Cob Ran Ding

CO BRANDING (

Contributed by Abhishek Mishra & Manisha Singh, PGP - II, XIM Bhubaneswar.)

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To put in the words of inter-brand definition, "Co-branding is a form of co-operation, in which all the participants' brand names are retained." And 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. 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. Reach & Awareness Co-branding This is the lowest level of shared cooperation in a co branding exercise and its objective is to rapidly increase the awareness of the sharing brands through each other's strength in the respective domains. The example for this type of co-branding is found in the credit cards. In fact co-branding of this type finds the maximum utility of co-branding. In the Indian context, we have already observed a spate of co-branded credit cards between Citibank and Jet Airways, Standard Chartered Bank and Indian Railways, Indian Oil and Citibank, and Citibank and The Times of India. The benefits of co-branded cards to the cardholder is that he gets points whenever he uses it and he can get these points redeemed for additional products or services for free. Thus, it builds loyalty to the brand or service in use by the customer. This is a sort of affiliate marketing between three brands, viz., a payment service franchiser (Mastercard, VISA), a bank and a product or service. Value Endorsement Co-branding This is the second level in the co-branding hierarchy wherein the shared value creation and the strength of relationship is such as to have endorsement of one brand values to the other with a strong affinity towards the other. The most appropriate example here would be of the companies getting involved with a cause with some non-government organization, e.g., the co branding exercise between P&G and National Association for Blind in the form of Project Drishti where one rupee

per pack of Whisper purchased by the customer was diverted towards the cause of a blind female child. Thus, here one of the brands gives a small proportion of its transaction revenue to charity and the brand comes to be associated in the public mind with a worthy cause and with a good citizen brand values. The essence of this type of branding is that the two participants cooperate because they have, or want to achieve an alignment of their brand values in the customer's mind. Some of the other examples of two commercial brands coming together would include endorsement of Ariel by Vimal. Ingredient Co-branding Intel Inside on a Compaq Personal Computer explains the basis of ingredient co-branding. In this form, there is a physical identifiable ingredient brand which has a high brand value for the customer and with it the value of the final product greatly increases. Here, one of the strong brands is an ingredient to another strong brand adding value to the final product. The potential of value created in this cooperation is tremendous and without it the value of the product will be diminished significantly. Another example here can be of Nutrasweet as an ingredient in Diet Coke. To put in the words of inter-brand definition, "Co-branding is a form of co-operation, in which all the participants' brand names are retained." And 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. 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. Reach & Awareness Co-branding This is the lowest level of shared cooperation in a co branding exercise and its objective is to rapidly increase the awareness of the sharing brands through each other's strength in the respective domains. The example for this type of co-branding is found in the credit cards. In fact co-branding of this type finds the maximum utility of co-branding. In the Indian context, we have already observed a spate of co-branded credit cards between Citibank and Jet Airways, Standard Chartered Bank and Indian Railways, Indian Oil and Citibank, and Citibank and The Times of India. The benefits of co-branded cards to the cardholder is that he gets points whenever he uses it and he can get these points redeemed for additional products or services for free. Thus, it builds loyalty to the brand or service in use by the customer. This is a sort of affiliate marketing between three brands, viz., a payment service franchiser (Mastercard, VISA), a bank and a product or service.

Value Endorsement Co-branding This is the second level in the co-branding hierarchy wherein the shared value creation and the strength of relationship is such as to have endorsement of one brand values to the other with a strong affinity towards the other. The most appropriate example here would be of the companies getting involved with a cause with some non-government organization, e.g., the co branding exercise between P&G and National Association for Blind in the form of Project Drishti where one rupee per pack of Whisper purchased by the customer was diverted towards the cause of a blind female child. Thus, here one of the brands gives a small proportion of its transaction revenue to charity and the brand comes to be associated in the public mind with a worthy cause and with a good citizen brand values. The essence of this type of branding is that the two participants cooperate because they have, or want to achieve an alignment of their brand values in the customer's mind. Some of the other examples of two commercial brands coming together would include endorsement of Ariel by Vimal. Ingredient Co-branding Intel Inside on a Compaq Personal Computer explains the basis of ingredient co-branding. In this form, there is a physical identifiable ingredient brand which has a high brand value for the customer and with it the value of the final product greatly increases. Here, one of the strong brands is an ingredient to another strong brand adding value to the final product. The potential of value created in this cooperation is tremendous and without it the value of the product will be diminished significantly. Another example here can be of Nutrasweet as an ingredient in Diet Coke. Complementary Competence Co-branding This is the highest layer in the hierarchy of co-branding. In terms of value creation, it is just next to the Joint Ventures. Here, the two powerful and complementary brands come together and combine for a product or service that is more than sum of its parts, and it relies on each partner committing a selection of its core skills and competencies to a product. The examples for this type would be Coke at McDonalds or tie-up of retail brands like Ebony and Crosswords, or Planet M and Shoppers' Stop. Successful Co-branding Over 90% of co-branding ventures fail. This is because the basic or ground rules of co-branding were not followed by them. Successful co-branding must achieve equal value for all parties in any relationship; partner brands' values need to match each other; and the resulting strategy must be easily understood by consumers. Equal Value for All Parties If the potential relationship doesn't represent clear value for both parties, then the companies should not go in for co-branding. One should forget everything about trying to fashion a better deal out of the arrangement than one's partner's deal. No relationship in which one of the two parties has a better deal has survived. This doesn't mean one brand can't be very well known and

