Co-branding is the strategy that strives to capture the synergism of combining two well-known brands into a third, unique branded product (Rao and Ruekert, 1994).
In other words, a co-branding strategy will introduce a new product or service to the market. This product or service’s characteristics are then rooted in the attributes and core competencies of the two cooperating brands.
Co-branding can be a very effective activation that bolsters both brands working together rather than acting independently. It helps extend reach, awareness, and sales potential by capturing prospective consumers of each brand.
In contrast to co-branding, where companies co-create a new, unique product, co-marketing pertains to when two separate brands promote multiple products through a combined campaign. Here, the focus of the strategy is on communications. Companies will strive to align their messaging to capture the awareness of the target audience.
When forward-thinking brands consider co-branding vs. co-marketing, the key component is to evaluate how they can improve their position in the marketplace and how much time and resources they are willing to invest.
Co-marketing is effective when organizations commit to each other and cross-promote existing products or services.
In circumstances where brands want to convey a deeper connection and craft a new, compelling offering, a co-branding initiative can drive results and revenue and be a win-win for each partner.
When guidelines are followed, and execution is flawless, both brands are bound to benefit.
Co-branding is built on the foundation of collaboration, and when completely different cultures collide, it might not always be ideal.
The agreement requires a lot of trust, guidelines to be followed very closely, and resources shared.
Most importantly, brands need to consider consumer reaction to this newly established partnership. Brand images can clash, and market segments can be misled if companies fail to demonstrate a seamless, sensible connection. For example, if a prestigious high-end brand shares voice with one perceived as mass-market or lower quality, the co-branding partnership can fail due to mixed messages and confused consumers. Examples of this are Lego and Shell or Custo Barcelona and Lidl.
In the worst-case scenario, the product could flop, the brand image can be tarnished, and the venture can be considerably costly.
