Co-branding Curtin University Miri

Executive Summary

The followerss purpose to let the reader to hold an apprehension of co-branding. Certain existent life concern illustration is used to exemplify of the relevant theories that has been extract from research diary. Many other relevant articles are besides being used for treatment to do the topic affairs every bit current as possible with the aim to remain valid as in point of reading. Inside this paper, co-branding was explained as to why it has been applied as a scheme to research new market and growing by concerns. Types of illustration in co-branding that exist and practise in the market. In add-on, all the marketing-mix tools are discussed as to how it can impacts the co-branding procedure. The benefits and disadvantages are besides being put frontward for treatment with a recommendation to utilize co-branding as a concern scheme.


In today complex concern universe, whereby competitions are ferocious particularly for the fast moving consumer goods industry ( Helmig, Huber and Leeflang 2008, 359 ) , sellers tried to utilize any tools they has in order to open a way for extra chances for new clients and trade channel to bring forth greater gross revenues from their bing mark market. Co-branding is one of the selling schemes that used by sellers to make chances in accomplishing concern growing in the market. Some may hold admiration, what is co-branding? Co-branding is either two or more celebrated trade names that combined to organize an confederation to work together and making selling synergism ( Kotler, Keller and Burton 2009, 361 ) . In simple term, it means that two trade names comes together to make a individual, alone merchandise.

This coupling can be in a selling context such as in advertizements, merchandises, merchandise arrangements and distribution mercantile establishments ( Grossman 1997, 191 ) . Such selling synergism can potentially spread out the client base, to additions profitableness, responds to the expressed and latent demands of clients through production lines, strengthens competitory place through a bigger market portion, enhances merchandise debuts through heightening the trade name image, creates new customer-perceived value and outputs operational benefits through reduced cost as stated by Chang ( 2009, 77 ) of a notes identified by Gaurav Doshi 2007 article.


An illustration of successful co-branding is the McDonald ice pick with M & A ; M ‘s confects and besides Kraft Oreo cookies which resulted to the creative activity of M & A ; M ‘s Mcflurry and Oreo Mcflurry ice pick merchandises. The success of both M & A ; M ‘s and Oreo Mcflurry ice pick is an illustration of using two or more trade name names to present a new merchandise with competitory advantages. Chang ( 2008, 220 ) province that the intent is to capitalise on the repute of the spouse trade names in an effort to accomplish immediate acknowledgment by the consumers.

Airasia, the low budget air hose of Malaysia has done really good in the online engagement for air traveling, had form an confederation with Citibank to present their alone Airasia Citibank recognition card ( Citibank and Airasia tie the knot! 2007 ) . In this illustration of joint-venture of co-branding, both Airasia and Citibank have their ain separate trade name equity, and both besides earned trade name consciousness and positive trade name image. Their confederation for success comes from a logical tantrum between two trade names, therefore their selling activity maximises the advantages of each other while understating their disadvantages as mentioned by Kotler, Keller and Burton ( 2009, 361 ) . The research done by Park, Jun and Shocker ( 1996, 464 ) shows that consumers are more likely to accept the co-branding merchandise when two trade names are complementary instead than similar. Their confederation is a perfect lucifer as both Airasia and Citibank which can tap on each other client base to increase their concern activity and on top with addition in net incomes.

Further to another type of co-branding is known as same company co-branding. This is an illustration of Nestle Company in Malaysia when they develop Nestle ice pick utilizing their well known cocoa trade name like Kit Kat and Smarties to perforate into the ice pick market ( Nestle in your life: ice pick n.d. ) . Therefore, with immediate trade name consciousness among their trueness clients, Nestle are optimizing their opportunities of success of a new launch merchandise.

The list does non halt here as there are other types of co-branding, which is multiple-sponsor co-branding, such as Taligent, a erstwhile technological confederation of Apple, IBM and Motorola ( Kotler, Keller and Burton 2009, 361 ) . There is besides retail co-branding, illustration like Pizza Hut and KFC in Malaysia, where two retail concerns use the same location as a method to maximize both infinite and net incomes. Furthermore, ingredient co-branding is another type of co-branding ; a successful illustration of this is Intel whereby the ingredient stigmatization was so strong that the consumers insist of purchasing Personal Computer with ‘Intel Inside ‘ . Therefore, it gives great impacts towards major maker such as Dell and Compaq to follow Intel french friess for their coating merchandises ( Kotler, Keller and Burton 2009, 362 ) .

