What is co-branding and how it can benefit companies

Last Updated: June 18, 2012By Guest AuthorTags: marketing strategy, marketing tips

Co-branding, as the name suggests, is the phenomenon wherein two companies merge their brands to produce one type of service or product. This doesn’t necessarily mean that the two organizations will merge together to form a single corporation. While remaining as separate entities, these two can join forces in order to produce a product or service that caters to a certain need of their consumers. In a way, this is a true partnership, as the two organizations will end up with a win-win situation as a result of co-branding.

How the partnership will work will depend on what the two organizations agree on, although it is important that the relationship should be mutually beneficial. It’s not necessary for the co-branding to result in a new brand. In some instances, the product carrying the co-brand can simply be a special type of product from one company (for example, it’s common to find ice cream companies offering a flavor that is explicitly promoted as coming from another group). The partnership doesn’t even have to involve companies coming from the same industry. For example, a toy company can actually partner with a food company to create treats for kids resembling their most popular toy lines. Sometimes, the relationship doesn’t even have to involve two companies. One good example of this is celebrity endorsements, with the celebrities bringing their own brand to promote the product or service of one company.

Benefits of Co-branding

Potential to increase visibility and sales.

Co-brands offer companies the opportunity to get the interest of the audience of their partner organization. This will not only increase the amount of visibility they are getting, they will also increase the chances of making more sales, since they can tap into a new market with the help of the co-brand. The two companies can even tap into new audiences as well, since their product will be able to tap into the needs of a certain group.

Strengthening your market position.

A co-brand can potentially result in products and services that will be able to reflect the strengths of both companies. This, as well as the greater visibility of both brands as a result of the partnership, can greatly strengthen the position of both companies in the market.

Offer better products.

Both groups will effectively be bringing their strengths to the table, which means that it’s possible that the new commodities are actually better than what they can produce on their own, since both companies will be able to lend their knowledge and expertise in designing new products or services.

Increase cost-effectiveness.

Launching a new product can cost a lot. Not only do you have to worry about manufacturing costs, you also have to worry about packaging and promotions. Partnering with another company can save money, since expenses can be split between the two organizations. The partnership will also effectively mean shared risk. As such, one company doesn’t have to solely bear the burden in case the venture flops.

Co-branding can be a great venture for companies to go into, given the numerous benefits this offers. However, this can also easily spell disaster for the organization if they partner with an organization that is more concerned about profit-making than anything else. If you’re considering building a co-brand, be sure to carefully think of which company to partner with, since your choice of associate can spell the difference between success and failure.

About the Author

Julian Kim writes on behalf of Vionet Graphics, Inc., a firm that specializes in branding and branding strategies for businesses and can assist with any identity design projects you have.

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