Recent Trends In Co Branding

Recent Trends In Co punctuateingCo- tick as an alternative put uping pro vista is fast making earthly concerns in todays tradeing bena only over the world in close all the industries as well as in international marting. apart(predicate) from the factors want cooperation leaf blades equity, information, category, consumers knowledge, experience, nationality and culture, and so forth the achievement of a co- piting partnership also depends on the murmur effect. The state of matter of-extraction effect is master(prenominal)ly produced by cooperative brands terra firma of-origin characterisation and plays an important role in the success of co-branding scheme. In this cover, we identify dis connatural strategies a company washbowl follow in ordinance to wear a co-branding adhesion and critical factors of a booming co-branding dodge with special(prenominal) centering on country-of-origin effect to assist the multinational companies perplex conclusiveness s virtually co-branding. We also utilise some real-world cases in ball club to demonstrate our notions. ingressNowadays, unrivaled of the upliftedly sparing protectd assets for a company argon its brands (Aaker, 1990), with branding being every companys top priority. nevertheless it often costs the companies ample amount of m sensationy and takes them a long eon to build their brand. Todays market is suffering from a syndrome of alikeness where all the intersection points swirled to the guests look very similar ii in harm of sameness in the physical brand element and in the symbolic value propose offered to the market. Thus it has baffle arduous to establish a unique position for sensitivefound yields with markets clutter up with competing brands. Even innovative contrastiveiated returns plenty be imitated quickly, leaving no strategic edge. As globalization phenomenon continues to elevate competition in the marketplace, ingathering introduction has beco me highly fraught with take a chance. One reason of such(prenominal) happen is the incredibly high cost of building brands for a product, which in some cases so-and-so exceed $100 million (Voss and Gammoh, 2004), and an separate is that firms are facing the reality of high in the raw-product snuff iture rates in the midst of 20 and 40% per grade (Spethman Benezra, 1994). In this situation marketers are searching for alternative method of branding for creating sustainable competitive receipts.Although in that location are a go of ways for a company to build its own brand, co-branding may be a good branding strategy since it can offer fresh opportunities for companies to gain new markets that may oppositewise be difficult to r from each one effectively, and it is beneficial to the organizations involved to alleviate costs when entering new markets by using the established equity of the second brand (Aaker, 2004 Kapferer, 2004 Keller, 2003). Moreover, it can also help th e company to increase consumers perceive timber and depict toward their brand (Keller, 2003).Co-branding is a marketing arrangement to utilize multiple brand names on a angiotensin converting enzyme product or renovation (Chang, 2009). Basically, it involves devour 2 or more well-known brands into a private product. The constituent brands can assist each other in achieving their objectives. employ properly, co-branding has the potential to achieve beat out of all worlds synergy that hoodises on the unique strengths of each contributing brand. Successful examples take Coach and Lexus, Diet deoxycytidine monophosphate and Nutra Sweet, Pillsbury Brownies and Nestle Chocolate, Crocs and Disney, IBM and Intel, Betty Crocker and Hershey, Breyers and Hershey, Lays and KC Masterpiece, Sony and Kodak, and so forth. These co-brandings stupefy created large benefits for stakeholders. However sometimes co-branding can pose the threat of contrastiveial advantage on one quisling and generate potential competitors. Many a times, co-branding effectuate one partner overbearingly and the other negatively.Among numerous factors (discussed later, in detail) that repair a brands evaluation by its customers and thusly affect a co-branding alliances success, country-of-origin is an important factor. prima(p) research publications defend established country of origin information as an indicator ingestiond by consumers to infer the quality and reliability of products from a country (e.g., Hong and Wyer 1989, 1990 Klein, Ettenson, and Morris 1998 Grhan-Canli and Maheswaran 2000). This notion is typically drug abused to describe the boilers suit quality of goods within a particular product category, such as electronics or automobiles. plain-of-origin fit is described as the consumers perception of the boilers suit compatibility of the two countries of origin involved in the brand alliance. Compatibility is assessed by comparing the consumers overall percep tions of the countries ability to produce quality goods within their respective product category.For example, direct that a consumer is evaluating a brand alliance that involves a Taiwanese calculating machine manufacturer and a Japanese microprocessor chip manufacturer. When analyzing country of origin information, the consumer allow for rely on his or her perception of the overall quality of computers make in Taiwan and microprocessor chips made in Japan. If in that respect is an inconsistency within this country of origin fit, the consumer may either weigh each country in terms of relative importance to the brand alliance or simply view the alliance unfavourably due to its dissimilarities of perceived product quality of the brands. Therefore country of origin fit will immediately govern consumer attitude towards a cross-border brand alliance for specific product categories. That is to say, if the brand had a very strong negative brand of origin stamp, it would be very diff icult for it to build its own brand.In this paper previous research on co-branding is reviewed and upstart trends and examples analysed to offer