Co-branding is a type of marketing strategy where two or more brands decide to bundle their products or services together. It is a strategy that can create a great effect once there is a unique synergy between the products or services.
When two or more companies find that their products or services are not being sold at the desired rate, co-branding becomes the most rational solution. In co-branding, several offers are bundled together under a new name. By doing this, a marketing partnership is therefore formed, where each company uses its existing stock to cross-promote all the other parts of the bundle.
There are several types of co-branding that you should know of. This includes:
- Retail – several retailers in the same niche sharing resources to utilize them better.
- Multiple – several companies forming a cross-promotion alliance.
- Joint venture – discounts offered for select debit cards used to buy a certain product.
- Same company – products from the same company are bundled into a new package.
Ingredient Co-branding vs. Composite Co-branding
Co-branding is in theory a satisfactory marketing deal for all companies involved, yet the reality of it has often proven otherwise. Large companies in particular are wary of attaching their brand to that of some other company, especially when it is apparent that the brands are disproportionate in value. When this happens, it becomes termed as “ingredient co-branding”.
With ingredient co-branding, a popular brand is leveraged to give exposure to a less-popular brand. For example, this could mean selling a bag of popular potato chips wrapped with a less-known chocolate bar brand. This way, both products are increasingly being sold and both companies can enjoy the increased profits.
However, when the two brands are of equal value, the relationship is termed “composite co-branding”. An example of this relationship would be any product or service bundle that carries the words “powered by” or something similar to that effect.
In co-branding, all companies involved share the financial risks and increase their exposure at the same time. However, a brand that enters too many co-branding relationships risks losing its identity.
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