What is Co-Branding? Strategies, Benefits, and Examples
Business managers, directors, and CEOs looking to strategically grow their companies understand that generating brand awareness and accessing new markets plays a big part in that business growth.
One of the easiest ways to accomplish those awareness goals involves seeking strategic alliances and partnerships, and to create new, co-branded products. By doing so, the loyal customers of one brand are introduced to the other, helping both partners improve their company image and gain market share.
Sound like a good idea so far? Let’s dive in.
What Does Co-Branding Mean?
Co-branding is a strategic partnership between two well-known companies who join together to create a new product involving both of their brand names and brand images.
Co-Marketing vs. Co-Branding
Co-branding is different from cooperative marketing or co-marketing. Co-branding involves combining two or more brands to create a unique new product. In contrast, co-marketing involves two or more different products from different brands that are bundled or promoted together but do not create a new product or service.
As such, a co-marketing project is primarily a strategic marketing partnership. It is heavily reliant on marketing strategies and cross-channel marketing campaigns. Such a venture typically involves traditional advertising, digital brand management, and social media campaigns.
Both forms of collaboration involve a detailed co-marketing or co-branding agreement, and it’s helpful to consult a business contract attorney who specializes in facilitating these kinds of deals, especially if small businesses are involved without in-house legal counsel.
There are numerous co-branding strategies when deciding the best way to proceed with a new product collaboration. It’s important to know how they differ and choose the best option to benefit all partners.
Global Brand Strategy
In co-branding, a global brand strategy outlines how a jointly created product’s marketing team will position, promote, and manage the product brand across different cultures and markets worldwide. It is a long-term approach that aims to create a consistent and cohesive brand identity that resonates with customers and differentiates the company from its competitors. A global brand strategy can include elements such as brand positioning, messaging, visual identity, and marketing tactics that are aligned across different regions and cultures. A global brand strategy is especially effective when the different collaborators have strong footholds in different cultures and geographies.
National to Local Co-Branding
National to Local Co-Branding happens when a national or global brand, such as Toyota, works with a local business, such as “Toyota of Eastern Ohio.” The dealership works locally to provide excellent sales and service, while Toyota supplies the products and marketing support. Both the small business and large corporation benefit. Another example is a department store credit card. In the case of a company like Barnes and Noble, its “B&N Credit Card” is managed by a third-party credit card company, Barclaycard. Still, it’s unlikely anyone thinks of the card as a Barclaycard Master Card but rather a Barnes and Noble card.
Composite co-branding (sometimes called a joint venture) is when two or more well-known brands form a new product line. Note: This is different than the business entity type Joint Venture. This is especially popular when one company owns the intellectual property rights to a brand but lacks the expertise to take that brand where it wants to go. For example, ViacomCBS owns the intellectual property rights to Star Trek but is in the business of entertainment, not toys. Therefore, ViacomCBS partners with Playmates Toys to create official Star Trek toys.
Same-company co-branding occurs in a parent company with many subsidiary brands. An excellent example of this is PepsiCo, a food conglomerate company, who owns, in addition to their namesake Pepsi Cola, the Frito Lay brands such as Fritos, Doritos, Lays Potato Chips, etc. The company frequently launches marketing campaigns that combine their different subsidiaries, as seen in various Super Bowl ads. The company also offers manufacturer coupon promotions where there is a discount for purchasing a bag of Frito Lay snacks with a twelve-pack of Pepsi-Cola drinks. This “Party Pack” uses the brand identities of both subsidiary companies by combining the individual brand power.
Brand Extension Strategy
With brand extension, a company uses a well-known brand name to leverage its “brand equity” in promoting a new product. For example, when telecommunication company Verizon launched a prepaid wireless company, “Total Wireless.” Verizon had invested significant marketing dollars to ensure they were seen as the carrier with the “largest coverage map” in the United States. To associate their coverage availability with their new Total Wireless brand, they launched a brand activation campaign, “Total Wireless: Powered by Verizon.” Later, the need for direct association was so great they renamed the service Total Verizon.
Benefits of Co-Branding
Not only can co-branding be a great way to build brand awareness across new markets, but there are various benefits that a co-branding collaboration can bring for everyone involved. Now that we’ve defined co-branding and provided some basic examples, let’s review some of the key benefits this marketing strategy has to offer.
Increases Customer Base
Co-branding can increase a customer base by expanding brand awareness and reaching new target audiences. Because a co-branding venture brings together at least two different brands, each brand suddenly has access to the customers from the other brand... that’s a win-win!
Expands to New Demographics
Co-branding can help a business expand to new demographics by leveraging the existing customer base and marketing efforts of the partner brand. For example, if a business partners with a brand that appeals to a different demographic than their own, they can access that demographic through the partner brand’s marketing efforts and existing customer base. The brand loyalty and positive perception of the partner brand can also rub off on the co-brand, helping the business to establish a foothold in a new demographic.
Boosts Product Sales
Co-branding can increase customer loyalty by providing customers with a wider range of products or services to choose from—and thus preventing customers from having to shop with competitors. Not only do product sales increase because there is a new jointly-created product to buy, but consumers may also begin purchasing a partner brand’s related products, or other products belonging solely to the partner’s own brand.
Reinforces Customers Loyalty
Co-branding efforts can increase customer loyalty by providing customers with a wider range of products and services to choose from, and by creating a sense of uniqueness and exclusivity. This encourages customers to remain loyal to the brand. Furthermore, co-branding can create an emotional connection with the customers, as they may see the partnership as a reflection of their own values or preferences, leading to more loyalty.