the critical success factors for assessing co-branding opportunities with special focus on the country-of-origin effect.Benefits of Co-brandingThere are several reasons why some companies would want to pursue co-branding. The first one is that co-branding can take up a wide range of consumers. Be contract 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 transfer 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 kind from a v irtuoso product to a diverse selection of products. What is more, there are not only diddleing more creams to choose brand and product but also bring the convenience for the consumers. In this fast society, more and more people want to purchase the require goods in one place. So co-branding integrates variety of line concepts in order to have-to doe with the consumer needs. They can take the less money and time to buy the at rest products. So co-branded products and assistances can gain consumer choices, loyalty and ultimately make the brand unique and distinctive.In addition, co-branding can bring more hazard for the company. It can improve the quality of the product and influence the consumer judgment of the brand. deal innovation, this approach offers opportunity of growth in lively 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.Co-branding can also deoxidise the risk of company to enter new markets, because they luck the risk and responsibleness from each other. Most of all, it can help the company reduce the costs and expense of operation. 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 altercater 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% scotch 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 r direct offue of $6.6 billion. Anheuser-Busch has a market portion of around 48%. (Wei-Lun Chang, 2009, page 4) Collaboration not only increases the identification number of market share, but also reduces the cost of two companies.Risks posed by Co-brandingHowever, co-branding can also provide drear effect to the company. Because collaborating with your competitors is like a double-edged sword. Firstly, it is difficult 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 re-establish the brand alone. It is not good for the firm future tense because it more easily bring dependence.Secondly, brands are also receptive to the risk of devaluation, sometimes virtually overn ight. At times, both companies can be affected, as in the case of a partnership between a bank discount drawstring and an upscale house wares company. At first, the co-brand created significant earnings for both companies-in one year generating more than $1 billion in sales. barely when the discounter filed for bankruptcy the announcement depressed the partner companys stock. It also caused the enthronement community to question the partner about its contingency means-an unexpected challenge for a co-brand. Subsequent bad press about possible poisonous activity by the house ware brands CEO had similar effects and raised similar questions for the discounters managers. Shortly by and by the allegations were made public, a consumer trailing firm reported that nearly 20 percent of the upscale manufacturers customers tell that now, because of the negative media attention, they would be less credibly to buy the companys products.Thirdly, when establishing co-branding, choosing th e right partner is very important. sometimes, due to the different cultures and vision and even operative frictions, they are in-compatible. One fast-food chain that serves mostly sandwich fare had unsuccessfully move co-branding with Italian and Mexican restaurant chains. While these partnerships created great brand synergies, operative friction was created because the co-branded restaurants attracted customers at the same time of day-during the lunch and dinner rushes. The chain went ahead with the deals anyway, overburdening its staff and diminishing the in-store customer dining experience. Finally, the company conditioned its lesson, and its most recent co-branding partner is a breakfast-food chain.Gary Hamel pointed that Western firms commonly abut a lack of strategic intent in collaborative stews. The parting 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 hot at limiting unintended competency transfer than their Japanese counterparts. So if the company with different culture backgrounds transfer, perhaps it will bring the bad effects (including low profit, internal conflict).Finally, in some extent, co-branding can die hard to transfer of competitive advantage to the partner, creating a potential competitor. Collaboration allows two firms to 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. Sometimes co-branding more easily drives to loss of characteristics of their own products and their own strategy. Meanwhile, there is a crisis in co-branding, when they share the same brand, so there is a caper which company can get the ownership of the brand after co-brand. On the other hand, it can lead to transfer of consumers. For example, the per-brands product image and quality can ef fects the partner. After co-brand it may lose some consumers. So, sometimes, co-branding is a treat for the company.Critical Factors for a successful co-branding strategyIn order to achieve a strategic fit, Chang, 2009 notifyed five critical factors that must be analysed for a successful co-branding strategy. This can be referred to as a 5C pose for evaluating a co-branding opportunity ( course 1). These factors can assist a company in organising a successful and tolerate co-branding strategy from a macro perspective. inflection CostIts important to consider the transition costs for two companies embarking on a successful co-branding strategy. For the joint venture typeface, the two companies have the same responsibility for both profits and liabilities (e.g., Sony and Ericsson). Thus, the transition cost for both parties is symmetric. But in the fusion type, one party (e.g., BenQ) must take responsibility for the other (e.g., sulfur). BenQ unified with