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Thoughtful
(?) Co-Branding
By Michael Alan Hamlin
December 30, 2002
Co-Branding has become popular in
recent months for mostly the wrong reasons. Well, maybe not wrong
reasons, but reasons that shouldn't be the principal reason why
brands partner. According to branding guru David A. Aaker, co-branding
offers the opportunity to "capture two (or more) sources of
brand equity and thereby enhance the value proposition and point
of differentiation."
A study by Kodak demonstrated the
benefits of co-branding very clearly. It "showed that for a
fictional entertainment device, 20 percent of prospects said they
would buy the product under the Kodak name and 20 percent would
buy it under the Sony name, but 80 percent would buy the product
if it carried both names." Other studies have demonstrated
similar co-branding synergy, or what Aaker calls, "freedom
to stretch."
These results can be obtained in
real-life marketing situations when the partner brands offer complementary
associations, and those responsible for building the brands are
thoughtful about the relative benefits. Those benefits should be
associated with extending, as the studies show is the principal
benefit of co-branding, each brand's franchise.
Problems arise when extending the
benefits of the brands isn't the principal catalyst for a co-branding
initiative. One of the most basic forms of co-branding is something
called bundling, or putting complementary products into one reduced-cost
package. One of the chief advantages of this type of co-branding
is low costs associated with advertising and distribution. That's
why you often see complementary software bundled with licensed software
that you purchase (You do purchase licensed software, right?). Another
benefit is commissions arising from software purchased as a result
of test driving the bundled package. There are other benefits as
well, such as extending the utility of both software packages because
they are complementary functionally, increasing the chances that
users will remain loyal.
But when brand managers forget that
the principal purpose of any co-branding exercise should be extending
both brands, rather than saving on advertising or distribution costs,
for example, problems arise. Problems also arise when managers haven't
been very thoughtful about the relative associations of their brands,
and how they affect perceptions of their products or services.
At lunch last Friday, I observed
a sad example of co-branding that superbly demonstrated the pitfalls
of knee-jerk co-branding. A friend of mine and I had lunch at a
favorite restaurant chain. Since I am in the unfortunate habit of
damaging relationships through this column, my friend recommends
that I not mention the name of the restaurant. So suffice it to
say that the restaurant is named after a town 12 miles south of
San Diego and World War II era GIs. And it generally serves great
TexMex and steaks.
After ordering ice tea rather than
a nice frozen margarita or a shot of tequila - it was lunch, after
all - I was surprised when the friendly waitress slapped a coaster
on the table promoting Astring-o-sol, which is a mouth wash (my
favorite, as a matter of fact, but I bet you didn't want to know
that). Now, just off the top of your head, imagine you are sitting
down for lunch, and tell me what associations does mouth wash bring
to mind with respect to the culinary orgy you are preparing to dig
into?
Does it extend the restaurant's brand
franchise? In what ways? Does it make the food more appealing? Does
it encourage you to slather on the Caramba hot sauce, both red and
green varieties? Perhaps you feel like ordering extra onions? Or
something else? Assuming that the same coasters are used in the
evening and you are on a date with your wife or girlfriend or whatever,
what visions come to mind with respect to that good night kiss (Whoa,
spicy! Or Whoa, minty! Or Whoa, I'd rather not…)?
Now, let's consider how Astring-o-sol
is extending its brand. I have to tell you before you answer that
question that a bottle of Astring-o-sol does not come with the meal,
or at a discount. As far as I know Astring-o-sol is not even offered
at my favorite TexMex restaurant, although the coasters are meant
to encourage you, I presume, to want a bottle.
Apparently, the Astring-o-sol brand
manager is interested only in the exposure, and the suggestion that
Astring-o-sol means you can eat all the spicy TexMex you want and
not have to worry about what happens after dinner as long as what
ever happens is preceded by a good gargle (You'll have to bring
your own bottle if you want to do this in the restroom before retrieving
your car, so be forewarned.).
But naturally, I digress. But who
cares? This is a bad, bad idea. When my friend asked why the restaurant
was using the coasters, the bubbly waitress replied, "We have
a tie up." My friend, staring at the coaster with an expression
out of the Blair Witch Project, asked, "Have you ever thought
that it might be costing you customers?" And in so doing made
another point, that co-branding can result in negative brand equity
stretch; that is, compression.
Her smile faltering, the waitress
left. And we should have, too.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001).)
Copyright © 2002 Michael Alan
Hamlin. All Rights Reserved.
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