Group 56

CO-BRANDING

What is co-branding?

Why is co-branding so popular?

Enemy or Friend?

Exclusive it?

Pros & Cons

Zhimeng, Han 019958 Hui, Liu 020533Rui, Zhao 025142Jinyi, Zhou 024561Siying Zhu 018275

ReferencesApple, 2012. [Online]. Available at: < http://www.apple.com/ipod/nike/run.html>[Accessed 10 March 2012].Fendi, 2012. [Online]. Available at: <http://www.fendi.com/#/en/foreverfendi>[Accessed 07 March 2012].Gourmet Ads, 2012. Co-Branding Examples which have embraced this effective trend. [Online]. Available at: <http://www.gourmetads.com/blog/co-branding-examples> [Accessed 07 March 2012].HTC, 2011. [Online]. Available at: <http://www.htc.com/us/press/htc-and-beats-by-dr-dre-set-to-introduce-new-era-in-mobile-audio/41> [Accessed 08 March 2012]. L.A. TIMES BUSINESS, 2011.HTC invests $300 million in Beats by Dr. Dre. [Online]. Available at: < http://latimesblogs.latimes.com/technology/2011/08/htc-buys-a-majority-share-in-beats-by-dr-dre.html >[Accessed 10 March 2012].Maserati, 2012. [Online]. Available at: <http://www.maserati.com/maserati/en/en/index/models/GranCabrio/GranCabrio-Fendi.html>[Accessed 07 March 2012].Park, C.W., Jun, S.Y. and Shocker, A.D. (1996), “Composite branding alliances: an investigation of extension and feedback effects”, Journal of Marketing Research, Vol. 33 No. 4, pp. 453-466.Soloman, Bamossy, Askegaard and Hogg, Consumer Behaviour: A European Perspective, 4 th Edition, (2010)Swatch, 2012. [Online]. Available at: <http://www.swatch.com/zz_en/watches/finder-detail.sku-SUOZS02.html>[Accessed 08 March 2012].Tapan, k. P., (n.d). Strategic advantage through successful co- branding. [Online]. Available at: <http://dspace.iimk.ac.in/bitstream/2259/203/1/StrategicAdvantagethroughSuccessfulCoBranding.pdf> [Accessed 09 March 2012].

Editors’ talk...

The Special Topic this week

is “Co-Branding”, which is worldwide popular since 21st century. Different types of co-branding, the elements which influence consumers decision making, the corporations between companies and the advantages and disadvantages of co-branding will be discussed in this magazine. We will combine the academic theories with the real examples, in order to present the concept, “co-branding” , to you easier.

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Co-branding is an increasingly popular strategy, which is used by companies to add products’ value and increase sales. There are four types of co-branding, which are ingredient co-branding, same-company co-branding, joint venture co-branding and multiple sponsors co-branding.

Firstly, ingredient co-branding means that using a well-established brand as a component of the production of another well-established brand. A well-known example is Gateway computer with Intel chips.

“it involves that pairing two or more branded products (constituent brands) to form a separate and unique product (composite brand), which is a strategy currently popular for introducing new consumer products.”

------Park, Jun and Shocker (1996).

Secondly, same-company co-branding means that, a company makes two or more brands’ products and promotes those different products together; for example, consumers get freebies Anna Sui perfume, when they purchase Boss perfume, while both of those brands belong to Procter& Gamble.

Another form of co-branding is joint venture co-branding, which means two or more companies create a “strategic alliance” to produce a product to target customers. McDonald's and Disney’s “happy meal” is an example.

The last one is multiple sponsor co-branding; this refers to different companies working together to form a “strategic alliance” in technology, promotions, sales, etc. For instance, HCL computers integrate HP hardware.

Co-branding

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Nike was the first company, which realised the value of co-branding. Therefore, the company cooperated with Michael Jordan in 1984, and created a production line of shoes which named as Air Jordan(s). Air Jordans was first released in 1985; and it updated new designs every year. Nowadays, Air Jordans is still one of the most popular products in the shoes industry. The success of Air Jordans pointed other companies that how great the concept “co- branding” is; since that, co- branding became more and more popular day by day.

Editor: Hui, Liu

In this case, as Nike has chosen the right partner, it reached a peak in its business life. This was a typical example of win-win scenario.

Based on the four types of co-branding, we can see that, co-branding is an efficient strategy to add products’ values. That can be regarded as an innovation or a creation, which refreshes the business industries.

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Nowadays, co-branding becomes a highly popular concept in business area. Companies corporate with others, try to reach a win-win target and gain a high profit and market share. The two companies could be in the same business area or in different areas, while some of the companies used to be competitors. However, business is always a complicated world, isn’t it?

