With different companies coming together and sharing their competencies to get the maximum revenues, co-branding is emerging as a happening format, accepted and tried by major retailers in the country
WHAT is co-branding? In simple terms, it is an arrangement that usually represents a collaboration of two or more different companies to produce one unique outlet. In such alliances, the resulting product is something that could not be done as successfully if only one of the partners did the whole product. Co-branding is a meeting of expertise and reputation, and lies between the two extreme points of marketing alliances. To put it in the words of Interbrand definition, ‘Co-branding is co-operation between two or more brands with significant customer recognition, in which all the participant brand names are retained.’ This co-operation between the brands is of medium to long-term duration and its shared value potential is not as low as that of a temporary nature, nor is it as high as to justify its culmination into a joint-venture.
Co-branding is different from other forms of marketing alliances, like joint promotions and joint-ventures, in terms of duration and strength of relationship and the additional value created by sharing each others'' strengths. Joint promotion is a co-operation for a shorter duration with low additional value creation and is a temporary exercise, while a joint-venture is of longer duration and higher value, creating alliance of a stable nature. Various retailers, in order to have better space management, more customer attention, repeated visits, and easy acceptance, are now following newer concepts of co-branding and co-location for sharing their retail space.
Co-strategies: Co-branding and co-location
The use of two or more different brand names on a single product, such as wireless phones bearing the name and logo of both the manufacturer and wireless carrier, is an example of co-branding. In franchising, the concept of co-branding simply involves two or more brands sharing a common location. Though each maintains its identity, there is, also free flow of customers between them. One advantage of co-branding is that it saves operating costs and lures more customers to the site.
A co-location arrangement usually represents the use of a single building or location by more than one brand. The formula of co-location minimises the cost for search, negotiation and promotional campaign for the brands involved. Co-location also offers an opportunity to share the rent cost, and the brands can, therefore, lease property at a high market street or in a major mall.
The gains
Besides, easy enlargement in their retail vastness, retailers account varied gains, like split in revenues and rentals. Presence of more than one brand under one roof encourages the visitors to revisit the premises, which in turn, increases the sales of the outlet. Most retailers feel that sharing common retail space reduces expenses considerably in terms of cost of search, negotiation and property development. According to Mr Surjya Meher, head, marketing, Barista Coffee, “Possibilities of enriching guest experience are endless and there’s a lot that can be offered to the guests. This is where co-branding opportunities with another brand helps in guest experience as they also contribute by extending their products and services to the guests.” Co-branding also offers tremendous leeway to pick-up strategically-placed properties, which a single retailer, would otherwise, find prohibitively expensive. And, it definitely helps co-retailers to tap the common audience.
The risks
Brand alliances expose companies to the risk of failing to meet the consumer’s expectations by their non performance, thus damaging the brand reputation of the other alliance member as well. Co-branding, therefore, requires increase in the shared value creation, which has to be more than the individual values created by the two brands. There is also a word of caution in terms of synergies of the two brands, which they bring together. If the brands are such that their brand values are difficult to share, then the success of a co-branding exercise would be a remote hope. Mr Sandeep Dutt, chief executive officer, Book Café, feels, “There is indeed a rub-off from the co-located brand partner, and to a certain extent, we are at risk from their short-fall in service. However, the inherent advantages of cost share and assured footfalls far outweigh this risk.”
Co-branding comes with some risks. Putting a brand name on multiple product lines can weaken its identity, and confuse consumers. There is also the danger of associating one brand with a company whose product could suffer an image shock beyond the other company''s control, thereby staining the reputation of both the brands.
Retailers opting for co-branding
Apna Bazaar
The retail major Apna Bazaar is working towards partnering with Japanese Consumer Co-operative Union (JCCU) in the areas of training the staff force, visual merchandising and setting up of a co-operative food brand. Apna Bazaar is also foraying into co-branding exercise to offer value to its consumers. While the chain will soon roll out ''Apna MetLife policy'' in association with MetLife Insurance, it has also signed up a memorandum of understanding with SBI cards to issue co-branded credit cards. This retail chain currently has around 80 outlets, of which 46 are company-owned, and the rest are franchised. The network includes seven department stores, six supermarkets, 26 food stores and five specialty chemist stores.
Gillette
Gillette India Ltd is planning to initiate a co-branding exercise with its Gillette and 7 O''clock brand of blades. The details of the proposal to join the two brands are currently being worked out. The new brand that is likely to emerge as a result of the exercise will be ‘Gillette 7 O''clock''.
Strategies already tried by retailers
Book Café
From a famly-owned book store to a Book Café chain, English Book Depot has come a long way since its inception. Today, it has tie-ups with retailers like Café Coffee Day, Nirula''s, Barista and Subway. Mr Sandeep Dutt, the man behind the success, has effectively used co-branding and co-location strategic tie-ups to set up a 20 store book retail chain. He observes that there are many consumers, aged anywhere between 15 and 40, whose need for leisure and a great place to browse, are not being met adequately in the existing book retail scenario. The company is planning to open 100 outlets all over India by December 2006 to boost the reading habit while tingling the taste buds. As a first move, Mr Dutt plans to sell a retail model of sharing common premises with a co-retailer, while building nationwide franchise operations.
Benq
Benq and Siemens joined forces in a uniquely complementary merger of competitive strengths, research and development capabilities, customer reach and world-class manufacturing. After this merger customers may consider opting for a Benq-Siemens co-branded phone.
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