenge- 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

http://www.managementstudyguide.com/co-branding.htm

DMRC AND CITIBANK• India's first co-branded, '2-in-1'

transit credit card• Launched in May 2008• Citibank credit card• Metro Smart card

• Citibank gained through wider reach while Delhi Metro gained by greater prospect of luring in customers who were looking for bundled benefits.

Source: http://www.business-standard.com/india/news/dmrccitibank-launch-co-branded-transit-credit-card/322235/

REASONS FOR SUCCESS

The reward points accumulated on this card can be redeemed for free Metro rides• 2 Reward Points for every Rs.100 spent on the Metro, • 1 Reward Point for every Rs 100 spent elsewhere

Offer several benefits - exclusive shopping deals and discounts in Delhi and the NCR, fuel surcharge waivers (2.5%) at Indian Oil outlets.

The special "Delhi Delights" feature - unique deals from some of the biggest brands in Delhi, including Dominos, Fun Cinemas, Nirula's, Bercos, India Today and VLCC.

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WOODS-ACCENTURE• Accenture entered into an agreement with

Tiger Woods on October 2003.

• “Tiger Woods' strength, mastery, discipline and relentless focus on winning - mirrored the characteristics of a high-performance business.

• Accenture used Woods to personify its claimed attributes of integrity and high performance.

• Accenture made the brand building of Tiger Woods an equal part of their own brand building.

http://www.duetsblog.com/2010/01/articles/irreparable-harm-to-the-accenture-brand/

FAILURE• Wood’s car crash, the revelations of third

parties, marital issues were key reasons for failure.

• Accenture backed out of an endorsement deal worth an estimated $7 million a year.

• Six year investment ended abruptly on a low, negative note rather than strategically timed graceful separation.

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BACARDI AND COCA COLA

• Co-branding may help usage extension.

• Helped to increase Bacardi’s market penetration in Europe

• Moreover, Bacardi’s status is a powerful endorsement for Coke as the ideal mixer.

• Pairing also benefited Coke, which wanted to remain the number one adult soft drink.

20Source: http://www.management-hub.com/branding-co.html

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Both the telecom giants got together in 1998 to serve as Concert

It was 50-50 joint venture with $10 billion in assets

Convergence of applications like information like in the Internet, communications, such as fax and voice, long distance, and local, and entertainment 

Main focus was to provide global calls at lower rates.

They wanted to capture the telecom market which was exploding at that time with developments in technology.

Planned to provide telecom services to multinational organizations like global phones with a single number.

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Reasons For Failure

• The decision to end the partnership, had been widely expected as– rising losses, – internal squabbles – increasing competition from rivals

• Management problems and a corporate culture clash prohibited the desired synergy.

• A victim of the downturn in tech, collapsing telecom prices and huge debt levels accumulated to pay for new-generation mobile-phone licenses, Concert bled cash and was expected to rack up losses on the order of $800 million this year alone.

Source-http://www.forbes.com/2001/10/16/1016concert.html

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BODYGUARD• Bodyguard is a film starring

Salman Khan and Kareena Kapoor in the lead.

• The movie released on occasion of Eid.

• The movie has in the span of 6 days managed to do collection of over Rs. 100cr.

• Movie makers usually use co-branding to generate revenue before the movie is released.

• In this movie the lead actors are well known brands. 24

BRANDS PROMOTED IN THE MOVIE

• AUDI: AUDI SUV Q5 has been used extensively in the movie.

• BLACKBERRY: Blackberry cell phones can be seen being used by Salman khan in the movie.

• SYMBIOSIS UNIVERSITY: Symbiosis Pune campus has been used.

• SONY VAIO: Kareena Kapoor who is the brand ambassador of Sony Vaio can be seen using it in the movie.

• TIGER SECURITY SERVICES: Salman khan can be seen wearing uniform of this company.

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IPHONE WITH AIRTEL AND VODAFONE• Excessive marketing was done by both firms, which

focused on iphone as the best phone.• Companies anticipated great sales volume and even

initiated pre-launch booking process.• Launched at price band of Rs. 32000-400000• But the phones prices became a reason for its failure.

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• Main reason being it was already available in the grey market at less than Rs. 27000.

• Lack of 3G technology at the time being also hampered sales.• This caused the potential buyers to purchase the cell from grey

market. Damping the expected sales figures.• In the early quarters on 2009 – 40000 iphones were imported and

only 20000 were sold, the importers were force to offload there imports to Sri Lanka and other countries.

• Were as Grey market managed to sell around 80000 pieces in the same time fame.

• Airtel and Vodafone both failed to analyze the pricing expectation of the consumer.

SOURCE: http://www.thinkdigit.com/Mobiles-PDAs/Only-20000-iPhones-sold-in-India-distributors_3460.html

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