The benefits of Co-branding

It is common for all concerns face towards the challenges of fiscal hazards when presenting new trade name to consumer market ( Aaker and Keller 1990, 27 ) . In add-on, a merchandise or services life rhythm is acquiring shorter each twenty-four hours as the promotion in engineering has makes it easier to copy among trade name in the same industry. It is because of these, the hazards built-in in set uping new trade names are high, with a failure rate runing from 80 to 90 per centum as mentioned by Leuthesser, Kohli and Suri ( 2002, 35 ) . So, in this instant co-branding make sense as it can increase trade name peculiarity by capitalising on the values embedded in collaborating trade names. Through the agreement of co-branding, concerns are able to make brand-leveraging which capitalize on bing trade name equity instead than constructing new trade name equity as noted by Dickinson and Heath ( 2008, 22 ) .Take Airasia Citibank credits card for illustration, the benefits of being the card proprietor automatically becomes an elect traveler to bask particular menus and vacation bundles non available elsewhere. By unifying values and individualities of trade names originally engaged in different industries, now both are able to derive consumer picks, trueness and accordingly lead the trade name to uniqueness and typical as comparison to their rivals. From this illustration it has deliver the purpose to increase the peculiarity of the co-branding merchandise and besides derive client trueness by supplying them with the confederation benefits. Therefore, it besides achieves its set aim of co-branding that is to spread outing client base, making a new client perceived value and most significantly to beef up its competitory place in the market.

As market status alteration quickly, it is non easy for a merchandise to hold a safe seafaring to success as there is full of picks and is keep on increasing for the consumers to take. Brands research besides found that a individual trade name may non be able to run into the demands of variable single demands such as usage design with added value ( Djurovic 2009 ) . By utilizing extension co-branding to heighten the merchandises will able to run into those single demands. For illustration Bacardi and Coca Cola or Bacardi and Sprite, to hold co-branded Bacardi Mixers range to demo and propose alternate ways to devour the two trade names. By this agreement, both trade names will derive fiscal benefits, to hold introduced a new merchandise scope with a strong image and besides respond to the expressed and latent demands of the clients.

The other benefits of co-branding is that the merchandise has it uniqueness and typical feature, thereby bring on more gross revenues and besides cut downing cost of merchandise debut as noted by Desai and Keller ( 2002 ) . Interestingly, co-branding is able to work more efficient and efficaciously pass oning through to the consumers as the two trade names consciousness is high ( Aaker 2003, 84 ) .

Selling tools for Co-branding

Indeed co-branding activity has increase over the past decennary as Spethmann and Benezra ( 1994 ) noted that the figure of corporate confederations worldwide, including co-branding ventures is go oning to turn at 40 % rate each twelvemonth, affecting one million millions of dollars in assets. Such an addition in co-branding activity may project itself to be a popular scheme as mentioned by Hilton ( 2007 ) . In add-on he asked ‘is it besides a smart one? ‘ and he answered it with a qualified ‘yes ‘ if it is executed good.

In order to put to death good, we need to discourse any of the relevant seven P ‘s in marketing mix tools. The seven P ‘s mentioned which is Product, Price, Promotion, Placement, Physical grounds, Process and People. Sellers use these tools to do marketing-mix determinations for act uponing their trade channels right to their terminal users.

In practise, companies seek growing through invention of new merchandises by their research and development squad and co-branding scheme can develop this new merchandise to success by provide perceptual experience of quality and image as it capitalizes on the alone strengths of each lending trade name ( Chang 2008, 498 ) . For easy concentrating onto one industry, we use the fast traveling consumer goods as our point of treatments

By and large for a co-branding to success, the possible spouse has to be big and have strong distribution channel or client base with positive market image. As mentioned, the market environment alteration quickly and the velocity to market is one of the cardinal success factor to a co-brand merchandise or services. The purpose is to set up a strong bridgehead before the onslaught by rivals. With broad distribution coverage or client base will enable this undertaking to be accomplish on the set mark.