Decreases Costs and Risks
Co-branding decreases individual cost and risks by allowing businesses to share the costs and risks associated with creating and marketing new products and services. For example, a business can share the costs of creating a new product or service, splitting the costs of research and development, production, and marketing. Co-branding can also allow for sharing distribution channels, sales networks, and other resources, which can further reduce costs and risks.
Risks of Co-Branding
While co-branding can have many excellent benefits, there are some risks that companies should be aware of. These include:
Co-branding can dilute the strength and integrity of one or both of the brands involved. This can happen if the brands have poor synergy, or if the partnership is not executed effectively.
Partner Brand Dependence
If a business becomes too dependent on the partner brand, it can become difficult to disengage from the partnership and continue growing as a strong, standalone company. Meanwhile, if a co-branded product is poorly received, each company may be unable to write off the product’s failure on the collaboration. Maintaining their individual brand integrity may be difficult.
Guilty by Association
When one brand partner has a public relations crisis, the other company may not be able to avoid being affected as well. For example, Kanye West’s Yeezy deal with Adidas was canceled after he made anti-Semitic remarks, leaving Adidas with millions of dollars in products that they then discontinued, which took them months to determine how to sell down.
5 Brands That Nailed Their Co-Branding Strategies
While there are many examples of co-branding ventures we could reference, five examples stand out from the rest.
1. Nike and Michael Jordan
The partnership between Nike and Michael Jordan is one of the most iconic and successful co-branding partnerships in the history of sports and marketing. The partnership began in 1984, when Michael Jordan, who was at the time a rookie with the Chicago Bulls, signed an endorsement deal with Nike to wear their shoes on the court. The partnership quickly led to creating the Air Jordan brand, which became synonymous with style, performance, and success. The partnership leveraged Michael Jordan’s on-court success, charismatic personality, and cultural impact to drive sales and create a sense of exclusivity and aspiration around the brand. The iconic “Jumpman” logo, which features a silhouette of Michael Jordan in mid-air, became one of the world’s most recognizable logos. The co-branding campaigns associated included the iconic “Be Like Mike” and “It’s Gotta Be the Shoes.”
2. Dell and Intel
Through a co-branding partner agreement, Dell uses Intel processors in a majority of its personal computer and server products. This allows Dell to offer customers a wide range of computers that are built with the latest and most advanced technology from Intel. In addition, Dell and Intel also collaborate on product research and development, which helps to ensure that Dell’s products are always at the forefront of technology and performance.
The partnership has benefited both companies in terms of increasing revenue, market share, and brand reputation. Intel has benefited from being the go-to choice of processor for a large computer manufacturer like Dell, while Dell has benefited from being able to offer customers high-performance computers that are built with Intel technology. The partnership has also led to several joint initiatives such as Dell technologies on Intel Xeon scalable processors; as well as Dell EMC PowerEdge servers with Intel Xeon processors.
3. Betty Crocker and The Hershey Company
Another fantastic example is an ingredient co-branding partnership between major consumer packaged goods companies Betty Crocker and The Hershey Company. Owned by General Mills, Betty Crocker is known for its line of baking mixes, frosting, and other baking products. Hershey, on the other hand, is a leading producer of chocolate and other confectionery products. The partnership began in the early 2000s, with the goal of creating new and exciting baking products that combine the expertise and resources of both brands. One of the key aspects of the partnership is that Betty Crocker began to use Hershey’s chocolate and other ingredients in their baking mixes and frosting, which allowed them to offer customers a wider range of products that are made with high-quality chocolate.
The partnership between Betty Crocker and Hershey continues to this day, and it is considered a successful strategic alliance between two major food companies. It has benefited both brands to combine their expertise and resources to create new and exciting products for customers.
4. Uber and Spotify
The partnership between rideshare company Uber and music streaming service Spotify is a strategic alliance between two leading technology companies. The co-branding partnership allows Uber riders to connect their Spotify account to the Uber app and listen to their preferred music or playlists during their ride. The partnership also includes other benefits such as allowing Uber riders to discover new music and playlists by offering curated playlists in the Uber app. Furthermore, Uber and Spotify also collaborate on joint marketing campaigns and promotions to increase brand awareness and drive the adoption of both services.
5. Frito Lay and Taco Bell
Frito-Lay and Taco Bell have had a long-standing partnership, with Frito-Lay providing various snack products for Taco Bell’s menu items. One notable example of their partnership is the “Doritos Locos Tacos,” which features a taco shell made from Nacho Cheese Doritos. This partnership has been successful for both companies, with the Doritos Locos Tacos becoming one of Taco Bell’s most popular menu items. In 2021, PepsiCo’s Frito-Lay division and Yum! Brands, Taco Bell’s parent company, announced a new partnership to develop new products, bring new food and drinks to the market and increase the companies’ e-commerce and delivery capabilities.
Partnering with successful and experienced companies can open game-changing doors for each brand ... and working with a software company to help manage your marketing partnerships is no exception.
Take, for example, our channel partner management tool. Businesses like yours, who use a channel partner program to help promote your products, can use Relevize to easily connect with resellers and affiliate marketers, provide training and marketing materials, and track any leads and conversions that your partners have brought in. You can discover what partner marketing strategies are working best, and promote them out to your other partners to further their success—and your own.
If you are interested in learning how Relevize can help your company create creative and strategic partnerships with assorted channel resellers and referrers, request a free demo today.