Towards the formation of consensus in the domain of co-branding: Current findings and future priorities Author - Ali Besharat, Ryan Langan

Agenda Introduction Brand management, Architecture, Framework Co-Brand Scope and Definition Lessons From Co-Branding Success And Failure

Introduction Companies often encounter difficulties in their efforts to

introduce new brands. The high cost of establishing new brands, which suffer failure rates of 80–90 per cent

As a result, the use of co-branding has grown by 40 per cent annually. A notable example of this growth lies in the credit card industry, with 43 per cent of credit cards allied with at least one other brand (Punch, 2001).

Introduction The competition in today’s dynamic marketplace have forced

successful organisations to adopt innovative strategies, such as brand partnerships, to leverage brand equity

A co-brand is defined as the placement of two brand names on a new or perceptually improved product

Brand Management One such approach is brand chartering that views branding

as an integrated and innovative business process

This approach consists of three principal processes (i) creating and communicating the brand (ii) managing the brand organization (iii) directing and structuring the brand

Brand Architecture I There are two types of brand architecture that offer a

framework for marketing managers to be able to capitalise on potentially powerful linkages between brands.

Brand architecture I involves getting two or more brands within a company to partner with one another in a way that creates a synergistic effect (Macrae, 1996).

For example, a brand such as Kellogg’s is known to have multiple brands of cereal in their portfolio (for example, Rice Krispies, Mini-Wheats & Raisin Bran).

Brand Architecture II An alternative to managing a portfolio of brands within a

company lies in brand architecture II, the type of brand architecture a company adheres to is driven by a desire for a brand associated with power and stature, to a brand portfolio built around personalization and differentiation at the other end.

Brand managers who are considering strategic options for a particular brand may also choose to ‘leverage their master brand’ ex: WOWPRIME CORP

Brand management Framework

Co-Brand Scope and Definition Broadly, co-branding refers to any pairing of brands in a

collaborative marketing effort (Kapferer, 2012), including advertisements, services, promotions, public linkages or distribution outlets

More narrowly defined, co-branding describes the combination of two brands to create a single, new product (Abratt and Motlana, 2002; d’Astous et al, 2007; Kumar, 2005).

Lessons From Co-Branding Success And Failure To further our understanding of co-branding, we turn our

focus to industry for insights into the factors that lead to successful co-branding initiatives.

Initiatives of co-brand : value exchange occurs primarily in one of three ways (i) an enhanced product or service (ii) an improved brand image and/or (iii) access to a new market.

Co-branding value exchange

Product – Crest + Scope

Image - Aston Martin + Nokia

Market - Trek bicycles + Volkswagen automotive

Co-branding successes the Italian label Missoni and Target Corporation caused

the retailer’s Website to crash and store shelves to be cleared within hours of launching the collection, because of overwhelming demand

Target then was able to benefit from this partnership by being able to bolster their image of offering ‘great fashion for less money’. Finally, the family-owned brand Missoni brand was able to gain immediate access to an enormous market that would have previously been difficult to reach

Nike’s partnership with Apple

Co-branding successes Ice cream products have eagerly embraced co-branding

partnerships with candy and dessert manufacturers. Haagen-Daz ice cream entered into a co-branding agreement with Nestle Toll House.

Moreover, Breyers’ ice cream offers an array of ice cream flavours co-branded with such brands as Hershey’s, Oreo, Twix and Snickers

Co-branding failures A co-branding arrangement between Hummer vehicles and

Fly mobile phones

For Hummer brand loyalists who have come to expect

rugged performance from their brand, the flimsy design of the Hummer edition Fly phone failed to meet expectations.

Co-branding failures A co-branding initiative between the clothing brand DKNY

and the luxury champagne brand Veuve Clicquot

The DKNY and Veuve Clicquot partnership led to a pair of designer rain boots, featuring logos from both brands.

Consumers in this case did not find value in the product at the marketed price point, nor did they see value in the image of two brands whose partnership appeared to be ill-matched.

