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The New Rules Of Brand Management/How Co-branding Grows The Business

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How co-branding grows the business

Products that have two creators, and advertise the fact through double branding, are on the increase: for example Inneov by Nestlé and l’Oréal, the first nutritional pill to prevent hair loss, launched in pharmacies in November 2006. We are already familiar with Danao, by Danone and Minute Maid. Philips created a revolution with its Coolskin razor with a moisturising cream, entrusted to Nivea worldwide – a fact that appears on all the razor’s packaging, and in advertising. Everyone knows the ‘Intel Inside’ signature that appears on all computers that use Intel, and in their advertising.

The rise of co-branding is symptomatic of our era, with its culture of networking and partnerships. It is also the result of a desire to remain within the company’s key competences, to the point of looking elsewhere for those competences that are missing. It therefore merits an in-depth discussion.

Why this rise in co-branding?

Co-branding is fundamentally a response to the need for continual growth. However, whereas yesterday companies would have sought at any price to acquire the new competences that were missing and restricting their ability to innovate, today they seek to find a partner with which to co-create. This is the era of alliances, partnerships and the networked economy, where each party retains its specialization and its key competence, and utilizes those of others to the fullest extent. In the pursuit of growth, it is not long before we encounter the difficulty in reconciling this with maintaining the brand’s specificity and the company’s expertise.

In the West, the brand is the name for a specific expertise or state of mind (in Asia, the brand is far less specialised). When trying to grow, the brand can reach the limits of its own identity and its specificity: it therefore has need of an ally to fill the gaps where it is not competent or legitimate. When this ally is competent but not legitimate, the partnership does not give rise to co-branding. For example, Weight Watchers needed the industrial and distribution competences of Fleury Michon in order to develop a genuinely qualitative range of vacuum-packed ready meals.

However, this was not mentioned anywhere on the packaging. In fact, not only is the Weight Watchers brand sufficient for diet disciples, its ‘marriage’ with Fleury Michon, the epicure’s brand, suggestive of French-style good living, is unclear and even contradictory. In contrast, when the two images complement one another, both brands strongly endorse it. Thus, in order to please the youth of today, increasingly seduced by computer games and consoles, Lego decided to add an electronics line to its products.

However Lego not only has no industrial competence in this field (which can always be subcontracted), crucially its brand image would not lend credibility to the new products. The signature of a brand with a strong reputation in electronics among young people would remove this obstacle. Mattel had already worked with Compaq to create a line of interactive, high-tech toys.

We can see therefore that several strategic questions arise on the subject of co-branding:

Will the visible alliance of two brands create a favourable impression among clients?Is there a high degree of complementarity between the two brand images that will create value?Is there a good ‘fit’ between these two brands, given the perceived status of each? As with any successful marriage, of course there must be complementarity, but also a common vision and shared values.Will the innovation be attributed to both partners, or only to one of them?

Typical situations that lead to cobranding

Co-branding is necessary to increase the chances of success for a brand’s extension beyond its original market. Thus, as a strongly child-centred brand, Kellogg’s explicitly marked its new range of cereals for health-conscious adults with the Healthy Choice brand, already well-known in this segment. Danone and Motta pooled their competences and their images to launch Yolka, a yoghurt ice cream. This was also the case for a refrigerated fruit juice from Minute Maid/Danone, and as mentioned above, the Mattel-Compaq interactive toy.Co-branding is also necessary when the brand’s image makes it difficult to communicate with a particular target. In that case, it needs an intermediary, someone to open doors for it, another brand that has the ear of this target and can therefore act as a relay. When Orangina, primarily thought of as a child’s drink, wanted to boost its sales by targeting adolescents, the biggest consumers of soft drinks, its childish image was a handicap. It created a partnership with NRJ, the most popular radio station among young people, and a jeans brand, Lee Cooper. Orangina cans were cobranded NRJ and Orangina.Co-branding makes it possible to develop a product line that is often sold in a separate distribution channel. The goal, in addition to selling to a previously reluctant clientele, is to nurture certain traits of the brand’s identity kernel. Thus, in order to create a relationship with ‘creative’ young women, Tefal developed a range of specific products internationally with the young, unconventional, up-andcoming and very media-friendly British chef, Jamie Oliver. This line is sold worldwide. The partnership between Jamie Oliver and Tefal is that of two – admittedly different – actors who nevertheless share the same vision: a taste for simplicity, pleasure and conviviality. The marketing positioning of this product line will be just below the top of the range: it will only be found in selective channels.Co-branding makes it possible to move up a level. In food products, it is difficult for a known brand to move up a level, and therefore up in price, to become a massmarket brand. It needs a credibility link.  This is why all pre-cooked meals, even distributors’ brands, have created lines that are co-endorsed by a famous chef: Ducasse, Troisgros, Robuchon and so on. Ingredient brands are also a way to send the client a message about the product’ssuperior quality, and to lift it above the more ordinary copies, thereby justifying its higher price. Diam’s, by Dim, displays the Lycra logo. The same goes for Goretex, Woolmark, Tactel, and for Nutrasweet in the food sector. In B2B, the practice is also on the increase: the ‘Intel Inside’ brand is exhibited by all computer assemblers that use Intel chips and agree to say so in their communications, in return for which Intel pays half of its clients’ advertising expenses.

For the distributor Decathlon, which creates its own brands, co-brands are strategically valuable since they boost the perceived technicality of the products of its passion brands, which are still relatively unknown to the end customer. All of Damart’s structure and profitability is based on an ingredient brand, Thermolactyl. This brand, which is owned by Damart, designates a generic fibre that retains heat (rhovilon): this gives Damart the appearance of exclusivity. While many other distributors offer warm underwear, only Damart has Thermolactyl!

