Pros and Cons of Co-Branding

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Co-branding is the practice of two or more companies or brands that come together for a common marketing strategy. The objective is to market and sell new products or services for both companies or brands. A modern example of co-branding at this time would be for Finish Line shoes to be sold through Macy’s department store.

You can use similar marketing concepts in your unique presentation to the public or you can combine multiple concepts if you prefer. Here are key points to consider when analyzing the pros and cons of the joint brand in the current market.
Pros and Cons of Co-Branding

What are the benefits of the shared brand?

1. It costs less to both brands to reach a larger audience.
In most co-branding agreements, the brands or companies involved share the marketing costs. This allows them to reach a potentially larger audience while reducing their overhead.

2. Increase the size of the market.
The joint brand is more effective when two different companies join together for a marketing plan. This allows each natural clientele to be attracted to what the other company has to offer. An example of this would be Tim Horton’s co-branding effort with Cold Stone Creamery.

3. It can improve the reputation of a brand.
If one brand has difficulties, but the other in a co-branded situation is really successful, the brand that fights can improve its reputation thanks to this marketing effort.

4. Create leverage.
Small businesses may have difficulties to establish themselves in a competitive market. By using the joint brand, they can begin to take advantage of their advantages in a world where larger companies have mature relationships with customers. This gives them a potential opportunity to compete legitimately.

5. There is a shared group of talent.
Each company or brand can put its best employees in this type of projects so that there is a collaboration. This even saves labor costs and reduces the need for outsourcing because two teams come together to create a consistent marketing product.

6. Loyal fans feel they have been given more value.
It is unlikely that people who are loyal to a brand will make their preferred products or services easier. Without new offers, however, some loyal fans might start thinking about leaving. The joint brand allows a company to present new ideas to its most loyal customers without having to develop new ideas.

What are the cons of Co-Branding

1. There are usually financial problems that develop.
The joint brand offers benefit sharing agreements and other joint venture scenarios that can make one brand feel like the other takes advantage of them. This complex relationship is often governed by several legal agreements that take place before the campaign is activated, which means that you have to consider the cost of the negotiation before this starts.

2. Sharing reputation is not always a good thing.
A franchise with problems gets a boost from a successful franchise, but the opposite is also true. This can be especially annoying for successful brands if the objective demographic combination begins to see the two companies or brands as a combined brand instead.

3. A company or brand may not be able to keep up.
The customer’s response to a co-branded effort is generally positive from a general perspective. Sometimes it’s so positive that sales accelerate unexpectedly. If one brand can satisfy this demand, but the other can not, then this result will reduce the reputation of both demands.

4. It can create confusion.
Many consumers like to have competitive products that they can choose from. However, when there are too many products, what tends to happen to the consumer is a sense of confusion. They lose their confidence. They enjoy the comfort of multiple options in a campaign, but the confusion leads them to a completely different brand.

5. Reduced risk does not mean zero risk.
There will always be risks involved when marketing new products or services. Being able to combine resources through the joint brand can help companies reduce the amount of risk they are taking, but will not eliminate it completely.

6. Some cultures are simply not compatible.
Some companies may be a good combination from the point of view of the product or service, but their internal cultures may not be compatible. Sometimes, the joint brand is not a good option, which means that it takes time to develop the necessary relationships to understand the full potential of this company.

The pros and cons of co-branding shows that there is a potential benefit in introducing new products in an established market, but only when a clear message has been offered. If both companies can offer a concise message to both audiences, then it can be a very successful marketing campaign.

Have you participated in a joint branding effort in the past? We would love to hear some of the lessons you learned from that experience.





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