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Co-Branding - The Ultimate Guide To Joining Forces With Other Brands

Rachel Chaiet

September 9, 2022

In the crowded business world, brands must think outside the box to remain competitive. Co-branding is an excellent way to do just that. 

Co-branding initiatives can help brands master their market and build stronger connections within their industry. This guide will walk you through the ins and outs of co-branding, its importance, and a few strong examples.

What is co-branding?

Co-branding is when two or more brands collaborate to create a new product or service. It’s a beneficial strategy for many different types of businesses, allowing them to leverage the unique strengths of each brand to amplify their impact. You’ll find co-branded products everywhere, from your pantry (Reese’s & Oreo) to your tech gadgets (Nike + Apple) to your wallet (Virgin + MasterCard). 

How does co-branding work?

When two companies combine forces to create a new product or service, they are co-branding. This is most successful when the brands have similar values, missions, and cultures. Brand partners will combine their resources, such as market knowledge, technology, and funding, to give both brands a boost in profits, positive brand perception, and an increased customer base.

Co-branding is an umbrella term for several different types of branding collaborations. While each partnership will vary, most brands use one of four co-branding strategies.

The four co-branding strategies are:

  1. Market penetration strategy: Two partnered or merged firms will use this conservative strategy to maintain their current market share.
  2. Global brand strategy: This strategy aims to benefit all customers by creating a single global co-brand.
  3. Brand reinforcement strategy: Two firms use a new name in the market.
  4. Brand extension strategy: A new co-branded name is created to be used in a new market.

Types of co-branding, plus examples

Learn more about the different types of co-branding below. We’ll help you understand how these partnerships work, including examples of partnerships that pulled them off to great effect. 

Ingredient co-branding

Ingredient co-branding is when one prominent brand uses the ingredients or components of another prominent brand in its product or service. Ingredient co-branding partnerships usually occur between major brands that each bring distinct qualities and patent-protected products. 

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Tide and Downy's legendary brands probably come to mind when you think about doing laundry. Tide is known for its stain-fighting laundry detergent, while Downy is known for its line of fabric softeners, dryer sheets, and fresh scent boosters. A match made in heaven!

Tide Plus Downy is an example of successful ingredient co-branding. The science utilized in Downy products was incorporated into Tide's new product to create a better detergent. 

Tide also leveraged Downy’s brand recognition to introduce a new product to the market. Once the customer sees Tide Plus Downy, they know exactly what to expect. 

Same-company co-branding

Companies that want to promote multiple in-house brands under one product employ a same-company co-branding marketing strategy. This co-branding involves only one company but can feature collaborations with different subsidiaries. 

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If you’re in the market for an Oral-B electric toothbrush, you might notice a badge on the packaging that says “Powered by Braun.” Both Oral-B and Braun are owned by Proctor & Gamble. This is an example of a co-branding strategy that leverages the reputable Braun brand to build the credibility of Oral-B in the electric toothbrush market. Each brand brings credibility to the table, and Proctor & Gamble gets more bang for its buck by creating awareness for each brand.

National-to-local co-branding

If you own a small or local business, a national-to-local co-branding partnership is a great way to help you grow your brand. National to local co-branding is when small businesses team up with a brand recognized around the nation. 

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Picture this: you’re treating yourself to a haircut at one of the most luxurious salons in London, England. What could elevate the experience even more? Imagine if the chair emulated the luxury of a Bentley car seat. 

That’s what the national-to-local co-branding partnership between Bentley and Pankhurst Salon is. Bentley designed six barber’s chairs featuring the same iconic style and high-quality materials used in their premium cars. Pankhurst could use the Bentley brand to build awareness and align its brand with luxury. Bentley benefited from this partnership because it shows the world that sitting in their vehicle is an experience people want to replicate elsewhere. 

Joint venture or composite co-branding 

Some products and services can only be made possible by collaboration between two genius products. Joint venture or composite co-branding is precisely this. It’s when two brands create a unique product or service that neither brand could offer on its own. 

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Doritos Locos Tacos are a prime example of joint venture co-branding genius. Taco Bell and Doritos teamed up to give us this mouth-watering menu item back in 2012, and it’s still popular today. By using Doritos for the taco shell and filling it with signature Taco Bell ingredients, they created something entirely new and groundbreaking that customers loved. As expected, people went crazy for Locos Tacos, with over 100 million sold in the first ten weeks. This co-branding effort worked because Taco Bell and Doritos have the same target consumer, and the brands make sense together.