the other totally unknown. It means the benefit to both parties from the relationship must be equal. Brand Value Match The idea of two brands working together might seem perfect at the board meeting, but the reality may be impossible to implement if the participating brands don't share values with each other. A co-branding partnership representing brands that are too different, that have no values in common, or that contradict each other's brand images will be over before it's started. Easy to Understand The brand relationship must be easily understood by the company and customers. If one can't explain the value of the relationship in two lines, one shouldn't go for co-branding. Benefits of Co-branding It is inexpensive. It's a form of marketing that can generate business even when rates climb. Many line extensions capitalize on a partner's brand equity. Brand extension success rates are maximized in the new market when co-branded with the reputed brand that has established in that market. Co-branding may help usage extension. Image reinforcement may take place due to co-branding. Loyalty programs increasingly include co-branding arrangements. The corporations are sharing the cost of loyalty programs; hence, the promotional costs to the companies are coming down. Co-branding signals a trade marketing operation. Capitalizing on the synergies among a number of brands is yet another advantage of cobranding. Feasibility of Global Co-branding Co-branding between an Indian major and a global firm in the Indian markets is beneficial as the Indian company would be having already established existing distribution network and a brand image in the market. The MNC in turn will provide the Indian partner with the technical know-how and an international brand attachment. But when it comes to co-branding between two global companies in Indian markets, the main constraints faced are: May not have any existing distribution network of any note. May lead to brand dilution of one or both the brands if the perceived image of both the brands is not similar in the Indian market.

The two companies may be in different fields altogether and the consumers may find it very difficult to identify the co-branded product with either of the two parent companies. No two brands have exactly the same impact on the consumer. Therefore, one partner in every co-branding partnership will receive more attention than its counterpart. If that risk is accurately assessed and accepted by the junior partner and it's still a net gain for its brand identity, then the partnership is sound. For example, computer-manufacturing companies like HP do co-branding with Intel. But Intel's Pentium Processor campaign has been so successful that many computer buyers don't bother about the computer manufacturers as long as it has Intel Inside. Taking into account all these constraints, we infer that global co-branding in the present Indian market scenario would be profitable in the following sectors: Retail Food Sector - Retail food sector is a growing industry in India at present and there are limited national players in this industry as of now. So collaboration of a foreign food retail chain, which has sufficient investment inflow to open a chain of outlets, even if it does not have a brand name in India, can team up with a global packaged food company or a global food brand, which has sufficient presence in India. So the packaged foods company gets a good distribution outlet and the retail chain gets a recognized brand association. Insurance Sector - There can be co-branding between a foreign insurance firm with an already existing MNC in the Indian markets, which may not be into the insurance business but is at least identifiable with the banking sector. The new entrant into the insurance sector gets a recognized brand label and the existing MNC in the Indian market has now forayed into a different line of business. Automobile Sector - Here, co-branding can occur between tyre-manufacturers, or any other reputed global component manufacturers and global car manufacturers. Here, it is advantageous for the component manufacturer as it is very difficult to identify a car component individually and the car manufacturer is also profited as he can strike a deal with the tyre dealer so that he can avail tyres at subsidized prices. Media Industry - This industry is cluttered up with several players. For foreign media giant to gain a foothold in the Indian markets, it is very necessary for it to enter a co-branding arrangement with an already existing MNC in the Indian market although it may be in a different field. Or else the co-branding can be such that it would be of some benefit to a marginal player, e.g., Discovery Channel Online has gone in for a multi-year co-branding partnership agreement with Mercury, a division of Ford Motor Company. The alliance provides Mercury with exclusive brand sponsorship of Mercury's planet of wonders, a series of quarterly scientific experiments on Discovery.com. Conclusion 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 inter-brand 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. Consumers tend to respond favourably 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. Furthermore, attitudes towards strong, well-known brands are less likely to be influenced by co-

branding than less known brands, a finding that is entirely consistent with a long history of research on attitudes showing that well-formed attitudes are highly resistant to change.