Co-branding is when two companies form an alliance to work together, creating marketing synergy. In the book Co-Branding: The Science of Alliance, by Tom Blackett and Bob Boad, they wrote :
the term 'co-branding' is relatively new to the business vocabulary and is used to encompass a wide range of marketing activity involving the use of two (and sometimes more) brands. Thus co-branding could be considered to include sponsorships, where Marlboro lends it name to Ferrari or accountants Ernst and Young support the Monet exhibition.
Co-branding is an arrangement that associates a single product or service with more than one brand name, or otherwise associates a product with someone other than the principal producer. The typical co-branding agreement involves two or more companies acting in cooperation to associate any of various logos, color schemes, or brand identifiers to a specific product that is contractually designated for this purpose. The object for this is to combine the strength of two brands, in order to increase the premium consumers are willing to pay, make the product or service more resistant to copying by private label manufacturers, or to combine the different perceived properties associated with these brands with a single product.
According to Chang, from the Journal of American Academy of Business, Cambridge, states there are three levels of co-branding.
Level 1: Market Share
Level 2: Brand Extension
Level 3: Global Branding
Level 1 includes joining with another company to penetrate the market
Level 2 is working to extend the brand based on the company's current market share
Level 3 tries to achieve a global strategy by combining the two brands
There are many different sub sections of co-branding. Companies can work with other companies to combine resources and leverage individual core competencies, or they can use current resources within one company to promote multiple products at once. The forms of co-branding include: ingredient co-branding, same-company co-branding, joint venture co-branding, and multiple sponsor co-branding. : Marketing Profs FAQ No matter which form a company chooses to use, the purpose is to respond to the changing marketplace, build one’s own core competencies, and work to increase product revenues.
One form of co-branding is ingredient co-branding. This involves creating brand equity for materials, components or parts that are contained within other products.
• Betty Crocker’s brownie mix includes Hershey’s chocolate syrup
• Pillsbury Brownies with Nestle Chocolate
• Dell Computers with Intel Processors
• Kellogg Pop-tarts with Smucker’s fruit
Another form of co-branding is same-company co-branding. This is when a company with more than one product promotes their own brands together simultaneously.
• General Mills promotes Trix cereal and Yoplait yogurt
• Kraft Lunchables and Oscar Mayer meats
Joint venture co-branding is another form of co-branding defined as two or more companies going for a strategic alliance to present a product to the target audience.
• British Airways and Citibank formed a partnership offering a credit card where the card owner will automatically become a member of the British Airway’s Executive club
Finally, there is multiple sponsor co-branding. This form of co-branding involves two or more companies working together to form a strategic alliance in technology, promotions, sales, etc.
• Citibank/American Airlines/Visa credit card partnership
Other examples include the alliance of the BeerTender in-home draft system, sold by Krups with the specific brand of Heineken, and the marketing of Gillette M3 Power shaving equipment (which require batteries) with Duracell batteries (both brands owned by Procter & Gamble).
Co-branding can be between an organization and a product also. An example of co-branding between a charity and a manufacturer is the association of Sephora and Operation Smile: Sephora markets a product carrying the logo of the charity, the consumer is encouraged to associate the two brands, and a portion of the proceeds benefit the charity.
2. Wei-Lun Chang. Journal of American Academy of Business, Cambridge. Hollywood: Mar 2008. Vol. 12, Iss. 2; p. 220 (7 pages)