What is ‘Cobranding’
Cobranding is a marketing strategy that utilizes multiple brand names on a good or service as part of a strategic alliance. Also known as a “brand partnership,” cobranding (or “co-branding”) encompasses several different types of branding collaborations typically involving the brands of at least two companies. Each brand in such a strategic alliance contributes its own identity to create a melded brand with the help of unique logos, brand identifiers and color schemes. The point of cobranding is to combine the market strength, brand awareness, positive associations and cache of two or more brands to compel consumers to pay a greater premium for them. It can also make a product less susceptible to copying by private label competition.
Breaking Down ‘Cobranding’
Cobranding is a useful strategy for many businesses seeking to increase their customer bases, profitability, market share, customer loyalty, brand image, perceived value and cost savings. Many different types of businesses, such as retailers, restaurants, car makers and electronics manufacturers, use cobranding to create synergies based on the unique strengths of each brand. Simply put, cobranding as a strategy seeks to gain market share, increase revenue streams, and capitalize on increased customer awareness.
Cobranding can be spurred by two (or more) parties consciously deciding to collaborate on a specialized product. It can also result from a company merger or acquisition as a way to transfer a brand associated with a well-known manufacturer or service provider to a better-known company and brand. Cobranding can see more than just name and brand associations; there may also be a sharing of technologies and expertise, capitalizing on unique advantages of each cobranding partner.
A cobranded product is more limited in terms of audience than a broad, single-name corporate product. The image it conveys is more specific so companies must consider whether cobranding can yield benefits or if it would alienate customers accustomed to a single name with a familiar product identity.
Companies should choose cobranding partners very carefully; as much as a company can benefit from a relationship with another brand, there can also be risks. A good strategy is to slowly roll out a cobranded product or service before publicizing and promoting it, thereby giving the marketplace time to vet it.
According to branding and marketing experts there are four distinct cobranding strategies:
- Market penetration strategy: A conservative strategy that seeks to preserve the existing market share and brand names of two partnered or merged firms.
- Global brand strategy: Seeks to serve all customers with a single, existing global co-brand.
- Brand reinforcement strategy: Exemplified by the use of a new brand name.
- Brand extension strategy: The creation of a new co-brand name to be used only in a new market.
Cobranding vs. Comarketing
Cobranding and comarketing are similar concepts in that both involve partnerships between brands that seek to bolster their marketing efforts, but they differ in how they are executed. Comarketing aligns the marketing efforts of two partners, but does not result in the creation of a new product or service. Cobranding, by design, is based on the creation of a new product or service.
Cobranding is all around you. Consider these examples:
- Taco Bell’s Doritos Tacos Locos: Specialty food item co-developed by Yum! Brands, Inc. and PepsiCo subsidiary Frito-Lay, Inc.
- ‘Your Ride. Your Music’: Uber and Spotify collaborate to allow Uber users to create playlists to use during their Uber trips.
- Supermarket foods: Pillsbury baking mixes/Hershey’s products; Ruffles/Buffalo Wild Wings chips; Kellogg’s/Jif Peanut Butter cereal.
- Sony Ericsson: A mobile phone joint venture between Sony Corp. and Ericsson that utilized Sony’s name and Ericsson’s manufacturing and tech. The partnership later ended with Sony buying out Ericsson.