Co-Branding - Dual Existence

I was going though an article talking about how GAP jeans were offering customers a free song an iTunes if they were to merely try on a pair of GAP jeans - my mom was quite amused about how they think its going to help in any way. I read the article to her and she quipped - "Customers gain. If I were to be given such an offer, I`ll try them everyday and get free downloads galore!"

Well what's not total madness, is as they call it, "marketing" - my mom calls it madness, I call it a mere case of dual existence...

Co-branding (also called Dual Branding) has become a rage in the marketing arena, with companies realizing that isolation is not after all the best policy. Buy a Filmfare magazine and get imitation jewelry free? What's the relation? What's the connection? Or free Duracell batteries with a magazine, which costs much lesser than the pair of cells? What's cooking?

The markets of yesterday saw companies focusing on the customer thinking about "How can I promote my jeans?" The marketers today believe that the myopia needs to clear off to a "How do I define my customer?" approach. By saying, "defining my customer", i don't mean getting back to classroom and assessing who the target consumer is. Defining a customer means more in terms of creating a persona for the customer, or rather shaping the customer.

Lets take a small example: Consider that i am a dealer who sells fashion accessories and jeans. One of my target customers would be the youth, who want to look hip. Now lets analyze this a bit more.

Customer Profiling - Fashionable India youth
Demographics: Age group of say 15 to mid 20s, SEC A & B max (SEC = Socio Economic Classification), atleast college educated

Psychographics: Fashion conscious, looks more to belong to his 'cult' or 'peer groups', wants to be updated with the latest gizmos in town - mobile phones, fashion accessories, computer and media related gadgets, ready to pay for a premium product which makes him look exclusive.

In such a case, we can certainly identify some items that he/she might be interested in:

Latest Mobile phones
MP3 Players
Cars / bikes
Branded clothing
Fashion accessories
Personal Grooming products
Latest eateries
Non-traditional cuisine
Discos/ lounges / places to party

So if I were a clever marketer, I would easily identify items or rather products, which would define or rather, shape my target audience. After all, a person buying designer jeans cannot live on bread alone! He would also look at other items that would add to moulding his persona or his "outer self", which many a times also have an important role in defining the "inner self" or feel that one gets after using a product/service.

What the gurus say?

Kotler, Philip (2003) defines Co-branding as "two or more well-known brands are combined in an offer" and each brand's sponsor expects that the other brand name will strengthen the brand preference or purchase intention and hopes to reach a new audience.

Kafperer talks of co-branding being quite beneficial such that:

* Many line extensions capitalize on a partner's brand equity.

* Brand extension success rates are maximized in the new market when co-branded with the reputed brand that has established in that market.

* Co-branding may help usage extension.

* Image reinforcement may take place due to co-branding.

* Loyalty programs increasingly include co-branding arrangements. The corporations are sharing the cost of loyalty programs; hence, the promotional costs to the companies are coming down.

* Co-branding signals a trade marketing operation.

* Capitalizing on the synergies among a number of brands is yet another advantage of co-branding.

Taking from the gurus:

In terms of defining the youth, one company can't perhaps do half as good as what two can, when they join hands... one of the positive take-homes from a co-branding exercise would be the fact that sales of a totally unrelated product would now help sell yours!

The advertising frat always laughed it off, saying "Everyone knows that 50% of advertising goes waste - its just that you cant find out which 50% it is!"

Co-branding can be an effective medium to reduce ad-spend and still maintain more of "mindshare and heartshare", as Kotler would put it.

Moving closer home - some Indian examples:

"Bharat Petroleum Corporation Ltd. (BPCL) has formed an alliance with Bank of Baroda (BOB) to launch a co-branded credit card Bharat BOB card. The deal works in favor of both the parties. BOB hopes to expand its current customer base. The bank charges 2% fee for this service. the petrol company on the other hand scores on customer orientation and an assured customer base.

Another Indian example is Diners Club-Citibank-British Airways card. Diners Club has been providing the exclusivity of their charge cards through Citibank. The charge has to be paid every month and their targeted customers are business executives, who are mobile and frequently travel abroad. Diners Club-Citibank card along with facilities and privileges offered to a regular cardholder provides automatic membership to British Airways executive club. Every Rs.50 spent on the card earns the holder one executive club mile and as such is a part of the frequent flyer program. This enables additional benefits to both the brands."

The Final Word : I would say that Co-branding can be like a dual edged sword - GAP may well end up being generous with the iTunes downloads and end up not selling even a single pair of denims...on the other hand, the prospective customer would perceptually link iTunes with Music - with style - with class - with exclusivity - and finally with GAP.....what happens on the other side of the road...only time will tell.

Reads:

Examples: Venkatesh, R. and Mahajan, Vijay. "Products with branded Components: An approach for premium pricing and partner selection" Marketing Science 16 (1997)

Guru-talk:
Kotler, Philip. "Marketing Management The Millennium edition" PHI pvt. Ltd.: New Delhi (2003)

Kapferer, Jean - Noel. "Strategic Brand Management" Kogan Page India Limited.: New Delhi (2000)