Co-branding or cross-branding is a strategic alliance between two or more brands in which the brand names of all partners are used to promote a single product or service.
The advertising buzz, social media exposure, word-of-mouth referrals due to two brands coming together, increased consumer recognition, and a dip in another’s loyal and expansive fanbase – co-branding enables brands to explore and augment their products and ideas with an element of surprise and delight for consumers, at minimal investments while leaving lasting impressions.
Legally speaking, it is a marketing strategy that uses cross-licensing of successful trademarks from different companies to market a new product.
Various permutations and marketing combinations are possible. For example:
1. Co-branding may involve players operating in the same industry tapping into a different class of consumers. H&M’s repeated partnerships with luxury fashion designers launching limited-edition co-branded collections – Jimmy Choo, Versace, Balmain and even local luxury label Sabyasachi – immediately come to mind in this context. In fact, the union of fast fashion giant H&M and Indian luxury designer Sabyasachi in 2021 shook the internet so much that the collection sold out within minutes of its fall, which perfectly highlights the power of strategies. co-branding marketing.
2. That said, the 2021 Gucci and Balenciaga Hacker Project, where Gucci and Balenciaga motifs merge to create new interpretations of the two luxury fashion houses’ iconic pieces, is a great example of a collaboration that seeks to attract a common consumer base.
3. However, more often than not, these partnerships involve brands that operate in different business spaces. Spotify, the music streaming app’s partnership with Uber to create a “soundtrack for your ride”, is a well-known example of such a successful co-brand.
But even the best-thought-out branding collaborations can fail. Kendall Jenner and Pepsi’s 2017 pairing for an ad campaign drew strong backlash for appropriating and trivializing protest movements – such as Black Lives Matter – for commercial purposes, and Pepsi had to pull the ad in the 48 hours after release.
1. Shared Values: When Shell, an oil company, partnered with the Lego toy company, the Shell brand began to be used on Lego toys. However, the alliance failed due to Shell’s reputation for poor environmental practices. With a focus on raising environmentally conscious children, the public outrage that followed led to the dissolution of the Shell-Lego partnership. So, brand values and stories must align for a brand marriage to succeed.
2. Long Term Goals and Fine Print: It is beneficial to formulate long term goals of a co-branding campaign and secure the future needs and interests of the business. For example, if an upcoming company partners with a world-renowned company, in the early days, it can be a win-win situation for everyone. The first part enjoys huge exposure, and the second earns generously through exclusive association and royalty payments. But what happens when the upcoming company becomes extremely popular in its own right? What if he wants to expand his partnerships? Or what if the most renowned brand suffers a loss of credibility? Contract disputes can be avoided if a legal agreement at the start of the co-branding partnership embodies a long-term business vision and provides for best-case scenarios (extension clauses) and worst-case scenarios (termination clauses).
3. Don’t ignore the legal pitfalls: In 2018, the Indian Institute of Technology, Delhi (IIT, Delhi) filed a lawsuit in the Delhi High Court against the Delhi Metro Rail Corporation (DMRC) and others alleging that the use of the name ‘FIITJEE IIT Metro Station’ for a metro station located near IIT, Delhi campus gave a false impression that FIITJEE had some association with IIT, Delhi.
As FIITJEE is an institute that coaches students for the entrance examination to IIT (an examination called ‘IIT-JEE’), the use of the name FIITJEE with IIT has been interpreted to imply a trademark association between the two when no such official association existed. The court resolved the case by ordering the DMRC to install a disclaimer/advertisement at said subway station identical to the font and size in which the trade name FIITJEE was advertised, stating that “FIITJEE does not is linked or associated with any IIT”.
To avoid such legal issues, it is of the utmost importance that co-branding tools are used with the express permission of all brand owners, formalized in an appropriate agreement.
If co-branding fails, negative fallout can include brand dilution, market confusion, loss of goodwill, and reputational damage due to a partner’s shortcomings. Disputes centered on intellectual property ownership and license fees and costs may also arise. Well-negotiated and drafted license agreements should therefore be at the heart of any co-branding exercise.
It has been reported that 71% of consumers appreciate multiple brands coming together to offer a single product. To conclude: a perfect union is comparable to when the fictional Tony Stark, also known as Iron Man from Marvel Comics, joins The Avengers; although Stark is fully capable of saving Earth alone, he knows that teaming up with other superheroes will allow him to save multiple planets.
Partner, Remfry & Sagar
Partner, Remfry & Sagar
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