Siemens and had to pro vide constant financial support. Unfortunately, BenQs pockets exclusively werent deep enough to absorb the cost of turning around the profit-losing Siemens unit. The cost for both parties was thus asymmetric. Thus the transition costs of co-branding severely affect the future for the companies involved. cultural DifferencesCultural differences are also a crucial consideration for two companies planning a co-branding strategy. Trying to merge companies from different countries creates many unknowns of, especially at the employee level. For example, if one companys culture is hidebound while the other is innovative, cooperation will prove difficult. And there are many other potentially problematic cross-cultural factors like power distance, uncertaininty avoidance, etc. BenQs employees worked hard to collaborate with Siemens workers for nine months, but ultimately failed, by and large as a result of underestimating the intractability of German labor laws. Cultural differences are a major factor impacting on the direction and termination (success or failure) of a co-branding strategy. Thus cultural differences between two companies should be considered thoroughly in advance and require very effective management.Consumer acceptanceThe third lesson is know thy customers. Consumer-centric design will drive a successful co-branding strategy. Sony and Ericsson is a case in point, having launched several consumer-centric mobile phones in recent years (e.g., embedded with Cybershot technology), they advanced the level of functions (digital video recorder, Bluetooth, etc.) in order to increase competitive advantage. On the other hand, BenQ and Siemens originally targeted young customers (based on the slogan enjoy matters) and then attempted to provide modify models (e.g., classical and business models) for other groups (besides teenagers). However, consumers in Germany and Taiwan are solely different. It was difficult to find a leverage point and common ground for both parties to satisfy the radically different types of consumers in the two countries, the companies should identify, focus on and act concertedly in terms of what specific consumers want and need. spirit PositioningThe marrow squash competence of a brand is fundamental in attracting large numbers of customers. Since each unmarried brand has its own impression competence, the synergy between two brands is extremely important. In the brand alliance situation, a strong brand should clearly and uniquely identify and position its internality competence, so that the second brand can integrate with it. The core competence could be either homogeneous or heterogeneous. Ideally, similar core competencies (i.e., homogeneous) will generate a stronger co-branding effect. However, heterogeneous core competencies can co-occurrence each other to create a substantial synergy. For example, BenQ has re-positioned its brand as keep exploring to replace the original slogan enjoy matters afte r that original venture failed. The lesson is that the core competencies of two companies should be clearly identified in order to successfully position the new brand.Capital RestructuringAs previously mentioned, co-branding may take on one of two essential operational types joint-venture or merger. For the former, both companies restructure the capital structures of the original corporations. That is, each ingredient corporation is responsible for the new joint-venture company, especially the financial aspects. In the merger situation, the dominant company should be responsible for the gain and loss after integrate. For example, the capital structure of BenQ was reorganized after it merged with Siemens, and this resulted in a loss of around 810 million US dollars between October 2005 and June 2006. The lesson adequate capital for two companies is critical before they even start evaluating each other and organizing a co-branding plan.Various strategies for co-brandingA co-brand i s more limited in terms of its audience than a corporate brand. It conveys a specific image and a set of expectations to target customers in a presumptuousness market. The severalize termination that the merged firm needs to make regarding its co-brand is to choose the type of evasive action it wants to create or maintain with the various strategies previously served by the indivi two-fold firms. Should it try to maintain all the existing strategies or eliminate them in favor of just one or a few? The smother underlying these choices is how to manage similarities and differencesin respect of both customers and the brands that it has inherited by means of a clear co-branding strategy.The two belongingss that determine a merged firms co-branding strategy are its co-brand name and its intended market. The co-brand name signifies a new or existing brand name for a co-brand. The co-brand name involves a choice for the firm should it have a same brand name to all its customer segmen ts no matter how different they might be from each other? Or should it create a different brand name, falsify the range of specifications and quality accordingly to different customers segments?The intended market dimension signifies the market perspective of the firms products or services that it wishes to convey to a given market. The merged firm may conclude to stay in the existing market regard to all its product or servicethat is, suggest the same set crossways all served segments. Alternatively, the firm could create new opportunities to move to a new market with its product or servicethat is, adopt different positioning for them depending upon the particular customer and competitive kinetics in each of its served segments. think food market.Co-Brand NameExistingExisting food market Penetration systemNewGlobal Brand StrategyFigure 2 Co-branding strategiesCross-classifying the two dimensions (Co-brand name existing or new Intended Market existing or new) leads to four alternative co-branding strategies, each representing a particular way to