The Advantages & Disadvantages of Co-Branding

Co-branding allows companies to unite and achieve specific goals by presenting multiple brands and products to consumers under one marketing strategy. For example, an advertisement may show a customer purchasing a specific brand of shoes but also showcasing the customer using a specific card to make the purchase. There are two commonly recognized forms of co-branding: Ingredient co-branding and composite co-branding. Ingredient co-branding refers to the use of a well-known brand to assist a brand not as well known to gain recognition. This typically involves the creation of brand equity for materials and parts within other products; for example, Dell computers co-branding with Intel processors. This leads to superior promotions, better quality products, more distribution channels, and higher profits. Composite co-branding utilizes two famous brands to offer a unique product or service, which they would not be able to offer individually. An example of this is the partnership between Apple and Mastercard in launching Apple Pay. The success of composite co-branding relies heavily on the brands’ popularity and the way they complement each other. When co-branding is done effectively, it can prove both advantageous and disadvantageous to brands in various ways.

The Advantages:

·      Credibility – Customers would trust the product and brand more if they were not familiar with it previously once they see it has partnered with their favorite brand. Consumers would be more enticed to try the product, thus generating more sales.

·      More significant profits – A new product on the market with the unique qualities from each brand will generate public excitement and lead to an increase in sales. Since both brands would have had a significant audience, the new product would have a more extensive audience range. 

·      Brands share the risk and cost – Both brands share the risks of the costs of marketing the product or service. However, because this cost is shared, it makes the risk limited, thus benefiting both brands.  

·      Publicity – By combining two target audiences, brands can develop a broader scope of interested individuals to sell their products to.

·      Technological benefits – Both brands can implement and utilize their technologies to create a product of superior quality unique to them and unmatched by the competition. 

·      Product Image Enhancement – Combining the features of two brands into one gives it a new and improved or hybrid feel. This gives consumers the perception of the product being particularly great or unique. 

The Disadvantages:

·      Confusion – If the products being used to develop the co-branding strategy are unrelated or popular in different markets, the strategy may not succeed as it creates confusion. Smaller companies, in particular, must be cautious in their co-branding initiatives to ensure that the brand they partner with complements their brand. 

·      Differing Missions, visions, and values – If partnering brands share differing ethics, missions, values, and visions, the co-branding initiative may fail as they would most likely have entirely different markets, and combining them may affect the brand’s image.

·      Overshadowing – This disadvantage applies to smaller companies that may be masked by a reputed brand if they have not yet established themselves in a market. This may lead to loss of personal image for the brand.

·      Conflict – Customers who have had bad experiences with the partner brand or associate bad traits with the brand can negatively affect their perception of the brand or co-branded product and damage the company’s brand equity.

With new products and services being advertised every day, brands must invent new ways to highlight their uniqueness and increase lead generation; co-branding is an effective and efficient way of accomplishing that uniqueness. The goal of all companies is to build a strong brand, and brands of any size can co-brand to achieve more success by building recognition and garnering a stable following.