What is Co-branding? Meaning, Examples, Types & Advantages

Co-branding refers to the combination of two or more brands into a single joint product. Co-brand is also regarded as brand alliance or brand bundling. The promotion of the brands also takes place together in a similar manner.

For example, Citibank-Indian oil credit cards, Mahindra-Renault, Bharti-Walmart, etc. Through co-brand, greater sales from the target market can be generated along-with ensuring greater chances of acquiring new distribution channels and customers. When two renowned brands in the market are combined, the cost or production is reduced and it also supports the mutual expertise in the context to India. Maruti-Suzuki, ICICI-Prudential Insurance Company can be seen as the best examples of this. As the name indicates, in case of co-branding strategy, the efforts of the organisations are combined together so that a product can be introduced under two different names Of brands in order to take their reputation and rapport forward.

Forms of Co-brand

There are mainly three types of co-brand:

Ingredient Branding: Ingredient branding mentions a fundamental element of the product with the actual name of the product. The combined image of two powerful brands benefits both of them. For example, the ‘Intel Inside’ mark is used by most of desktop producers with their own brand name so that they can enjoy the benefit of the brand image of Intel. If both the companies operate independently in the market, they will not be able to penetrate. But when combined, their strengths become unmatched.

Co-operative Branding: Formation of a new product through combining two or more brands is known as co-operative branding. Just like a joint venture, the two brands retain their identity and are familiar and well known in their own segments. The awareness about one brand is improved and enhanced by the other brand. In this regard, the Jet Airways-Citibank Credit Cards can be seen as a perfect example. Both the companies have joined hands in order to improve their market share. This also benefits the customers. When customers book a ticket with Jet Airways through their Citibank credit card, they receive some redeemable credit points. The image of the brand is also improved through this strategy and customers are motivated to be brand loyal.

Complementary Branding: As the name suggests, the two brands under complementary branding are marketed together so that they are purchased and consumed together. For example, McDonald’s burger is accompanied with Coke. Therefore, Pepsi (the rival of Coke) is prohibited by McDonald’s in its stores. Coke is given more visibility and exposure. The brand image of both the complementary brands is improved With the combination of Coke and McDonald’s.

Advantages of Co-Brand

Advantages of co-brand are as follows:

1. Convincingly Positioned: Due to the involvement of different brands, the products are positioned in a unique and convincing manner.
2. Creating Points of Parity: Many strong points of distinction or points of similarity, or both, can be created through co-branding. Because of that, higher sales can be generated from the current target market and more opportunities from new customers and channels can be facilitated.
3. Reduce the Cost of Product Introduction: The product introduction cost is reduced significantly by co-branding due to the combination of two strong brand images. This will in turn increase the adoption of the brand by the customers.
4. Means to Learn about Consumers: Knowledge about the customers and the way firms approach them can be gained through co-branding. Co-branding can be seen as a very good method for the creation of a unique product, particularly in categories which are weakly differentiated.

Other Advantages

1. Most of the brands want to join hands with other brands in this current marketing era so that they can enjoy the benefits given below:
2. Having successful line extensions by making the most out of the equity of partner brand;
3. Co-branding With a renowned brand maximises the success rate Of brand extensions;
4. Component co-branding may result in usage extension;
5. Co-branding will help in reinforcement of brand image.
6. The cost of promotions gets reduced since the cost of loyalty programs are distributed among the corporations;
7. A trade marketing operation is signified by co-branding; and
8. One more benefit of co-branding is taking advantage of the synergies among the different brands.

Disadvantages of Co-Brand

Co-branding has the following disadvantages:

1. Risk and Lack Of Control: One disadvantage that comes from the combination of different brands is the risks and absence of control for the individual brands.
2. High Consumer Expectations: There will be higher consumer expectations in terms of involvement and commitment when it comes to co-branding.
3. Possible Negative Impact on Brand: There can be a negative effect on the image of the brands in case of poor performance. There will also be a risk of overexposure if a brand has joined hands with several other brands.
4. Lack of Focus: The brands under the co-branding arrangement may suffer from lack of focus and distraction.