Co-branding is also a response to the fragmentation of the market and the emergence of communities. Take, for example, the telephone and internet brand Orange. How can it grow? It can sell wholesale to virtual operators, the mobile virtual network operations (MVNOs), which will act as discounters (for example Carrefour, Darty and so on).

In this first phase, the Orange brand name disappears: customers believe they are buying their internet services from Carrefour. It may also propose an association with those brands that already have a captive audience, and offer specific value-added content aimed at this audience. For example, loyal customers of Fnac (a rival of Virgin Megastores) can buy Fnac telephone packages: these clearly show the Orange logo. They offer more than just a price – that is, services and contents aimed solely at Fnac customers.  Orange reassures them, and manages the whole business.

Orange does likewise with football clubs, creating subscriptions in the club’s name, associated with Orange’s: fans benefit from ad hoc content, with a strong football focus. When their club wins, they also win promotions, the opportunity to send free SMSs, or to ‘chat’ with the star players. Orange has also negotiated exclusive mobile phone retransmission rights for certain major competitions. In this way, Orange has succeeded in adapting to market fragmentation.

On the internet, co-branding also has a role to play. This is normal: online brands reference one another, in order to mark a community of values, interests and audiences.

Co-branding, in the form of licences, was one way to boost sales for car models at the end of their life-cycle, when the product itself no longer has the value of technical novelty. New value was added by customising the car in the style of a famous designer or couturier. Prominent examples include the Peugeot 205 Lacoste and the Citroen Bic. This approach is now used at the beginning of the life-cycle, in order to put a sociocultural stamp on the vehicle and emphasise its positioning: Twingo Kenzo illustrated the car’s central proposition, that ‘It’s up to you to invent the life that goes with it’, and strengthened its creative aspect. The Citroen Picasso was also a response to the desire to strengthen Citroen’s positioning as an innovator, competing against the Renault Espace. For the Picasso family themselves, this maintains the brand status of their surname, and prevents it from falling into the public domain through lack of commercial use.Co-branding sometimes aims to provide a buzz around the brand among opinion leaders, to create an image. This is the case with the specially designed products Mark Newson has created for Tefal. In the same way, to give itself a fashionable, stylish touch, Adidas has entrusted designer Stella McCartney with the task of developing a co-branded product line. The brand is effectively seeking to have a presence on the style market and not only the technical market. This approach of co-branding with a creator is prevalent in the sportswear sector: Puma has done likewise. H&M caused a riot by launching a limited series by Karl Lagerfeld: customers were queuing up outside from midnight.Finally, co-branding is the visible – confidence- inspiring – sign of a brand union. Skyteam is the airline alliance formed around Air France and KLM, in order to standardise their loyalty programmes and enable travellers to increase their air miles still further – an additional defence against the low-cost airlines.

Co-branding, alliances and partnerships The modern world is a world of alliances and partnerships between groups, companies, brands and so on. Co-branding is the symbol of an alliance that neither party is seeking to hide (unlike subcontracting, for example).

An analysis of company strategies since 1990 saw certain forms of behaviour, such as alliances, undergo considerable growth, and even saw new, hybrid forms emerge – hence the creation of new concepts and terms to capture them. One of these is ‘coopetition’ – an alliance with a competitor.

Before we proceed, let us give some definitions. An alliance is indeed a strategic decision, with long-term implications, aiming to bring together complementary competences in order to develop innovative processes and products/services, and finally new markets. It is therefore distinct from a simple partnership, which is limited both in time and in the scope of the cooperation. As for the neologism ‘coopetition’, it refers to alliances involving two mutually competitive companies.

Thus it is coopetition when PSA and Toyota create a common manufacturing unit together in Slovenia, to produce the same small car model. It is a partnership when PSA carries out various cooperation and exchange projects with Ford on diesel engines. It is also a partnership when, in order to exist in this gigantic country, Evian entrusts its US distribution to Coca-Cola. It is apparent that this agreement may be called into question at any time. It is also a partnership when Nestlé entrusts Krups with the European development of a coffee maker that uses Nespresso, the famous and vastly expensive top-of-therange coffee capsules. Tomorrow, or in another part of the world, Krups could be replaced by another famous brand.

Alliances are nothing new. Think back to Ariane, Airbus and Concorde – all projects on such a scale that even at the planning stage nationalism, competition and sensitivities had to be forgotten in order to fuse cuttingedge competences in a meta project that no single company, or even single country, could achieve alone.

In strategic terms, an alliance is an alternative to acquisition and fusion. This latter is a common type of company growth, buying out key competences or market shares through the sacrosanct critical mass. All of the following companies are the result of fusions or acquisitions: Novartis, Aventis, Vinci, Vivendi, Aviva, Arcelor, Entenial and Sony- Ericsson. An analysis of the components of the success or – as it is admitted nowadays – lack of success of fusions and acquisitions between companies is not relevant to this section. As for the alliance, it preserves the cultures, identities and legal forms of the companies that come together in a common, large-scale project.

In terms of visibility, the members of alliances are not always clearly identified. This is the case when a new name and often a new collectively managed structure are created for the project in question: Airbus Industries, Eurocopter, Thalys, Eurostar or Arianespace. However, it is sometimes the case that the parents are clearly identified by their names and logos. In fact, many products are clearly endorsed by both creators: Philips Alessi, Samsung B&O and so on.

Strategic uses of co-branding

 

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