Co-branding failures a model of co-branding success between Martha Stewart and Kmart

eroded into a tumultuous relationship.

Even after the co-branding partnership ended, Stewart publicly admonished the Kmart brand for the quality of their products and the atmosphere in their stores

the challenges of maintaining a value proposition between co-branding partnerships.

To sum up: a significant, enduring value exchange for each member in a co-branding arrangement.

Co-branding improves quality perception of the weaker brand Co-branding as a marketing strategy can capitalise on brand

value by making both brands in the alliance look similar in quality

Even when product quality is unobservable, allying a brand with another partner can provide reassurance about the quality of the first brand and reduce information search costs (Rao et al, 1999).

Co-branding leverages the brand attitude towards the weaker brand Washburn et al (2000) indicate that buyers can be

conditioned to form favourable impressions about a constituent, unknown brand in co-branding when they see it allied with a high-equity partner.

when customers identify a high-equity brand in a co-branding scenario, they may use it as a simple decision heuristic to choose among potential alternatives, some of which do not include a well-known brand

Co-branding helps an unfamiliar brand more than a familiar brand Well-known, familiar brands typically have developed

associations in consumers’ minds.

When a brand allies with an almost unknown or less familiar brand, people tend to extend the association network of the known brand to the unknown partner (Rao et al, 1999).

Co-branding effectiveness is determined by the message content and execution＊＊＊ Gammoh et al (2006) suggest that the effec- tiveness of co-

branding advertising depends on the nature of the elaboration and availability of information.

enough information => contrary to the premise of co-branding, target audience rely less on the synergistic value of the brand partnership.

when cognitive elaboration is low and the message contains strong arguments, people follow a peripheral route, such that the well-known brand serves as the endorser.

Co-branding is a concept that can be applied to other context Dickinson and Barker (2007) suggest that non-profit organi-

sations can ally with commercial partners in cause-related marketing to acquire financial resources.

Venkatesh et al (2000) find that co-branding is most attractive to a promoter if the value and the market strength of both partner brands are comparable

Does co-branding create a synergistic effect? Park et al (1996) suggest that co-branding creates higher

quality perception about a new product than each constituent brand does.

Gammoh et al (2006) argue that highly reputable brands can transfer their quality perceptions as a signal to another partner only when consumers are highly involved in their decisions and the advertising for the co-branded product contains weak arguments.

Is co-branding assessed favourably when the images of the partner brands closely fit?＊＊＊ Simonin and Ruth (1998) show that fit between the images of

participating brands has a positive influence on co-branding evaluations

When people are cognitively involved in the evaluation of the co-branded product, moderately incongruent brands obtain the best evaluation (cf. low or high congruity), which produces an inverted U-shaped curve.

Is it always more advantageous to be the first brand than the second brand in co-branding? Murphy (1988) delineates how a composite concept forms

through the combination of nesting (modifier) and nested (header) concepts.

A person is likely to process the nested concept before combining it with the nesting concept, because doing so requires less cognitive effort than does a composite structure.

Does a co-branding strategy have a positive consequence for both of the participating brands irrespective of brand value?

Supporting this premise, Vaidyanathan and Aggarwal (2000) argue that a private brand can benefit from a national brand and there is no negative spillover effect for the well- known national ingredient brand when they ally.

Washburn et al (2004) show that low-equity brands benefit from associating with high-equity brands in co-branding and do not harm the brand value of the well-known partner.

CO-BRANDING: WHAT WE NEED TO KNOW IN FUTURE Co-branding strategy and financial performance

Co-branding as a social alliance

Co-branding and negative spillover effects

Use of co-branding in emerging markets

CONCLUSION Overall, we find that research on the topic of co-branding

lacks clarity and consensus with respect to how co-branding is defined, its scope and the extent to which it differs from other forms of brand partnerships.

We then draw upon this framework to narrow the breadth of our discussion about what co-branding is, and importantly, what it is not.