integrate the brand name and customer positioning dimensions Market Penetration, Global Brand, Brand reenforcement, and Brand Extension (see Figure 3).Market Penetration StrategyA Market Penetration Strategy signifies a buttoned-up tactic to keep the existing market and the original brand names of two firms. In essence, the co-brand name is either a single brand name (e.g., BMW MINI Cooper) or the combination of two firms (e.g., MillerCoors and DaimlerChrysler). The key confidence that drives the betrothal of a Market Penetration strategy is the flat convergence of two companies. The merged firms commission is to take advantage of such horizontal integration, accentuate the sexually attractive goals and benefits by sharing the resources. The merger between HP and Compaq, for instance, has led to the creation of a global brand. HP uses single brand name for the firms image but some products with a dual name such as HP Compaq Presario series of laptop/desktop.However, charge on existing market and brand names might not cause the synergy to make the merged firm stronger and more economic (e.g., HP was not superior to IBM much after encounter Compaq). Finally, for a Market Penetration strategy to succeed, it is critical that the heterogeneous of customer segments and the disposition of two firms should be sufficiently high.Global Brand StrategyA Global Brand Strategy signifies a firms decision to serve all its customers with an existing co-brand name in a new market. The key assumption that drives the adoption of a Global Brand strategy is convergence of cross-segmental preferences. The merged firms commitment is to take advantage of such convergence, accentuate the desirable goals and benefits by utilizing global recognition. Among recently merged firms in the telecommunication sector, BenQ has actively move to extend the market share and global visibility by merging telecommun ication department of Siemens with existing brands of the combination BenQ-Siemens.For the merged brand, advantages of a global product brand could accrue at both the release endwhen scale and scope advantages substantially outweigh the benefits of partialas well as the demand end, with uniquely and premium than local or regional brands. However, focusing on extending the current market might cause fail and lose the original advantages (e.g., BenQ reduced its assets dramatically after merging Siemens). Finally, for a Global Brand strategy to succeed, it is vital that the universality across diverse customer segments appeal continuously to evolving patterns of preference.Brand backing StrategyA Brand Reinforcement Strategy signifies two firms decide to use a new name as a co-brand name in the existing market. The key assumption that drives the adoption of a Brand Reinforcement strategy is brand image reinforcement. The merged firms commitment is to take advantage of such attempt of a totally different co-brand name, accentuate the desirable goals and benefits by providing a diverse name and representation style.For the new co-brand name, two firms could reinforce the reputation of their original brands without hurting the original names. However, focusing on creating a new brand name might cause fail lose the advantages (e.g., people have negative image will affect the seed company of a diverse co-brand name). Finally, for a Brand Reinforcement strategy to succeed, it is essential to create an appropriate co-brand name that is totally different from original ones effectively and efficiently.Brand Extension StrategyA Brand Extension Strategy signifies two firms decide to serve a pertly co-brand name in a new market. The key assumption that drives the adoption of a Brand Extension strategy is union of cross-segmental preferences (e.g., Sony and Ericsson). The merged firms commitment is to take advantage of such union, accentuate the desirable goals and benefit s by extending different segments.The merger between Sony and Ericsson has led a horizontal integration for a strategic purpose. Before merging with Ericsson in 2001, Sony was not (with market share of only 1% to 2%) a leading player in the telecommunication industry. Sony had superior design capabilities, but lacked core telecommunication competences, whereas Ericsson had tenuous RD capabilities. The merger began to earn profits in the second merged year (2003). Sony-Ericsson is currently among the top four mobile phone manufacturers. This success can be attributed in part to the fact that the partners had a good co-branding plan including a joint brand name for cellular phones.For the merged brand, positioning a co-brand in an extension purpose might cause by a successful co-branding plan (e.g., Sony-Ericsson). However, it is risky for both firms to position a new brand in an unfamiliar market or customer segments. Finally, for a Brand Extension strategy to succeed, it is vital t hat two firms have to take advantage of their core competences at the first place, generate the prescribed synergy as well as draw up an appropriate long-term co-branding plan.Types of Co-brandingThe uncomplicated type of co-branding can create significant value for companies and their customers, the potential of more durable and innovative co-branding approaches-those that focus on combining the real capabilities of partner companies to create new customer-perceived value-is far greater.While there are many forms of co-branding, before a company can decide which option makes the most sense for its situation, it must fully explore four main types of co-branding. Each is differentiated by its level of customer value creation, by its expected duration and, perhaps most important, by the risks it poses to the company. These risks include the loss of investment, the diminution of brand equity and the value lost by failing to focus on a more rewarding strategyCountry-of-origin Effect an d its significanceCompanies all over the world are face to expand their businesses into foreign markets. With the dropping of trade barriers and improvements