CO-BRANDING: AN OVERVIEW

Winning through partnership

Through co-branding strategy, the new entrants in retail market have successfully established their brand identity and created new consumer base

In today’s competitive market scenario, where every category has different brands offering product with similar features and price points, it’s become very challenging for a new brand to sustain in market and create a new consumer base. As a brand building alternative, most of the brands launch their new consumer products through co-branding. It is a proven concept where two or more brands merge together to become a single product.

Objective

The co-branding strategy has been used by players in every sector be it automotive or consumer durable or apparel brands or fast food giants. Many leading brands and retailers use this marketing strategy in order to attract new customers, increase the brand awareness, support the customer loyalty etc. The aim of co-branding strategy is to combine two brands in order to attract more customers and to maximize the power and prestige that each brand has to offer. The partnership helps in opening up new markets and marketing opportunities for both brands.

Different forms of co-branding

There are four different forms of co-branding. The first form is ingredient co-branding – an example could be Dell computers with Intel Processors. Next form of co-branding is same-company co-branding – a Titan watch from the house of Tata is an example of the second kind.  Joint venture co-branding is yet another form of dual branding – the case of Godrej and Procter and Gamble is example of this kind. And last is multiple-sponsor form of co-branding, where co-branding of two or more companies work together to form a strategic alliance in technology, promotions, sales, etc. The example would be the case of HCL computers with hardware alliance of HP, processor alliance of Intel and software alliance of Microsoft.

Advantages

Through co-branding both brand and consumers are benefitted. The brand gets preliminary benefit of instant brand recognition in markets where there may not be any consumer awareness (at the launching stage) or a lesser degree of consumer awareness a company desires. Other benefit is the financial advantage provided by the alliance. It results from the sharing space, which lowers operating costs, maximizes marketing dollars through joint promotions and increases marked exposure with one product carrying both brand names.  Consumers´ attitudes toward a particular brand alliance influence their subsequent attitudes towards the individual brands that comprise that alliance. 

Disadvantages

Despite all the advantages of co-branding, there are possibilities that the strategy may have negative effect on the partner brands due to co-branding. The strategy may fail if the two products have different market and are entirely different. If there is difference in visions and missions of the two companies, then also composite branding may fail. If the customers associate any adverse experience with a constituent brand, then it may damage the total brand equity. Once a brand takes position in the market, it becomes difficult to dismantle the co-brand. Also it will become a big challenge for brand to re-establish the brand identity alone.

Future of co-branding in India

As the consumer in today’s modern era are more informative, demanding and conscious about their buying behavior, the need for co-branding in retail will increase in future. Many foreign giants are venturing into Indian retail sector in strategic partnership with Indian companies – the example will include Wal-Mart, Metro, and Tesco etc. With advance technologies in modern retailing, it is now possible to know the exact information about consumer shopping habits, which further will help retailers to improve marketer knowledge and strategies. As additional market sectors become more and more difficult to penetrate for newcomers, co-branding may be preferred as a faster, cheaper and safer growth strategy.