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1

Although those companies are supposed to be

competitors, while they are all in the fashion

industry; the cooperation of them showed us a great

results, which can be presented by the long queue in

front of H&M’ stores. Business is never simple;

hence, a clever business man should be aware of,

that profits are always accompanying with risks, and

how successful his/her business can be

depends on his/her ability.

Editor: Siying Zhu

20042006

2009

2010

20112012

Most of H&M’s co-operations are “joint-venture co-branding”, as we have mentioned earlier. It usually seems that co-brand with a lower level brands would damage the brand images of the luxury brand, while H&M’s history of co-branding with luxury brands tells a different story.

Karl Lagerfeld is one of the most influentially fashion designers, who cooperated with H&M in 2004 .

The Amsterdam-based fashion house, Viktor & Rolf is H&M’s third high fashion partner, which rose a big hit for H&M.

With all the designers pairing up with lower-priced stores, there has been a bit of high-low fatigue lately but this particular collaboration of Jimmy Choo for H&M has been a hot seller.

Lanvin , which is one of the first fashion house in Paris co-brand with H&M, and designed the Lavin for H&M; the must-have collection sold out within hours of going on sale.

With the reveal collection of Versace for H&M, the hit goes on sale began in 300 stores worldwide. 

Marni for H&M is going to release in March, 2012. It has generated a worldwide attention before it launches. The attractiveness of it can be imagined.

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The aim of the cooperation is to redefine theSmartphone and audio industry. They will focus on bringing high performance sound to HTC phones. Customers will feel the high quality and superior mobile audio experiences.

Different from H&M and other companies, HTC and Beats’ cooperation is “ingredient co-branding”. In 2011, HTC Corporation, a global designer of mobile devices announced to work with Beats Headphone Company.

That is a win-win strategy: for HTC corporation,  it gains a powerful arm to fight with its rivals (Apple and Samsung), while Beats organisation conducts a new revolution: a move of professional headphone integrating mobile phone refreshes audio industry and customers’ consumption concept. The price of the Beats headphone is very high. Most of those who tend to purchase Beats headphone are audiophiles or really love the brand. HTC with Beats headphone(HTC Sensation XL mobile phone) gives customers a chance to own a pair of Beats headphone with a affordable price. At the same time, HTC and Beats attract each other’s consumer group.

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“Their target audiences are those who listen to the MP3 and those young generations, but for our middle aged or elderly people who grow up with CDs are not interested in that. “

The “high performance” is just a way to promote their products, clamor our attention and our money. Most people just blindly buy it to follow the fashion and show off in the pubic.”

“The cooperation is amazing! Beats headphone is professional, and HTC mobile phone is also with smart shape and large screen. I could watch video with a high quality version and stereo sound effect. I am so into it!”

The cooperation is a move to promote the two companies’ products and increase their sales. Actually, when I saw the HTC phone intergraded with beats headphone, I feel so impressive. That is a reward for funs of HTC and Beats brand.

Editor ： Zhimeng, Han

It seems that, there is no real “enemy” in business area.The main reason of cooperation is to increase sales and create new selling points. Profit oriented, companies could work with their partners or even competitors. 

Conclusion

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For a woman, the most

beautiful words in the

world may not be ‘I love

you’, but --

Believe it or not, the

exclusive items seem to have

better consumption

than common ones.

Co-branding

also can not resist the invitation of

exclusive goods.

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Jeremy Scott (man in the picture), a fashion designer who has built a reputation for outrageous designs favored by pop stars and celebrities.

Swatch is a brand name for a line of luxury wrist watches which is popular among teenagers for its unique and interesting designs.

The co-operation between these two brands are tremendously successful. The watch collection was exclusive for only 1000 sets all over the world and they were sold out immediately once they came into the Swatch shops.It is not the first time that Swatch co-operates with a fashion designer, but it might be the most successful one. Jeremy Scott has also created a line called Adidas Original X Jeremy Scott, which is now sold both online and in stores. This line has a large quantity of production, which perfectly caters the target audience. However, the enthusiasm of consumers about it cannot be compared with Swatch& Jeremy Scott. Nevertheless, it seems that, people desire more for exclusive products, rather than the mass.

However, not all exclusive goods have better popularity.

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Maserati is an Italian luxury car manufacturer. It is famous for the brilliant appearance and mechanical characteristics.

Fendi is an Italian high fashion house best known for its "baguette" handbags. It has covered from clothes to eye-wears, now even cross over with the car industry.

The Maserati GranCabrio Fendi designed

by Silvia Venturini Fendi is born from the union of two iconic brands of the Made in Italy, which share common values such as

craftsmanship and tradition. It is a special edition which is quantity limited.

