Does Co-Branding Help Consumers
with Purchase Decisions?

13/09/2019



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A common marketing strategy employed by many companies is the use of co-branding. Co-branding is a collaboration and partnership between two or more brands to promote a product, service or even to launch a campaign. This strategy has been widely used by brands as a way to further promote their own services by utilizing the strength and likeability of another brand.

Although this marketing strategy seems ideal and beneficial for brands to consider, co-branding is not necessarily the best fit for every brand or organization. The first reason is that the level of similarity or dissimilarity between the brands can have a direct impact on consumer perception. Consumer perception is heavily influenced by the way a brand positions itself. If a brand engages in a co-branding opportunity that does not have an alignment of values or brand fit, consumers will not respond well. The congruency between brands must be high enough that consumers will see the value in the partnership and believe in the authenticity of the collaboration.

The second reason that not all co-branding opportunities are beneficial for brands is due to the fact that consumers already have predetermined expectations of brands based on elements such as quality and experience. Rooted in the Expectancy Value Model, consumers generate opinions of brands based on the totality of brand characteristics including benefits of the various product or service, cost, user experience, and performance. When it comes to co-branding, partnering brands must be mindful of the consumers’ perspectives and expectations for each individual brand group or product category. If a consumer has already omitted a brand from their lifestyle, the brand they are favorable of or loyal to would not benefit by partnering with the omitted brand. Fully understanding your target consumer or audience is critical in a co-branding situation because brands must be aware of how their consumer will interpret the partnership.

Here’s an illustration of a poor co-branding partnership in which consumers did not interpret the partnership in a positive way.

Neiman Marcus and Target: Neiman Marcus is a luxury department store that sells exclusive designer products including handbags, apparel, and footwear from designers like Gucci, Prada, Salvatore Ferragamo, and more. Consumers at Neiman Marcus are typically of higher socio-economic status. In contrast, Target is a retail store that competes with other retailer giants such as Walmart. Target caters to the consumer who values affordability. In 2012, Neiman Marcus and Target partnered together to feature a line of designer fashion at Target. The expensive and prestigious nature of this fashion line did not sit well with Target consumers. They felt that the line of clothing was overpriced and not economical to spend hundreds of dollars on clothing. This partnership inevitably failed as a result of a poor consumer analysis. Target, the family-friendly retail store with affordable apparel, footwear, and home items, did not sell the Neiman Marcus line, as there was low brand congruency for the partnership.

Let’s look at two illustrations of effective co-branding.

Nike and Apple: Nike is a top leader in the athletic sector and Apple is a top leader in the technology sector. By understanding their consumer to perfection, Nike and Apple joined forces to deliver a seamless entertainment experience to users of both brands. With the majority of Nike consumers owning an Apple device, they were able to offer a collaborative service in which runners could experience their favorite device, with added athletic tracking data. The partnership first began with the Nike+ technology placed in a particular Nike shoe, but it has since expanded with Apple offering Nike editions of their Apple Watch series. Spotify and Starbucks: With Starbucks leading the coffee and espresso crafted-beverage industry and Spotify becoming one of the top music streaming services, this partnership was a sure success. This co-branding opportunity brought the musicality and artistry of Spotify content into Starbucks locations — having been known to foster artists and the music industry. Because of the partnership, Starbucks customers and loyalty reward members are able to access the selection of music from the in-store locations via their mobile Spotify or Starbucks Reward app.

Here at J.O., we have had a similar experience with one of our clients in a co-operative advertising position. “I once had a design-build client that required a photograph of a kitchen remodel for a series of ad campaigns we were designing,” said our President, Jennifer Henderson. “We made sure we focused on the Wolf brand oven with hopes to future co-op advertise the project with Wolf’s corporate marketing. When they saw the photos, they jumped on board immediately. We were able to make a larger media buy than budgeted — a win for the client and a win for Wolf!” So there you have it, some examples of co-branding that were effective and helpful at delivering a better consumer experience.

The marketing strategy of co-branding certainly has its benefits, but it can also impede with a brand’s success if not executed carefully. There is surely a heightened risk for brands that are highly dissimilar in nature, but if market and consumer research are both coordinated thoroughly and pertinently, the outcomes can be extremely rewarding for all participating brands and their consumers. So, does co-branding help consumers with purchase decisions? The truth is, it depends on the brands’ tactics, approach, and execution.

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