What is cobranding? | One of the important topics in business is cobranding. This happens when two or more brands offer the same product or service under a new brand name. In this type of brand partnership, goals such as entering new markets, expanding sales, more advertising, earning a profit, and attracting newer contacts are pursued.
This type of partnership has been going on for years in various fields of business, such as the collaboration of two brands in the production of Sony Ericsson products or the collaboration of Nike and Apple, or the partnership of Mastercard and Apple, which we will continue to introduce some examples of this successful cobranding.
Cobranding, also known as cobranding, is one of the ways to create a new brand or strengthen a brand.
As with brand building, in cobranding, the principles of branding and brand management strategy must be implemented in a way that is possible to succeed in today’s competitive market.
Choosing good business partners should consider all the marketing and legal issues of brands. Also, consider that sharing brand reputation is not always a good option.
Definition of cobranding
After developing brand guidelines, you can attract partners who are aligned with your goals.
Cobranding is a marketing strategy that uses multiple brands of goods or services as part of a strategic alliance. Cobranding, also known as cobranding, involves various types of cooperation with commercial companies, usually involving the branding of at least two companies.
?What are cobranding strategies
Brand and marketing experts have defined 4 common branding strategies as follows:
- Market Penetration Strategy: It is a conservative strategy that wants to maintain the brand name of two or more companies in the market.
- Global or national brand strategy: In this strategy, the goal is to serve customers with a common global or national target market.
- Brand Enhancement Strategy: Two or more brands start a partnership in various aspects of technology and marketing that each could not do alone.
- Brand Development Strategy: Aims to cover new markets under a new co-brand.
The difference between cobranding and comarketing
Cobranding and co-marketing are similar concepts in that they both involve partnerships between brands that want to strengthen their marketing efforts, but they differ in how they do it.
Joint marketing aligns the marketing efforts of two partners but does not lead to the creation of a new product or service, but joint branding is based on the creation of a new product or service based on a new design.
Types of cobranding
- Ingredient CoBranding
When another brand is used in the components of the products of one brand the common brand method has been done in the components. For example, when an Intel processor or a Samsung brand SSD is used in an Asus laptop.
In this case, joint branding has been created, which has created credibility for all its brands at the same time.
The common brand in production components leads to the creation of higher-quality products. Even more, because of more advertising channels, it generates more sales, and profits, attracting more customers, contacts, and fans.
- Same Company Co-Branding
Organizations and companies that own several brands sometimes engage in intra-organizational partnerships to create a new product or service. In this case, all the rights of the new brand are owned by the same organization or company.
- National to Local Co-Branding
co-branding within the company is one type of co-branding.
In this type of co-branding, cooperation between a local brand that can be a specific region of a country, and a larger brand that operates at the level of the country or the world takes place.
In this case, the larger brand cooperates with the smaller brand to gain a share of the local market, and the smaller brand also gains credibility and a better position in its local market from this cooperation.
An example of this type of cooperation is the cooperation of international automobile companies with the country’s automobile industry.
- Joint Venture Co-Branding
In co-branding with joint ventures, one or more businesses create a co-branded product and offer it to a target market.
Sony Ericsson is one of these examples, which was active in Iran during the previous years, and the result of the partnership between the two big brands was the creation of affordable products for the Iranian market.
- Multi Sponsor Co-Branding
When two or more brands attempt to create a product or service that they could not produce separately.
Participation in technology, advertising, distribution, and sales is considered one of the most complex types of brand alliance and requires a lot of technical, legal, and financial reviews and evaluations.
Advantages and disadvantages of a co-branding
The partnership of two collections to create a brand has a different result than the outcome of normal bilateral cooperation.
In co-branding, we must pay full attention to its advantages and disadvantages. Although co-branding has great benefits and strengthens the brand’s position if you do not pay attention to the factors that hurt this process, the success process of this partnership will be affected and it will probably fail. We will explain some of the most important advantages and disadvantages below.
Overall, co-branding has an impact on the bottom line because individual brands agree to develop and co-promote a compelling new product or service.
Advantages:
- Every company is launching a product extension program tailored to their loyal customer base while also designed to attract new business.
- When companies execute strategically and effectively, they increase brand recognition.
- Companies gain respect and credibility when they are aligned with a trusted brand partner.
- Co-branding allows each investing partner to generate revenue, attract new customers, share risk, and essentially increase their advertising budget.
- sales increase
- Creating better quality products
- Generating royalty income
- Increase customer loyalty
- Advanced brand recognition
- Increased credibility and respect when aligned with the right partner or project
Sharing the financial burden for marketing, technology development, and promotional events - Revenue from cross-generated technology
- Risk sharing among all partners
Disadvantages
- Co-branding is based on collaboration. When completely different cultures come together, it may not always be ideal.
- This agreement requires a lot of trusts, agendas must be followed closely and resources shared.
- Brands should consider consumer reactions to this newly formed partnership.
Brand images may clash if companies fail to demonstrate coherent and meaningful communication.
- Benefits of co-branding
Due to the joint advertising by all the brands involved in the production, it is possible to attract more customers and audiences and gain more profit and sales. Also, people have more and easier trust in that product or service.
Co-branding allows technology to be shared between brands.
- Disadvantages of co-branding
Like any method that may have disadvantages along with advantages, co-branding is no exception:
Sometimes a brand does not have a good memory or a good position among the audience, which can affect the product or service produced together. Sharing the reputation of brands is not always a good thing.
Even sometimes, when a brand had a different goal before participating in the market, its presence and participation in the production or provision of a new service may cause doubts for the audience, and this strangeness has negative effects on the sales process and reception of the audience.
Shared financial issues between companies can be challenging and make financial transactions more difficult.
In the middle of the activity, one or more companies may not be able to continue cooperating in the joint branding process, which creates a threat to the process of achieving goals.
The most important cobranding in the world
In 2016, Apple and Nike introduced Apple Watch + Nike. The integration of exclusive Nike sports bands with the Apple Watch Series 2, which has GPS, a twice as bright screen, water resistance, and a powerful dual-core processor, was the output of this cobranding.
In 2012, Red Bull and GoPro teamed up during an event called Stratos, in which Australian skydiver Felix Baumgartner jumped from a helium balloon 24 miles above the Earth.
Baumgartner broke three world records during the event and received numerous media recognitions. The event was considered a success for all teams.
In 2020, in a special collaboration with Ferrari, ICIC Bank introduced the exclusive Ferrari credit card. This card offers special discounts on the goods of people who are loyal to Ferrari customers through the Ferrari online store. In addition, users can access a 15% discount on the entrance ticket to Ferrari World in Abu Dhabi.
The co-branding of Harley-Davidson and Ford from 2000 to 2011 was highly praised. However, there is a clear reason why this merger makes so much sense. Both brands have male personas who are over forty years old and have a significant income level. That means they could buy both new trucks and motorcycles for transportation. In addition, Harley-Davidson and Ford are both big names that have been trusted in the automotive world for decades.
In 2013, the famous American singer Kanye West signed a contract with the sports brand Adidas to create a line of shoes. The result was a billion-dollar business that became world-famous under the Yeezy co-brand.
Conclusion
Co-branding requires many reviews, which can create a good brand position if correct and professional branding and marketing policies are determined.
Even though co-branding is not a new phenomenon in branding and has been going on for years among different brands, there is still room for more expansion in different areas and different brands with participation and creation of services or The new product can gain a newer and stronger user experience and position in today’s competitive market. The goods and services that can solve a large part of the needs of the audience and be welcomed.
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