Multiple-sponsor co-branding

Multiple-sponsor co-branding is a strategic partnership involving two or more companies that team up to share technology and promotional events. We often see multiple-sponsor co-branding in athletic events, concerts, and other PR events. 

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While you might not think that a camera company and an energy drink company have much in common, GoPro and Redbull pulled off an incredibly successful collaboration by appealing to customers who share their values. While their markets differ, both brands appeal to a spirit of adventure and excitement. That’s what made their adrenaline-fueled collaboration so successful. In their joint-sponsored Stratos event, Felix Baumgartner jumped from a space pod 128,000 feet above the Earth’s surface. By funding, organizing, and promoting the event together, GoPro and Red Bull displayed their commitment to adventure and garnered huge amounts of attention for their eye-catching stunt. 

How is co-branding different from co-marketing?

While co-branding and co-marketing are related, they are not the same. Firms will engage in a co-marketing partnership when they want to align their marketing efforts without creating a new service or product. Examples of the different types of co-marketing content include ebooks, blog articles, webinars, videos, and events. 

8 reasons co-branding is powerful 

Co-branding is a powerful strategy that can take your business to new heights and even introduce your brand to a wider audience. Here are eight reasons why co-branding is something your business might want to consider.

Increases audience reach

When two or more brands partner up, they can access each other’s audiences, increasing their reach and introducing them to new demographics. By building brand awareness and credibility with another brand’s audience, they can make moves to acquire more customers.

Increases sales

Businesses need to turn a profit. Sales are important, and co-branding is a fantastic way to increase sales and market share

Leads to better products

When two great brands put their heads together, more often than not, something extraordinary happens. Co-branding can help brands create more innovative and successful products than their original product lines.

Increases customer loyalty

Customer loyalty can make or break the success of your brand. Luckily, co-branding can help develop enduring customer relationships through clear, accessible, and attractive incentives. One example is how retailers use co-branded credit cards to drive loyalty, offering customers points and other incentives to help them become returning customers.

Improves brand reputation 

If a co-branded initiative is well-executed and successful, the reputation of both brands will benefit. Think of GoPro and Red Bull’s Stratos event — the press was incredible, and people still associate the stunt with those brands to this day. 

Increases credibility

Co-branding is an excellent opportunity for brands to leverage the credibility of other brands to boost their credibility. You’ve never tried Pop Tarts before, but you notice an Oreo-flavored Pop Tart. You’ll perceive Pop-Tarts as credible because they work with a brand you love. 

Better budgets

By combining their resources, two or more brands collaborating will have a significantly higher budget than any one brand alone! This will inevitably lead to a better product or service.

Shared talent pool

Co-branding partnerships are a great opportunity for brands to pool their talents and resources to create innovative new products that otherwise might not have been possible. Ever heard the phrase “Two heads are better than one?” Well, it applies to brands too!

Co-branding disadvantages

While co-branding can be a powerful part of your marketing strategy, it has some potential disadvantages.

Can create confusion

Confusion is one inherent risk of co-branding. When you create a new product or service and therefore create a surplus, consumers might not know which product to choose. This increases their risk of succumbing to decision fatigue and going with another brand.

Poor brand compatibility

For a successful co-branding partnership, brands must have the same values and similar brand cultures. If there is no overlap between target audiences or the brand doesn’t fit well together, consumers might be confused or upset by the collaboration.

Financial disputes

Splitting the work means splitting the reward. Dividing shared profits can be an extensive process and, if not done fairly, causes conflict between brands. 

Overshadowing

Overshadowing is a risk, particularly in the case of co-branding partnerships where one brand is a small business. Small businesses may get overshadowed by bigger, reputed brands, making the co-branding no longer mutually beneficial.

Conclusion

Some things are better together. Co-branding partnerships can be a terrific opportunity for all parties to benefit from a well-designed, well-marketed team effort. 

If you think that co-branding might be right for your business, Copy.ai can help. With a powerful AI content generator that gives you powerful copy in seconds, brands interested in collaborating can use Copy.ai to refine their messaging and develop promotional content ideas. Check out Copy.ai’s free tools

If you’re already ready to launch your next big co-branded product, make sure you read our blog post on writing an awesome product launch email

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