Why is Co-Branding Important for Your Business?
Co-branding is an effective marketing tool for businesses aiming to raise brand awareness, boost sales, and expand their existing customer base. It can be a win-win approach for two brands when done right. So, how does co-branding work and why can it be an imperative strategy for thriving in business?
What is Co-Branding?
Co-branding is a strategic marketing partnership between two companies aiming to increase their revenue by pooling their resources and values together for a common good. By merging efforts, ideas, and budgets to create a new product, service, or solution, businesses can double their market share and leverage each other’s strengths for a leg up on the competition.
Why is Co-Branding Effective?
1. Builds brand credibility
When a company merges its efforts with another brand, it’s able to take advantage of that brand’s reputation and built-in customer base. Not only are they expanding their reach to their partner’s audience, but they also provide added value to their existing audience through the fruits of the partnership–be it a new product, service, or content.
An example: Apple partnered with high-end fashion brand Hermes to launch a new Apple watch. Prior to this, Apple’s biggest criticisms of the watch was its design aesthetic. By partnering with Hermes, it allowed Apple to rebrand the wearable tech as a coveted, luxury fashion item. Apple was able to provide its customers with a nicer product, while also tapping into a more fashion-conscious consumer base.
2. Reaches or creates new markets
A brand partnership does not have to be between two companies in the same industry. In fact, aligning with a likeminded company in a different market allows for cross-promotion which can help to reach a whole new audience of potential customers.
An example: Red Bull teamed up with GoPro for a global content partnership. While Red Bull is an energy drink and GoPro is a technology product, both brands are reputed for celebrating an adventurous lifestyle. They may cater to completely different markets, but their shared values will likely resonate with the same type of customer.
3. Complements both partner’s strengths
When there’s a marketing collaboration between two businesses, each company can utilize its partners’ strengths to supplement its own weaknesses, and vice versa. This will clear up room for each company to focus on more critical tasks that need their 100% attention. It also minimizes the potential risks that come with running a campaign on their own.
An example: UNICEF partnered with retail giant Target for the organization’s Kid Power campaign, which encouraged children to live a healthier lifestyle and raised awareness of global malnutrition. Target sold a kid-friendly fitness tracker and was able to help UNICEF deliver nutritious food to underprivileged children globally with every purchase of the device. UNICEF was able to leverage Target’s massive reach to generate not only awareness, but a tangible give back to those it aims to help.
4. Doubles the marketing budget without additional costs
Marketing campaigns can be very costly. One of the biggest benefits of co-branding is its cost-effectiveness. Essentially, brands collaborating for a co-branded campaign combine their marketing budgets and efforts, as well as their reach. That means each brand can cut its cost and maximize its total output.
An example: a new keto meal prep business enters into a partnership with an established keto-friendly bakeshop. The meal prep business is able to tap into the bakeshop’s existing customer base by offering the shop’s desserts through its service. The bakeshop, on the other hand, is able to add a new avenue of distribution through the meal prep’s service, hopefully generating more sales.
Even though one brand is more established than the other, the partnership provides a cost-effective source of marketing that benefits the needs of both businesses.
5. Brings in fresher and more exciting deals to customers
Customers want variety. They want to be offered the best products and have the option to choose among the best solutions. Co-branding can be a means to create new deals that existing customers won’t find elsewhere.
An example: Grammy award winner Kanye West co-branded with Adidas for “Yeezy,” a top-of-the-line footwear series. By aligning with a big name star, Adidas was able to capitalize on Kanye’s cache to offer its customers a more upscale, aspirational, and exclusive product. In turn, Kanye received a platform to seed his fashion aspirations on a global scale.
Co-branding is for All Types of Businesses
Co-branding is scalable and can be utilized by companies of any size across any industry. Businesses that are on the edge of partnering with another brand should start by identifying their own marketing needs and goals, and effectively communicate these to potential partners.
Likewise, brands need to evaluate these potential partners to ensure that they share the same core values. Co-branding is a fun process especially when the objectives are well-aligned and ideas are pooled together. Thoughtful and innovative partnerships can really resonate with customers and produce long-lasting results.