In order for the executing of the co-branding to hold a speedy range out to the market, seller must look into trade publicity and advertisement run to help in legion ways. The joint gross revenues publicity and advertisement run is to excite involvement and enquiries in the market among their trueness client and the trade publicity activity should concentrate on pass oning the benefits and value-added the co-branding can supply to the consumer.

When these two trade names form an confederation for joint publicity on their co-branding merchandise or services, the aims is for those two trade names to provides greater confidence about the quality criterion than those of a individual branded merchandise from the perspective point of position as noted by Rao, Lu and Ruekert ( 1999, 259 ) . Therefore, from this positive point of position by the consumers it lead to higher merchandise ratings and this will let the co-branding merchandise or services to command a premium monetary values ( Helmig, Huber and Leeflang 2008, 360 ) .

To exemplify our point we take the Nestle and L’Oreal as illustration. Nestle and L’Oreal late announced their coupling. One may hold asked what common value does these two have. Nestle is the universe taking nutrition nutrient manufacturer and the company mission is to bring forth healthy nutrient to feed the universe but non restricted to inside but besides our outer organic structure, which is our tegument. Indeed, L’Oreal comes in as a perfect lucifer as the trade name is the planetary leader in tegument attention. Their coupling is seen to be an irregular trade name confederation as noted by Lindstorm ( 2003 ) but it has those values that the clients can trust and be converting of their trade name confederation committedness. In this case, the singularity and distinctive of the co-branding merchandise has a high rating by the client as indicating of higher opportunity of success gross revenues and besides better bid of monetary value point.

Although physical grounds is most normally being used to measure for the service industry such as eating house and hotel ( Physical Evidence ” the line of life for service companies 2006 ) , we can besides do it to be a relevant point to discourse for fast traveling consumer goods as in its packaging as physical grounds. The packaging has to be attractive and user friendly. An illustration of user friendly wadding is the pull up cap for transcribed nutrients as it allows the purchaser to easy open and devour it. As nowadays consumer are besides concern of environmental issues, they are besides taking for merchandise packaging that can be recycle after devouring their contents. This physical grounds can besides take signifier as in a guarantee or warrant. Take Duracell for illustration that has warrant against defects in stuffs and craft due to a battery defect ( Duracell Guarantee n.d ) . Here the physical grounds is clear and has communicate to the user that Duracell will mend or replace it. These are deems to be an of import physical grounds a co-branding merchandise can emulate to makes it alone and typical.

The other P ‘s of the selling mix is the procedure. In marketing mix, the procedure is an component of service that sees the client sing an organisation ‘s offering every bit largely in the service industry. As for fast traveling consumer goods, the procedure that the co-brand merchandise wishes the client to see is hassle free to entree to the merchandise. In short, the handiness of the merchandise is sufficient in every retails shop and in arm range location. One such illustration is the Wrigley Company in which their gross revenues scheme is to concentrate on the procedure of the possible consumers reach for their mastication gums merchandise. The consequence, Wrigley masticating gums was distributed to any corner of the universe and to expose it at arm range location in order for the client to hold pleasant experience when making for their merchandises. Wrigley understand it good that it continue to concentrate on acknowledge the singularity of each one of their consumers and attempts are made to make them and in return of hopes their possible client will acquire to cognize more of their merchandises and buy them.

The last P ‘s is the people. Peopless are really of import in co-branding. What makes co-branding merchandises a success besides its singularity, typical and value added to pull the consumers is its people that work buttocks and in forepart. A consumer who comes into contact with the co-brand merchandise will do an feeling, and they can hold a profound consequence, either positive or negative and that is on client satisfaction. The repute of co-brand merchandise remainders in the people ‘s custodies so they must be hence trained, good motivated and have the right attitude. They must hold high degree of committedness, competency and complete apprehension of their merchandises. The attitude to believe that their co-brand merchandise is alone and will convey them more gross revenues and net incomes therefore, it cans moves them to self motivate to serve their client to satisfaction.