In spite of the distinctive value of the car, the co-brand is not sold as much as the companies have expected. Some argue that it is worthless for the high price but dissatisfying functions when others hold the opposite opinion that it is a symbol of wealth.

Collaboration

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With the comparison of the two examples, we can come up with a conclusion that exclusive items do appeal to people, but in some cases the disadvantages may overweigh advantages. Customers consume based on their ability to afford and practicability of goods, not only the allure of limited quantity.

Companies should take different factors which may affect customers into consideration before they made a co-branding decision. Editor: Jinyi, Zhou

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In the twenty-first century, people’ s reliance on brands has been increasing significantly. Co-branding is undoubtedly a small business strategy for organisations. Companies utilise the phenomenon of people’s preference of choosing the brands they are interested in, from many alternatives, to attract consumers consumption. Why is co-branding products so attractive? It can be presented in two aspects.

Furthermore, Customers’ needs can be generally separated into

utilitarian need and Hedonic need. The utilitarian need is the basic one, while the hedonic need is about customers to pursue high quality life standard. Meanwhile, the hedonic need comes from customers’ “self-esteem (ideal self)” and “individual level”. The cooperation of H&M and Versace satisfy their need. In other words, some customers probably could not have afforded the Versace luxury products, but to their “ideal selves”, they are eager to own those. That is partly because that they think those luxury brands could reflect their tastes: “you are what you wear.” The two companies’ cooperation makes their dream come true.

The reason why customers do consumption is to satisfy their needs and wants..The question of how to maximize the satisfaction of customers’ needs must be well considered by each company. The Cooperation between companies (co-branding) is a good way to achieve that. For example, Nike and Apple have cooperated to release the Rock and Run to satisfy Sports enthusiasts. They could put Nike + iPod Sensorinto their Nike shoes and set some data. When they are running, the iPod or iPhone will tell them time, distance, pace, and calories burnedas well as the details of workout when they are done.

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Self & Need

Attitude refers to how do people measure or evaluate the position of an object in their minds, which in business aspect, means the way people feel about a product. The cognitive information processing effect from the famous ABC model theories about attitudes suggests that a consumer’s beliefs about a product would influence the feeling that the consumer has to it; then, those feelings and beliefs would motivate the consumer to do something. Companies ingeniously use the attitudes of people and form a business alliance, in other words, co-branding, to fascinate customers, who may not be their customers before. For example, there is a young man, who might not very into Converse, is a big fan of the Japanese famous fashion brand, Comme des Garcons. However, the beliefs and love he has for Comme des Garcons leads to his positive feelings for the “Comme des Garcons PLAY x Converse”, which is the co-branding products of Converse and Comme des Garcons. In the mean time, the explosive responses from the market motivate his action of purchasing. In a word, attitude to a product would affect people’s decision making when they are going to buy some products. Co-branding companies catch consumer’s psychological thinking and make a brilliant strategy– co-branding!

AttitudeCustomers choose Co-branding products in order to satisfy their demand in some aspects. Co-branding is an effective motivation to stimulate consumption. They can promote two brands by the new-born product.. Additionally, companies can maintain current customers and draw new customers through cooperating with another brand.

Editor: Rui, Zhao

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Share capitals

Technological benefits

Increase market

Brand effect/Share reputation

Costs& risks sharing

Risks of mis-choosing partners

Complex profit-sharing agreement

Dilution of brand image

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Walt Disney and McDonald’s ended up their 10-yearHappy Meal deal

The two companies worked with each other in the 1980s. Both of them gained a handsome profit in the last ten years. According to market estimates, Disney gained $100m (£54m) a year in royalties from McDonald's under the deal. However, Disney ended their co-operation unilaterally. Even though Disney denied the reason of broken relationship was due to the anxiety of being linked with junk food and obesity image, the underneath reason

The separation brings a big loss to both companies, while McDonald’s decision is understandable, for the image and goodwill of are valuable for a company. Even though the cooperation could bring profits, keeping company’s positive image is also worth doing. However, someone may argue that they have cooperated for ten years and the image was impressive. Others also hold the idea that if Disney does not announce that, they have never thought about linking Disney obesity image together. Based on our research, it is unnecessary for companies to co-brand without comparing the pros and cons of the movement. They not only generate profits, but take risk into responsibility together. Does it worth co-branding? It may be the most consideration before they collaborate.

was just like so.

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What’s more…

Vodka & Swarovski

ASUS & Lamborghini

H & M and Lanvin

Disney & McDonald

H &M and Marni

Veuve Clicquot & DKNY

H & M and Versace

Converse & Music stars

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