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How the Co-Branding Affect Company

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How the co-branding affect company According to Srinivasan (2007), Co-branding is the marriage between two brands with different backgrounds, which focuses on combination of the partners’ resources and best capacities. In this competitive society, hundreds of forward-looking companies are trying to expand their business scale and impact by doing brand alliance and refresh themselves by lowering prices using new technologies. According to Mckinsey & Company Statistics: the number of joint enterprises in worldwide in 1994 - including co-branding company, involving millions of dollars assets with an annual rate of 40% growth.(1994) That is because consumers become more and more dependent on brands, and become more difficult for company if they want to keep the strong competitiveness and get more profits. Co-branding provides the chance for this situation. However, the co-branding does not fit for every company and does not bring the benefit for them. There are also exist some problems not only in culture but also between in partners. So I will talk about how co-branding affects the company in positive ways and negative ways. There are several reasons why some companies would want to pursue co-branding. The first one is that co-branding can attracts a wide range of consumers. Because once company adopts the co-branding, for consumers, it means that it provides more selection and more function of products. For example: Nike and Ipod, announced a partnership, which resulted in forming a coopetitive alliance of co-branding named “Nike+Ipod”. They call the co-brand product “Nike + Ipod Sport Kit”. The consumers can download the music from the Ipod website for free. They realized that there is one kind of the potential consumers who like to listen to music while can achieve the aim of the exercise. This is the change from a single product to a diverse selection of products. What is more, there are not only bringing more choices to choose brand and product but also bring the convenience for the consumers. In this fast-paced society, more and more people want to purchase the require goods in one place. So co-branding integrated variety of business concepts in order to meet the consumers needs. They can take the less money and time to buy the satisfied products. For company, it can increase the wide of the market. For example, KFC, Pizza Hut and Taco Bell are important trademarks to the Tricon Global Restaurant business. If they carry out the co-branding and increase the food in different ways, it will certainly be able to attract the consumers because of the brand mix. So co-branded products and services can gain consumer choices, loyalty and ultimately make the brand unique and distinctive. If the brand is unique and distinctive, it can better attract a variety of consumer. In addition, co-branding can bring more opportunity for the company. It can improve the quality of the product and influence the consumer judgment of the brand. Like innovation, this approach offers opportunity of growth in existing market and exploration of new markets. In such alliance, companies come together to create new offerings for customers. Once the new products can meet the consumers taste, it means that can bring the more profits for the company. So, it must have more space for development. For IT industry, relying on co-branding to gain the trust of consumers is a common marketing strategy. In addition, co-branding can reduce the risk of company to enter new markets, because of they share the risk and responsibility from each other. Most of all, it can help the company reduce the costs and expense of operation. Those costs include labor costs, management costs and lower daily operating costs. They only need to manage and several assistants can operate the entire store and share the rent, so it became possible in the high premium place. Most of people are known that in order to compete with the same industry, the good location is the first step toward the success for the company, because nobody wants to cost a long time to go shopping. In this society, we are not denying that it is very hard to go beyond their field even they are the strong brand. So co-branding provides the opportunities and integrates their resources and makes-up their disadvantage in order for business to achieve the win-win situation. Like “Miller Brewing Corporation and Coors Brewing Corporation, which are US second and third largest brewers, combine their operations to create a bigger challenger to Anheuser-Busch Corporation. SABMiller and Molson Coors will each have a 50% interest in the joint venture, and have five representatives each on its board of directors. Based on the value of the assets, SABMiller will have a 58% economic interest in MillerCoors, and Molson Coors will have a 42% economic interest. MillerCoors will have annual beer sales of 69 million barrels, roughly 29% of the U.S. market, and revenue of $6.6 billion. Anheuser-Busch has a market share of around 48%”. (Wei-Lun Chang, 2009, page 4) Collaboration not only increases the number of market share, but also reduces the cost of two companies. However, they provide the benefit for the company at the same time it can provide the bad affect. Because collaborating with your competitors is like a double-edged sword. Firstly, it is difficulty for one of the parties to abandon the partnership and re-establish itself in the market independently. Once a co-brand takes position in market, it becomes difficult to dismantle co-brand and even more difficult to reestablish the brand alone. During the collaboration, it is limit the development for the each company. Most of all, it is not good for the firm future because it more easily bring dependence. Secondly, when establishing co-branding, choosing the right partner it is very important. Sometimes, due to the different cultures and vision, they are in-compatible. For example, “Western firms commonly exhibit a lack of strategic intent in collaborative efforts. The contribution of a Western firm in a collaboration effort is often in the form of technology and is relatively easy for the alliance firm to transfer. In many instances, Western firms are less skilled at limiting unintended competency transfer than their Japanese counterparts”. (Gary Hamel, 1989, page2) So if the company with different culture backgrounds transfer, perhaps it will bring the bad effects (including low profit, internal conflict). Thirdly, in some extent, co-branding can transfer of competitive advantage to the partner, creating a potential competitor. “Collaboration allows two firms share their resources, tacit knowledge, and know-how to align with a joint goal”. (Wei-Lun Chang, 2009, page80) In a word, due to the collaboration they lose their own advantage in strategy. Once terminate the cooperation, it will become the threat for each other. Sometimes co-branding it is more easily to lead to lose characteristics of their own products and lost their own strategy. Meanwhile, there is a crisis when co-branding. They share the same brand, so there is a problem which company can get the ownership of the brand after co-brand. On the other hand, it can lead to transfer the consumers. For example, the per-brand’s product image and quality can effects the partner. After co-brand it may lose some consumers. So, sometimes, co-branding is a treat for the company. Gary Hamel point out that collaboration is a strategic alliance typically between two firms with the goal of providing mutual benefit for each firm. Co-branding can be implemented by establishing an agreement of strategic cooptation that allows companies to compete and cooperate simultaneously in order to obtain competitive advantages through operational synergy. (1989) Co-branding has many positive ways affects the company. Firstly, co-branding can attract a wider range of consumers in the selection and function of the products. What is more, it brings the convenience for the consumers. And also can take more opportunity for the company not only increased sales revenue but also increased customer confidence on product. So Co-branding it has important guiding significance for a company to make a reasonable business strategy so that the competition predominance can be increased and core competitiveness can be formed. However, co-brand also has some obstacles. If brand don't possess sufficient credibility in market, it can negatively affect the other partner's brand. At the same time, it can lose some consumers. Due to the different culture and vision, it can also bring some problems in the process of cooperate. So according to this article and find how to build Secure Defenses improve the company benefit is very important. This article can guide the people who want to open the company and help the company learn about the marketing strategy. It can tell them how co-branding bring the opportunities and challenges for the firm.

Gary hamel, Yves L. Doz, & C.K. Prahalad (1989). Strategic Alliances: Collaboration with Your Competitors--and Win. Harvard Business review. 133-139.
Gaurav Doshi. (2006). Co-branding. Retrieved from:
João Leitão, Victória Souza and João Leitão. (2009). Strategic Coopetition of Global Brands: A Game Theory Approach to ‘Nike + iPod Sport Kit’ Co-branding. Retrieved from:
Miriam Claire Beezy. (2007). Co-branding: a popular form of strategic alliance. Retrieved from:
Tapan & Panda. (2001). Strategic Advantage through Successful Co- Branding. Retrieved from:
Wei-Lun Chang. (2009). Roadmap of Co-branding Positions and Strategies. The Journal of American Academy of Business, Cambridge, Vol. 15.

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