The disadvantages for Co-branding

By now, the above presented, should be able to give the doctrine behind co-branding and that is to increase both market portion and gross every bit good as deriving competitory advantages through client consciousness by supplying them with a co-branding merchandise that is typical and alone. Although co-branding expressions honoring and it does sounds like a perfect scheme to seek growing and by understanding the benefits of co-branding and reexamining the selling tools to help it to success entirely is non plenty. Co-branding does non come without hazards, as one have to aware that merely one in five efforts of a trade name amalgamations win as mentioned by an article by Knudsen et Al. ( 1997, 189 ) . In many ways, trade names can be explained like people, they their ain values and way. In existent universe is hard for married twosomes to accommodate their differences and commit to remain to each other everlastingly as noted by Lindstorm ( 2002 ) and that half of the universe ‘s matrimonies stoping with a divorce so as co-branding partnership.

The hazard of co-branding is partner offing with a spouse that can stain the bing merchandise ‘s strong trade name equity, as the two confederation trade names has become connected together in the consumer ‘s head as mentioned by Ueltschy and Laroche ( 2004, 93 ) . The booby trap here is that when consumers attribute any negative experience due to the mistake or carelessness of any one party of the confederation, the overall trade name equity could be harm and poses menace to co-branding and ensuing the other trade name being perceive as weak ( Kocherp 2009 ) . Therefore, when it lead to a negative rating by the consumers and is likely besides to do damaging to the co-branding privilege of monetary value bid in the market as it used to bask over their rivals.

The other scenario that a co-branding may neglect is when the two merchandises have different market and are wholly different such as no complimentary effects. If there is difference in visions and missions of the two confederation companies, so the co-branding may besides neglect dearly-won. To take an illustration of a failure co-branding is the instance of American Airlines and America Online. They determinedly launched a joint consumer-loyalty plan in 1999 in hunt of trade name synergism. As the plan ne’er met any of the co-branding outlooks, they separate their confederation and some analysts say that “ their failure was due to the co-brand merchandise and ne’er truly did anything interesting with it and did n’t look to perpetrate to it ” as noted by Buss ( Brandchannel n.d. ) . Possibly their co-branding failure is due to the absence of a clearly defined scheme. When this physical grounds happens, the people as mentioned in the marketing-mix, besides has an impact onto them. Failure of confederation means the loss of their credibleness and capablenesss to be able to make a market synergism branding merchandise. The procedure the client experience is unpleasant as we used American Airlines as illustration, to exemplify our point. Imagine all the trueness plan as promise to their loyal clients has either stop up empty handed or being compensated by other agencies in which may non be up to the outlook of their clients. This will certainly be the image of the parent company.

Co-branding may ensue into creative activity of new thoughts for merchandises or services, which leads to the entryway of new rivals who combine the characteristics of both trade names into one ( Kocherp 2009 ) . Such instance was the illustration of IBM and Microsoft partnership to develop DOS runing system for its personal computing machines in which it lead to a series of sequence events that finally creates Microsoft every bit laterality as we know it today ( Leuthesser, Kohli and Suri 2002, 42 ) . So, the possible spouse for co-branding agreement should be topographic point under showing and be analyse to what extent it can be spawn to be the following rival.

As ever we have to bear in head that, every coins has two side and after being able to show the above disadvantages, we besides must non bury the benefits of a co-branding has to offer as mentioned earlier for sellers to follow as a scheme to seek growing for concerns. It is ever practical to use a S.W.O.T analysis as in Strengths, Weakness, Opportunity and Threat to reexamine the co-branding proposal. The S.W.O.T analysis is a utile tool to supply an penetration to the possible co-branding proposal of their strength versus their failings within the trade name and company of confederation. It besides provides to reexamine of what was the chances can be created through the partnership versus the menace and challenges confronting towards.

