Co- branding

Co- branding

Introduction

Co-branding has been used by a number of franchises as an alliance strategy for the purposes of cost reduction and enhancement of sales. It involves the presentation of two or more brands simultaneously to consumers. This can be achieved through various ways. For instance, two brands can be featured in a single advert. Most of the times, the two brands that are used are complementary, for instance, an advert featuring Shell and Ferrari or Coca-Cola and MacDonald’s Fries (Punch, 2001). Two franchises can also operate side by side or occupy the same space in a co-branding strategy approach. Co-branding is, therefore, the best strategy that can be used to reduce costs and increase the sales of a particular brand, challenges notwithstanding. This paper will discuss co-branding with regards to its popularity and possible shortcomings, and it will also give examples of businesses that would thrive by applying co-branding as an alliance strategy. The paper is generally a case analysis in the light of pattering success.

Co-branding will continue to gain momentum since it is a very important alliance strategy that makes business dealings on a global platform more successful. It is a very important tool for the attainment of higher market shares as stated by Dignam (1999). This is supported by the fact that almost 43% of the credit cards that are in circulation are co-branded as stated by Punch (2001). Co-branding’s gain in momentum is attributed to the fact that a number of firms are focused on penetrating the new markets. This has been enhanced by globalization and global trade where firms compete on a global platform. It has also been on the increase since firms are now focused on improving their brand image through the attempts to signal the unobservable quality of brand as stated by Dignam (1999). Co-branding is also a very important strategy that drives the reinforcement of the image of a brand in such partnership arrangements. Because of this, a number of firms have used co-branding in their marketing strategy both for the purposes of brand reinforcement and cutting the cost of marketing through advertisement. Since co-branding play a great in reduction of cost of operation, it would make it possible for the maximization of the profit thereof. Because of this factor, it is expected that a number of franchises will continue to embrace co-branding as an affiliation strategy. For instance, side by side co-branding is very vital in the reduction of cost associated with rent and even other expenses. The franchise that occupies the same space in a co-branding arrangement would also reap the benefits of enhanced market share and reduction in cost. With this argument, it is given that co-branding will continue to increase in the momentum since emphasis and the focus of any business today is the reduction of cost and maximization of profit.

Nonetheless, co-branding also has some downsides. There are instances where co-branding may lead to the impairment of the image of the partner brand. This arise when one of the brands in co-branding arrangement experience some aspects of quality problem. This kind of problem may be perceived by consumers to be common for both brands. Thus when one brand has a quality issue, it is given that it will negatively impact the other brand. The firms entering into a co-branding alliance must therefore evaluate the possibility of such negative spillover before entering into a co-branding alliance. As stated by Venkatesh and Mahajan (1997), the branded components have the ability to suppress their partners’ values. In instances where the components of co-branding are not streamlined, co-branding may instead increase the consumer uncertainty about the brands in the co-branding alliance. The transfer of uncertain from one brand to another can also arise as a result of co-branding. This may lead to the consumer confusion concerning a particular brand. A franchise will, therefore, be hesitant to enter into a co-branding with another franchise in instances where the arrangement of co-branding will result to a negative brand image. When there are no tangible benefits associated with attaching ones brand to the brand of another franchise, it will be very difficult for one franchise to enter into co-branding arrangement too. A number of franchises prefer to have the control on how the partner in the co-branding will use or display the brand in question. If this is not the case, it will be difficult for one franchise to enter into a co-branding.

In the light of College Nannies and Tutor’s Opening Profile, they may consider forming an advertisement co-branding alliance. This is because of the complementarities that exist between the two. They share a common factor which is academics. Thus ads co-branding relationship would benefit both of them equally. Examples of businesses that can well together in a co-branding relationship include oil companies and automobile companies such as Shell and Ferrari, health centers and insurance companies, quick oil change and restaurants, learning institutions and publishing firms. As stated by Park, Sung and Allan (1996), this combination is informed by the complementary attributes of the brands in involved in co-branding.

Conclusion

Co-branding will continue rise in moment despite the fact that at times it may lead to impairment of the image of the brand. Important factor worth considering in co-branding is the complementary element of the brands that are involved in co-branding. The brands may be considered to complementary if they have a set of attributes which is common.

References

Dignam, C. (1999). The beginning of a profitable friendship. New York: Allen & Unwin.

Park, C. W., Sung, Y. J., & Allan, D. S. (1996). Composite branding alliances: An investigation of extension and feedback effects. J. Marketing Res. 33(4) 453-466.

Punch, L. (2001). Loyalty Theater: Co-branding 10 years after. Credit Card Management 14 (1): 42-50.

Venkatesh, R., & Vijay, M. (1997). Products with branded components: An approach for premium pricing and partner selection. Marketing Sci. 16 (2) 146-165.