What Is Co-Branding? (With Benefits, Types And Examples)
Updated 29 September 2022
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Co-branding is an effective way for companies to combine their resources to achieve growth, which can lead to increased brand visibility and profits while reducing individual costs and risks. Many companies use this marketing strategy to create better products and share with the target consumers of other companies. Learning more about this concept can help you become more effective in your role and create more impactful marketing strategies.
In this article, we answer the question 'What is co-branding?', explain how it works, compare it to co-marketing, share its benefits and strategies and provide examples to help you understand the concept better.
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What Is Co-Branding?
You might be wondering 'What is co-branding?' if you have an interest in marketing and business. Co-branding, also called brand partnership, is a marketing strategy that connects two or more brands together in an alliance on a single product to benefit all parties mutually. Co-branding is not simply adding two company names together on a product, but rather, it is a partnership that combines the identities and resources of each partner to create a new service or product, complete with new logos, brand identifiers and colours.
To be successful, co-branding campaigns create a product or service that is unique or has added value for customers. For instance, that value might be a better product, a speciality food item, a luxury item or an improved public image. These products and services provide value for customers and also help organisations in improving their sales and brand value.
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How Does Co-Branding Work?
Co-branding involves two or more independent brands working together on a new product or service. The most successful co-branding partners have similar values, missions and cultures. Co-branding partners combine resources, including in-house expertise, technological advances and funding. If the co-branding campaign is successful, it may reward partners with increased profits, positive associations and a larger customer base. Unsuccessful co-branding campaigns may generate revenue, but as the partners share the risks, it lessens each company's individual loss.
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Co-Branding Vs Co-Marketing
Co-branding is not the same as co-marketing. Co-marketing occurs when two firms align their marketing efforts but do not create a new service or product. The services provided by one firm may add value to the end-user experience when they complement the services of the other firm, but the partnership does not ultimately produce a new product for consumers.
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Benefits Of Co-Branding
Co-branding can be beneficial to all parties involved, including the consumers who purchase the products or use the service. Here are a few of the most notable benefits of co-branding for companies:
Co-branding can lead to an increased customer base, including customers in previously unreached demographics, as organisations get access to the customer base of their partners. This can lead to increased sales. All the partners gain access to this increased customer base and can use this to promote their other products or services as well. There can also be revenue from mutually produced technologies, products or services. Organisations may work together to innovate or design new products and services. The revenue from the sales of these products and services adds to the revenue of all the partners associated.
Creation of better quality products or services
In co-branding, the top human resources and technological capabilities of two or more companies come together to create a new product or service. This can lead to the creation of better quality products or services, which can ensure that the involved partners benefit and their brand value increases. Subsequently, this can generate increased credibility and respectability, which can garner increased customer loyalty.
Shared resources and risks
In co-branding, sharing of the financial burden for marketing, technology development and promotional events takes place. This means sharing risks with all partners. Because of this, the financial risk decreases for both parties.
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Types Of Strategies For Co-Branding
Here are the most common co-branding strategies with examples:
Multiple sponsor co-branding
Multiple sponsor co-branding occurs when two or more companies pair up to share technology and promotional events. Professionals can use multiple sponsor co-branding in athletic events or concerts. Each company involved often earns an opportunity for increased sales, brand recognition or improved reputation.
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Same-company co-branding is a marketing strategy companies can use to promote multiple in-house brands under one product. Large food conglomerates often use same-company co-branding to promote their products. This form of co-branding only involves one company, though it may include collaboration with subsidiaries.
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In an ingredient co-branding strategy, professionals use the ingredients or components of one well-known brand in another well-known brand's product. In an ingredient co-branding partnership, each partner is usually a major brand in their industry. These brands have their own unique qualities and products on which the companies own copyrights or patents.
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Joint venture or composite co-branding
A joint venture or composite co-branding is an alliance between two or more well-known companies with the goal of presenting a new product or service that may not be possible individually. This can include creating an entirely new product together or improving an existing product. An example of this is when a streaming service platform partners with film studios to create or host movies and television shows.
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National to local co-branding
National to local co-branding occurs when small local businesses team up with a nationally popular brand. The goal of this partnership is to increase national brand awareness while increasing small business revenue. For instance, vehicle manufacturers can co-brand with local car dealerships to provide service to vehicle owners and increase their brand visibility in those regions consequently.
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Here are a few examples of successful co-branding partnerships:
Co-branding example combining a product and a service
Here is a co-branding example for a beverage company and a non-profit:
Lemon-Cola is a beverage company and Help People is a non-profit organisation that works on helping the underprivileged. Lemon-Cola helps local chapters of Help People organise charity events, promote small-scale healthcare events and assist with disaster relief. Local Help People chapters benefit from this arrangement by having a partner that can supply volunteers, much-needed funds and event visibility. In return, Lemon-Cola gets an increase in its reputation.
Co-branding example with two food companies
Here is a co-branding example for a candy company and bakery:
Crazy Candy Company is a medium-sized candy company and Batra Bakers is a large baking mixes company. The partnership between Crazy Candy Company and Batra Bakers is an example of ingredient co-branding. Batra Bakers baking mixes and frostings have been using Crazy Candy Company products for years with amazing success. The co-branding campaign has created some of the most popular baking mixes on store shelves.
Co-branding example with a detergent manufacturer and a wildlife organization
Here is a co-branding example for a consumer brand and a conservation organization:
Doaba Dishwashing Detergents is a dishwashing detergent manufacturing company and Save The Birds is a society that works on the conservation of endangered birds and other wildlife. Doaba Dishwashing Detergents partnered with Save The Birds to help birds and other wildlife. They are working to help birds and wildlife affected by oil spills. Through this partnership, Save The Birds gets thousands of bottles of Doaba Dishwashing Detergents and Doaba Dishwashing Detergents gets a reputation as a compassionate community partner.
Co-branding example for two food-related companies
Here is a co-branding example for a chips company and a restaurant:
Pahwa Chips is a medium-sized chips company and Tara Restaurants is a big restaurant chain. Pahwa Chips partnered with Tara Restaurants in an ingredient co-branding partnership to create a new chips flavour. This flavour sold over ten crore units in its first ten weeks. The partnership continues, with continued benefits for both parties.
Please note that none of the companies, institutions or organisations mentioned in this article are associated with Indeed.
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