Co-branding programs have proven to be a valuable tool to help brands build equity while creating new products, but they're not without risks, wrote Steve McKee, president of McKee Wallwork Cleveland Advertising, recently in BusinessWeek.
Co-branding programs are now a fairly common marketing tool, he noted. Examples include Breyer's/Hershey in ice cream, Lay's/KC Masterpiece in snacks, Kellogg's/Healthy Choice in cereal, and Cinnabon/Mrs. Smith's in desserts. Outside the supermarket, examples include Coach/Lexus in the auto industry, Bulgari/Ritz-Carlton in hospitality, Disney/Crocs in footwear, Tim Hortons/Cold Stone in franchising and Southwest/SeaWorld in airlines.
Mr. McKee listed four primary reasons brands explore co-branding programs:
- Piggybacking on introductions: This enables newer brands to tap into the loyalty of a more established brand. As an example, Mr. McKee points the "Intel Inside" campaign tied to major computer makers such as IBM and Compaq.
- The "halo affect" of shared brands: One example offered was Nike's alliance with Michael Jordan starting in 1984 that has benefited both sides. Also cited was EconoLodge's housekeeper-certification program with Mr. Clean.
- Potential cost-savings: A Pizza Hut and Taco Bell shared restaurant not only shares real estate but often counter space and staffing.
- Charging a premium: An example cited was Ford's two-decade partnership with Eddie Bauer and its more recent creation of the "450 horsepower supercharged Ford F-150 Harley-Davidson Super Crew."
The risks of co-branding, according to Mr. McKee, are that they tend to be dilutive to brand equity "since it spreads the credit for a positive experience across two brands where normally there's only one." Also, a negative experience created by one brand can also unfairly tarnish the partner brand. Finally, Mr. McKee said although the co-brand is expected to be larger than the sum of its parts, "You can't get away from the fact that you are to some extent relying on another brand's equity. That can, in some cases, make your brand look weak or secondary."
Mr. McKee said it's important that the two brands "fit" together. These include sharing similar characteristics and values as well as a similar equity strength with consumers.
"Co-branding is an often-overlooked strategy by which the whole can truly be greater than the sum of the parts," wrote Mr. McKee. "While it should be used sparingly and judiciously, it could generate a new level of interest and excitement around your products and services."
Discussion Questions: What do you think are the pros and cons of co-branding programs? What factors should be particularly assessed when exploring co-branded opportunities? What are your favorite examples?