Co-branding is known as combining several brands into one service or product. Companies engage themselves in co-partnering in order to leverage into a strong brand. This kind of business practice is becoming very popular nowadays as companies strive to have a positive relation between various brands which may develop synergy. Such a strategy if well executed may lead to a win-win situation for both partners. It can also help in realization of untapped opportunities or unexplored markets.
Many firms form partnerships in order to fulfill certain goals such as; expand the customer base quickly respond to the customer’s need, for financial benefits, operational benefits, creation of new client perceived value, have a strong picture for new products and to strengthen their competitive position.
In this kind of alliance, all partners should have good relation which has the ability to commercially benefit all the parties. A co-partnering agreement should include obligations restrictions and rights which are binding to all parties. All these should be drafted carefully so as to give clear and understandable directions to the partners involved. The agreement should also contain explanations regarding the marketing strategies, confidentiality issues, warranties, royalties, disclaimers, payments and brand specifications.
This approach gives opportunities for growth in already existing or exploring untapped markets. An example of a powerful example can be found here: Partnership To Success Bonus. In these types of alliances, firms combine their services or products in order to develop new offers to their customers. Returns and risks are very important aspects that must be considered. Cooperation and organization of top managers is very important for the success of the agreement.
Co-branding brings several benefits to the alliance partners which include:
- Increased sales: Once the businesses come together, the sales increases as customers get to see or find different products under one company.
- Exploration of untapped markets with very little expenditure. Customers of a certain product get to see or learn about other services of products from one source. This promotes them to buy as they do not have to spend more time trying to look for that particular item from somewhere else.
- Ability to access new financial sources. Since companies are able to combine resources; those which are not financially stable benefits from the strong the already established companies.
- Risk sharing: Unlike in single business operation co-branding benefits partners as they share the risks which would come along. This means there will be no much to lose and still you would benefit from sharing ideas of how they can improve on their marketing strategies to avoid future loses.
- Companies are able to get higher prices for the worthiness added by brands which are joined with it. This comes when a company partners with more recognized partners who are already established in the market.
- It also increases client’s confidence on the services or products. New or small companies enjoy customer confidence especially if they partner with a big firm which has already made its name in the market.
- Increased exposure and coverage from group advertising.