Co-branding as selling scheme

Before pulling any determination to follow co-branding scheme to derive market promotion, allow ‘s reexamine some of import co-branding points that have been mentioned earlier. The confederations can supply an equal benefit for both entities, the values of both trade names can complement each other and the trade name relationship can make value added to the clients.

Harmonizing to Leuthesser, Kohli and Suri ( 2002, 41 ) , which defines four co-branding schemes which is, making in, making out, making up and making beyond. By making in, the scheme is to accomplish greater market incursion by confederation itself to other trade names that can complement what the bing trade name deficit when presenting over line extension. Such agreement was the illustration of McDonald M & A ; M ‘s Mcflurry ice-cream in which McDonald capitalize on M & A ; M ‘s strong trade name consciousness to make in for greater market incursion. Mcdonald by focal point on merchandises has really utilized one of the marketing-mix tools to make in for greater market incursion.

In making out, the scheme is to tap onto new market skyline and to accomplish this aim is to co-branding with an confederation that give complementary effects and such illustration was shown in the agreement of Airasia and Citibank recognition card. Their confederation has enabled each of the spouse company to make out to tap into different industries. Therefore, it increases the distribution channel of its concern as what marketing-mix tools call it ‘placement ‘ , which is merchandise or services reach out to client through difference webs.

Reaching up is a scheme to accomplish market promotion by confederations with spouses that can promote positive trade name image. The Oral-B trade name is such a good illustration to exemplify this scheme. In the Malayan consumers market before Oral-B, whereby Colgate is the high family name among the bulk of Malayan consumers and of cause acerate leaf to state, Colgate was ruling in the retail mercantile establishments every bit good and where Oral-B trade name was unknown to the local Malaysian. Then Oral-B start to scheme for the past decennary by acquiring the indorsement from the tooth doctor association of Malaysia to raise its trade name image among Malayan alveolar consonant attention user and as a consequence of the outstanding co-branding and today the Oral-B stigmatization has been strong in the head of the consumer. In order to accomplish entire pits free, Oral-B alveolar consonant attention merchandise scope is now the Malsysian first pick upon buying. As highlighted by Ueltschy and Laroche ( 2004, 93 ) , when the two confederation has become connected together in the consumer ‘s head, the consequence is a strong trade name equity been build. The successful of making up, to promote the trade name image has enable Oral-B to hold better bid onto their merchandise pricing therefore it makes more profitable concern than the remainder of its rivals. This is a instance of utilizing the marketing-mix tools of monetary value. When a trade name has a better bid of monetary value it generates non merely fine-looking net income while besides bring forthing a significant sum of advertisement and promotional activity fund to make gross revenues chance whenever there is a necessary. It is shown that Oral-B has show how to use the ‘price ‘ tool really good in order to be monetary value competitory and with net income where many others has failed upon using it.

In making beyond, the scheme involves confederation with a co-branding spouse that can promote strong image and deriving entree to new client. The aim of this scheme is to make up and make out. The Airasia and Citibank recognition card is besides demoing an illustration of this scheme. Airasia by co-branding with Citibank is said to be making beyond as it can tap onto the immense client base of the bank while Citibank is besides said to hold making beyond when co-branding with Airasia by tapping onto the turning client base as the air hose is spread outing quickly to more than 18 states chiefly in Asia. As Airasia continue to turn, so will Citibank as they both are complementary each other in every sense of their concern.


All the above stuffs is to gives an overall apprehension of a co-branding whereby it is one of the selling scheme frequently clip utilise by sellers to seek growing in a concentrated market environment. By accessing to the marketing-mix tools and its map, sellers who intelligently using it can speed up their co-branding concern to new highs while others that has already in the head can besides creates new highs as the benefits of co-branding as presented is promoting for one to see to venture into it. However, when using co-branding as the scheme, it is advice to utilize a S.W.O.T. analyse to screen for the failing and menace it possess and whether the overall confederations is worthwhile the hazard that is at interest that can act upon the parent trade name.

In general through research as discussed above, co-branding will success when there is a logical tantrum with the confederations. It is thereby the possibility for a co-brand to construct into a successful hallmark is high every bit long as it executed good as noted by Hilton ( 2007 ) .


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