What Small Business Owners Need to Know About Co-Branding

    Chris Gottschalk

    Chris Gottschalk About The Author

    Jun 16, 2022 4:45:00 AM

    When two entities combine, the result is often more powerful than they were separately. You can find examples of this all over, from the Power Rangers’ Megazord to Peanut Butter and Jelly. You can even find examples of this in the business world, where it’s known as co-branding.

    Co-branding is a marketing strategy where at least two brands join forces to create a new service or product that has features of all the brands involved. When co-branding is done right, it can lead to not only better sales, but also an expanded customer base that includes customers from demographics your brand might not be able to reach by itself.

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    Types of Co-Branding

    Ingredient co-branding is the type of co-branding strategy that comes to mind for most people. All the companies involved add components of one of their brands to another brands product, like when the toy company Hasbro releases a version of a Transformer that turns into a licensed product like a video game system or a sneaker.

    Closely related to ingredient co-branding is composite co-branding, where two well-known companies create an entirely new product or service that they might not be able to accomplish alone. Streaming services partnering with film studios is a good example of this.

    Larger corporations might use same-company co-branding, where they promote multiple in-house brands under one product. You can usually see this type of co-branding when different food brands supposedly team up to release a limited-time food product.

    National to local co-branding is the type of co-branding that many small business owners will be interested in. This is where larger corporations partner with smaller companies, like Visa co-branding their credit card with a smaller retailer. Ideally, the small business gets more money coming in, while the bigger company gets to increase its brand awareness.

    Sponsor banners at a stadiumFinally, multiple sponsor co-branding is an attention-grabbing strategy where multiple brands team up to share in big promotional events. Think about the biggest sponsors at a concert or a sports game and you’ll have an idea of this type of co-branding.

    Co-Branding Examples

    • Nike and Apple collaborated to make Nike +, a partnership that combined Nike’s athletic wear with Apple’s devices to form an activity tracker that would record your walks or runs on your iPod or iPhone
    • Taco Bell and Doritos famously created the Doritos Locos Taco, a taco with a Dorito-flavored shell that is both the butt of late-night talk show jokes and a huge seller for Taco Bell.
    • Kanye West and Adidas worked together to create Yeezys, a sneaker with a huge price tag and even bigger demand.
    • Rochester's own Little Thistle Brewing Company teamed up with Rochester company TerraLoco to create their Carb Loading ale.
    • Another Rochester business, Grey Duck Theater and Coffeehouse, serves coffee bought from Fiddlehead Coffee 
    • Dawn dishwashing detergent collaborated with International Bird Rescue to clean wildlife affected by oil spills and showcase the effectiveness of Dawn detergent.
    • First Alliance Credit Union co-branded with several businesses to make our First Alliance Commons branch a place where you can do banking and get some food. 

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    Questions to Ask Before Co-Branding

    Of course, just because you decide to co-brand with another business is no guarantee of success. There are some questions you should ask before partnering with another company.

    Do you and your partner have similar goals?

    This is one of the first questions you should ask. What do you and your co-branding partner want to accomplish together? Do you want to expand your customer base, get a new revenue stream or just improve your customers’ loyalty? Making sure everyone is on the same page goal-wise will make sure you and your partner are moving in the same direction when you undertake your co-branding campaign.            

    Do your customers bases have a common following?

    You and your co-branding partner should have at least some overlap in your customers. If you’re a hotel looking to partner with an airline, for instance, you’ll probably want to capitalize on the fact that your customers will almost certainly be traveling somewhere. One of the keys to good co-branding is finding different ways you and your partners fill an overarching customer need.

    What does your co-branding partner have that you don’t?

    This is the big question you should be asking when you decide to enter into a co-branding partnership. Your partner needs to have something that you don’t. However, it also needs to be something that your customer base wants.

    Red and black air jordan shoesOne of the best examples of this is Nike’s Air Jordans. It’s a co-branding partnership between Michael Jordan and Nike, and both sides have something the other didn’t—Nike had the capacity to not just design shoes, but to manufacture and sell them, and Michael Jordan had the star power to make people want to buy anything he endorsed. The result was a co-branding partnership that not only made both parties millions of dollars, but also became a cultural touchstone.

    You should also know what your business brings to the table in a co-branding partnership. You might not be a multimillion-dollar corporation or a mega-star of stage, screen or sports, but every company has something to offer in a co-branding partnership. It could be a loyal customer base, or you might have a foothold with a demographic another company doesn’t.

    Do your brand values line up?

    Finally, you’ll need to make sure your brand values line up. If your company stresses making environmentally-friendly products, for instance, co-branding with an oil and gas company might not be your best choice.

    Fund Your Co-Branding Efforts With First Alliance Credit Union

    When your company co-brands with another, you can reap a lot of benefits. However, you can’t co-brand indiscriminately. You have to think about what your goals are with co-branding, make sure you and your co-branding partners both have resources the other doesn’t and have some overlap in your customer bases.

    If you’re planning on co-branding, First Alliance Credit Union has several tools you can use to maximize the effectiveness of your campaign. We offer business loans that will give you the funding to promote your co-branding efforts, as well as business accounts that will help you keep track of the money you’ll get when your promotion takes off.

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