Co‐Branding: The Science of Alliance

Citation

Hultman, C. (2002), "Co‐Branding: The Science of Alliance", European Journal of Marketing, Vol. 36 No. 11/12, pp. 1439-1441. https://doi.org/10.1108/ejm.2002.36.11_12.1439.1

The importance of brands and trade names in marketing is well known. In a time when phenomena like co‐operation, partnership and other forms of alliances are in fashion, a book about co‐branding is well timed. The book is in 123 pages, excluding the appendix.

Co‐branding, as defined by the authors, is a form of co‐operation between two or more brands with significant customer recognition, in which all the participants’ brand names are retained. It is usually of medium‐ to long‐term duration and its net value creation potential is too small to justify setting up a new brand and/or legal joint venture. Legally the parties concerned are independent entities and their intention is to create something new – a product, a service or an enterprise – the scope of which falls outside their individual areas of capacity. The phenomenon is common today, have not we all an IBM‐Intel (or similar) co‐branded computer on our desk? Well‐known brands, often used for co‐branding of consumer products, are, for example Lycra, Dolby and Teflon.

As the degree of shared value creation increases, four different forms of co‐branding situations illustrated in the book arise. Low shared value creation represents what is called the “reach‐awareness co‐branding”, the parties may rapidly increase awareness of their brand through exposure to their partner’s customer base, for example the co‐operation between American Express and Delta Airlines. On the second level the authors put “values endorsement co‐branding”. The co‐operation is especially designed to include endorsement of one or the other’s brand values and positioning or both. Examples include the many banks that co‐operate with credit cards or Le Cordon Bleu’s co‐branding deal with Tefal. In the latter example, high‐quality cookware was launched with the name of the French culinary academy, synonymous with the highest standard of cooking.

“Ingredient co‐branding”, a brand noted for the market leading qualities of its product supplies that item as a component of another branded product, such as Intel and IBM or Compaq, represents the third level of co‐branding. Finally, “complementary competence co‐branding”, when two powerful and complementary brands combine to produce a product that is more than the sum of the parts and relies on each partner committing a selection of its core skills and competencies to that product on an ongoing basis. An example of this is Esso and Tesco Express co‐branding in the 24‐hours mini‐supermarkets at petrol stations.

The book continues with a discussion of the different forms of co‐branding and its opportunities and benefits as well as the risks and pitfalls. On the positive side, a number of different opportunities and benefits are identified ranging from increased income in the form of royalty to access to leading‐edge technology. On the negative and risky side, co‐branding may fail due to financial greed or over‐extended brand franchise or degenerate a successful trademark into a generic term. In essence, co‐branding may lead to royalty income, sales boost, new markets, and additional consumer benefits.

In the following three chapters the retailer’s opportunities, ingredient branding and the legal aspects are discussed. As is pointed out in chapter 7, the ultimate purpose of co‐branding is the creation of economic value and a model of how this can be assessed through financial valuation techniques is presented. The model is based on financial forecast of future economic earnings, subjective weighting and estimated future key drivers of demand (for example, such as perceived quality, lifestyle promise and pricing) as well as of key attributes that determine the strength of a brand.

In the last chapter, a “blueprint” in the form of the different factors determining a brand’s value is presented. Here we find a useful tool guiding managers to consider all aspects of a brand’s value both the own brand and potential partners’. Finally, the future is discussed. The authors believe that co‐branding in its purest form has at its core the exchange of values or attributes (on reputational level) between brands, to create a new reality whereby both brands are perceived to be better as a result of the initiative. While today, the best practice in co‐branding is in the high‐tech sector, the authors expect co‐branding to be much more used as a marketing tool in the future as it will be adopted in new fields like banking and become a truly mainstream marketing activity.

In total, eight different authors have contributed, however, the editors, and especially Bob Broad, are involved in several chapters, and the number of authors leads to a fragmented impression of the book. The first three chapters are well justified as they present good overviews of the topic. The weak part of the book is some of the following chapters. The legal aspects are well covered, but why only a particular chapter on ingredient branding and not the other types mentioned in chapter 1? And why a particular chapter on just co‐branding – a retailers opportunity? As an example, is two or more stores located in the same multiplex property a co‐branding situation of particular relevance to the reader? I would rather have a thoroughly presented case of best practice co‐branding in the high‐tech sector.

I am critical of the main model for assessing the economic value. As a conceptual model the interbrand’s approach to the economic use method works fine, but the problem is to quantify the model. The demand drivers, such as perceived quality, lifestyle promise, etc., all just examples in the text, but still hard to find anything more than subjective evaluation figures about. Is it realistic to talk about a financial forecast, generated from a strategic business plan, that ideally covers a period of five to ten years in dynamic and turbulent situations as we find in many markets today? What do we really know about 2006 or 2010) The final outcome depends heavily on weak information. Is a model based on such very loose forecasts and unreliable data of any more use than holistic judgement? The problem of finding reliable and relevant input to the model as well as the problem of predicting future earnings by a brand is completely neglected in the text. Instead, the reader is brought to the conclusion that by using this model, the co‐branding partners are able to assess the value creation of their brand in the mutual venture and to manage that value with respect to the co‐branded business as well as the brand’s main businesses.

In spite of these weaknesses, the book is useful both for practitioners and students, however, academics may find many parts too shallow, as important aspects of co‐branding are just briefly covered and references are not made to former contributors in the field. For an academic audience, the lack not only of references, but also of a positioning of the contribution of this book in relation to the literature in the field, is a major limitation, something many reading managers may thank the authors for not taking the time to include. The book focuses on a hot topic and is possible to read in a limited amount of time, perfect for a business trip with a few hours available for reading. Several co‐branding examples make the text easy to understand and the book also contains a few illustrations. If the purpose is to bring the reader an overview, the topic is well covered, however, the lack of discussion and depth limit the value.