Every business needs a marketing strategy to increase their brand visibility and increase their profit. In this article, we will take a look at a method that includes combining two or more businesses to create a new offering.
What is Co-branding?
Many companies decide to combine their resources with other companies to create new unique products or services. Their purpose is to reach new consumer markets, increase brand visibility, and gain profit. This marketing strategy defines co-branding.
Co-branding is also known as branding partnership in which two or more companies join together to create new products or services. This offering often has its own logo and name.
The alliance between two companies may have advantages but also risks.
What are the advantages and disadvantages?
Companies with bigger budgets have a greater chance of potential reach and sales income will tend to be higher as a result.
However, there are a few disadvantages.
Organizations need to share the same strategies, vision, and goals to have easy collaboration and create products that are engaging.
Also, they need to be careful when choosing partners to collaborate with. If one of the brands has negative associations, then the users will transfer these associations to the other brand. Leaving both of them with the same bad reputation.
Often people misunderstand co-branding with co-marketing. Now that we know the definition of co-branding, it’s important to not confuse it with co-marketing. Although they share similar concepts, they are not the same thing.
What are the differences between co-branding and co-marketing?
Co-marketing also aligns two or more brands that work together but without creating a new product or service. In comparison co-branding in which is based on the creation of a new offering.
Now that we know the differences between the two marketing strategies. Let’s learn more about the forms of collaboration in co-branding.
Although in co-branding, there are many forms of collaboration. Two main types are most important.
What are the types of co-branding?
The most common types of co-branding are ingredient and composite co-branding. Let’s take a look at what they mean.
Ingredient co-branding – With this form of co-branding the partnering between the companies is when one brand’s products are used in the other brand’s products. Just like the name says the “ingredient” of “Company A” is used in “Company B”.
For example, Intel is the ingredient brand of Dell, a computer technology company that uses Intel’s core processors.
Composite co-branding – This is a partnership between two or more brands or companies that invent or produce new products or services for their target audiences.
For example, Apple Inc. and Nike created an Apple watch that has custom Nike Apps. This watch is perfect for athletes who want to track their exercise.
To achieve a successful co-branding strategy brands need to launch valuable products that resonate with customers.
