Co-branding occurs when two separate organizations (or distinctly different businesses of a same organization) come together to generate unique values for their respective consumers. Co-branding is known to have worked brilliantly for several companies. It has significant rewards and risks associated with it.
On the risk side, co-branding like any other alliance cannot guarantee consistent attractive results for both the firms over time. There is a possibility of a situation where one of the partners feels that the return is inadequate or that the program no longer fits strategically. This may cause the partner to withdraw or, sometimes worse, stay in the venture but lose interest while caching on the benefits of the association. Also, certain complexities in designing and implementing programs arise when two different organizations are involved. But such risks can be countered if one of the brands in mutually set to be in charge of the program.
But there are significant rewards associated with Co-branding. Sometimes companies carry co-branding programs in non-financial deals and to generate great sales. One example of such deals was an education portal meant to help students in a virtual environment. This start-up tied up with one of country’s most influential and widely distributed newspaper to publish highly accurate predicted board question papers for 2 months. At the end of the contract, it turned out that the Newspaper achieved a 33% increase in its sale while the start-up received awareness through the newspaper which without the co-branding program would have dented them with USD$ 250000.
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Can we really call it co-branding? It is really cross promoting. Two individual brands benefitting from the audience of the other. They typically are complimentary brands – hence the great fit and potential for success. If they were co-branding would they not have to share one brand message? Since cross promotions are time limited, a great fit is definitely a benefit to the brand but short lived.
What do you think?
You may be right, Ed!! I think there is a thing edgy line to separate Co-branding from Cross-promoting.
In my opinion Co-branding is most essentially a single offering brought to consumers by both the brands. Something like the example I gave in the post about the Education Portal, I personally interacted with.
Cross-promotion is my opinion is two brands coming up with an offer for each others services or products. Like, 5% off on X when you buy 2 units of Y brand and 10% of on Y when you buy 1 unit of X brand.
Good points Meheer. A fine line indeed.