Co-Branding: Meaning, Characteristics, Types, Benefits and Drawbacks

Meaning of Co-branding

Co-branding refers to a marketing strategy in which two or more brand names are utilized on a single product or project. It is a type of partnership where multiple well-known brands join hands with one another for promoting the marketing as well as sale of join product. Co-branding is also termed as Brand bundling or Dual branding as this strategy requires strategic alliance of two or more brand names. Under the co-branding strategy, brands come together with the aim of raising the market share via manufacturing a joint product and carrying out the marketing activities together. 

Co-branding is one of the effective means which enable business in increasing their efficiency and sales potential by reaching prospective customers of each brand. This strategy leads to an introduction of a new product in market with the combined efforts of all partner brands. It can also link multiple products from several brands in one package. Businesses are able to increase their customer base, market share, profitability, brand image, perceived value, customer loyalty and cost savings. Co-branding is most widely used by businesses which are in the line of car makers, electronic manufacturing, restaurants and retailers for creating synergies.  

Characteristics of Co-Branding

The characteristics of co-branding are as follows: – 

1. Strategic partnership: Co-branding strategy results in formation of strategic partnership among brands which partners with one another for deriving profits out of combined efforts. Such profitability is composed of better customer reach, publicity, high conversions, good appeal etc. 
2. Creates marketing synergy: This strategy creates a marketing synergy by bringing together multiple brands. Principle of marketing synergy defines that the whole must be larger than its parts. According to this principle, the resources, brand image and creativity should be pooled by co-brands in such a way that results in an offering which is larger than the sum of its parts.  
3. Establish credibility: Co-branding facilitates to a great extend the smaller brands in raising their authority and trustworthiness via teaming up with other respected brands. The partner brands are able to strengthen their position in a given industry as they get a chance through co-branding to highlight and reflect each other’s asset. 
4. Combine strengths to push growth: This strategy enables partner brand in enhancing their strengths that lead to better growth via strategically infusing best of their brand with the other. The best creativity aspects as well as innovation aspects are pick up by brands while they form a collaboration. All this leads to creation of an enhanced marketing strategy by partner brands as well as they are able to pitch in best of their selling points.   
5. Build innovation and value addition: Co-branding pays an efficient role in keeping up the pace of innovation in business industry. Brand with more valuable solutions and innovative personalities are always preferred at top by peoples. Co-branding enables the partner brand in fulfilling the requirements of value addition and innovation. 

Types of Co-Branding

Various types of co-branding are as discussed in points given below: – 

1. Ingredient co-branding: Ingredient co-branding is one in which a well-known brand is used as a component in the production of some other renowned brand. The constituent brand is served as subordinate to primary brand. This type of co-branding among businesses leads to better quality products, greater profits, superior promotions and wider access to channel of distribution. Ingredient co-branding is in general done with present suppliers or large buyers. For example: Dell has co-branding with intel such that intel processors are used in computers produced by Dell. 
2. Sponsorship co-branding: Sponsorship or Promotional co-branding is most widely utilized by entertainment industry and sports leagues. Under such co-branding, well known brands in market take sponsorship of sports and film award functions, social events etc. with the aim of establishing their good brand image. For instance, Vodafone, Pepsi, Kingfisher, Citi Bank, ITC Group, set max, Hero Honda and DLF are the official sponsors of IPL league. 
3. Composite co-branding: Under the composite co-branding, a distinct type of product or service is offered with collective efforts of two renowned brand names. Producing of these products individually on their own is quite impossible for brands. Success rate of composite co-branding is more if ingredients brands are more favorable and share better complementarities among them.
4. National to Local co-branding: National to Local co-branding is a marketing strategy where a local company of smaller size partnered with one at national level for exposures and services. For example, the branded credit cards are offered by local banks. 
5. Innovation based co-branding: It is a co-branding in which two brands come together for invention of innovative products. Apple and Nike have joined hands with one another for creating a Nike+footwear. This shoe can be connected to iPod which plays music, give information about time, distance covered, athlete’s heart pace and calories burned. 
6. Specialist co-branding: Under this marketing strategy, a company having highly specialized core competency in a single field partnered with multiple businesses. The co-branding is done by business in order to highlight the product or services. 

Benefits of Co-Branding Strategy

The benefits of co-branding strategy are well explained in points below: – 

1. Lower Risks:  Strategy of co-branding enables brand in developing such strategies which bring down their marketing costs. Brands are able to split their expenses incurred on marketing programmes among their partners in alliance. They are able to get double return on their investments with half of the budgets. This results in lowering the risk associated with business in presence of less investment amount and moreover the risk is shared equally among partners. 
2. Broad customer base: This marketing strategy broadens the customer base in market for partner brands. When two well-reputed brands join hands then each of them can easily target one another market. Co-branding widens the visibility as well as the reach of each brand in market which they might not be able to access individually.  
3. Credibility: The brands and its products are more trusted by peoples if they are already familiar with it. This way brands add more credibility to their name by partnering with well-established brands. People will be more enticed to try products which leads to generation of large sales. 
4. Enhancement of product image: Improvised and innovative products are offered in market when two or brands combine their features into one. Co-branding provide perception to customers with regard to product being great and unique. 
5. Technological benefits: Co-branding strategy enable brands in alliance to mutually share their technology with one another. This will ultimately result in creation of superior quality products which is unique in nature and unmatched by competition.

Drawbacks of Co-branding

Co-branding strategy not only provide benefits to partner brands but also has drawbacks which are as given below: – 

1. Agreement fallouts: There are numerous complex agreements which are entered into by brands in co-branding strategy. Sometimes partner brands tries to manipulate such agreements towards their side. Under such circumstances, if partner brands came to know about manipulations then there might be a fallout instead of synergy. 
2. Distinct mission, vision and values: The initiatives of co-branding may fail if partnering brand have different missions, vision and values. All brands may have entirely distinct markets and combining them all becomes a difficult task. 
3. Overshadowing: Small companies in co-branding may be masked by well-established brands in case if they have not established themselves yet in market. In such scenarios, brands may lose chance of establishing their own personal image in market. 
4. Conflict: Strategy of co-branding may give rise to conflicts among the partner brands. When customers have some bad experiences with partner brand, then it will negatively influence the perception for brands as well as co-branded product.