in communication, many firms point to go global. The safest approach is to build brands with relevant differentiation and value proposition that would encourage customer loyalty. However, the consumers brand evaluation process is a intricate one with a number of variables. One key factor proposed by Robert Schooler, 1965, is the Country-of-Origin (coo) of the brand. Al-Sulaiti and Baker (1998) even considered it as the fifth element of the marketing mix.Country of origin refers to information pertaining to where a product is made (the made in concept). It is also defined as the unequivocal or negative influence/associations that a products country of manufacture may have on consumers decision processes or subsequent behaviour (Elliott and Cameron, 1994). According to COO theory, when consumers are exposed to the product whi ch is made from other countries, they will perceive some stereotype images about those countries and these images are subsequently used as information cues in judging products from different origins (Lotz and Hu, 2001). For example, France is associated with fashion, Japan with hi-tech/electronic goods and Germany with high level of technology.Factors affecting influence of COO effects on brand evaluations seek in international marketing has proven that country associations do lead to customer bias. Such bias is based on the image of the country in customers minds. This leads to the next obvious question what constitutes an image of a country? What makes French the best country for wines, what makes Germany the best in engineering and what makes Switzerland the best in watch manufacturing? Many factors contribute to the country image.Here are some of the most important onesEconomic DevelopmentOne of the main factors that influence customers perceptions towards a country is the leve l of the countrys economic development. Level of economic growth acts as a main proxy for the countrys other activities. In developed countries, national products are likely to be preferred than imports. On the other hand, in developing countries domestic products are likely to be evaluated less favorably than foreign made products especially from developed countries. trading storyThis refers to the evolution of business in a country and what a country has specifically been known for historically. Even though countries evolve done time to specialize in successively high-value industries, it takes a long time to shrug off any negative associations of the past. As such, the business history of the country contributes to the overall image of the country.DemographicsThe consumer perception toward COO can vary by demographics i.e. the effect of gender, age group or education and income. Studies (Kotabe and Helson, 1998) have shown that COO influences would be strong among the elderly, less educated and politically conservative consumers. Another factor is wealth index that refers to the perceived/actual overall wealth of a country as measured through levels of consumption, number of millionaires, number of billionaires, the size of the luxury goods industry, the sophistication of leisure industry, the proportion of unmarried income spent of leisure and self enhancing activities and so on. Wealth index offers customers a cue to infer the level of product quality, variety, and perceived credibility of the products/brands. engineering scienceGiven the extent to which technology and technological innovations impact consumers lives in todays world, it is not surprising that the extent of technological advancement of a country bears intemperately on consumers perception of the country. This factor is usually related to the level of economic development of the country. Higher the technological capability of a country, more positive is the COO effect.EthnocentricityHowe ver, in the context of economic development given above, the anesthetise of ethnocentricity of the host country becomes critical. Customers who are ethnocentric are likely to looking that it is inappropriate and wrong to purchase foreign made products (Schiffman and Kanuk, 2002). It is argued by LeVine and Campbell that in developed countries, consumer ethnocentrism is seen as the most important factor because they more knowledgeable therefore they prefer to buy domestic to keep domestic jobs and thus increase their countrys GDP, and as a result, COO effects have a minimal role to play.Hence, Low ethnocentric consumers are more likely to use COO cue to infer product Quality whereas, high ethnocentric consumers looks at COO as a means to say loyalty as so reflected in their purchasing behaviourregulatory mechanismsWith heightened globalization, the existence and effectiveness of regulatory mechanisms have become a major factor in creating country images. Regulatory mechanisms such as keen Property Rights law (IPR), online piracy laws, anti-fraud regulations and others create a sense of perceived security in the minds of businesses and customers about a specific country.Product CategoriesThe drill of COO cue is primarily determined by the specific type of product. Therefore, COO effect varies by product category. Typically, those products that can be categorised as high involvement products (such as durables) are more relevant to the concept of COO than low involvement goods.Consumer Expertise(Related to the above point), COO influences will be stronger when the consumer is not familiar with a product category, which can be categorized in novice group (Novices are the consumers who have the time limitation and lack of sufficient product knowledge). They possibly use COO cue under any circumstances (Usuiner, 2000). On the other hand, expert consumers only rely on COO cue when the product attribute is vague.All of these factors contribute towards the formati on of an overall image of a country. As such, a country which is economically well developed, is technologically advanced, has a high wealth index, has stringent regulatory mechanisms, follows a market economy, and has positive hi