Did you ever order a Bacardi Coke, a Red Bull Cola, ate the McFlurry M&M at McDonalds, thought about buying your Jimmy Choo shoes at H&M or your Sergio Rossi ones at PUMA? Then you already have an idea of what co-marketing is: a branding technique that has been around for the past 20 years that simply consists of presenting two or more brands simultaneously to the consumer.
Joint branding is quite popular, at an average of 40% growth per year (1994 data), but of course rather complex to manage and, if not implemented correctly, can have dire negative consequences, such as brand dilution or failure of the parent brand.
Back in 1998, Simonin & Ruth asked some very basic questions about the effects of these brand alliances: how do they affect the individual brands? How are customers evaluating the alliances? Do their perceptions of the individual brands change?
At the time, they knew that it is very likely that brand alliances have an effect on the individual partnering brands, but did not have a clear interaction pattern. Moreover, the gurus of academic research in the area of brand extensions, Aaker & Keller, had already noticed twenty years ago that we are more likely to favorably evaluate brand extensions if we like the brands and perceive them as having a high quality.
Like it or not, when we are presented with such a product, we tend to resort to the knowledge attitudes and feeling we already have of the brands and apply them to the new product. When evaluating brands, the context of the brand also seems to be highly significant, because our brain interprets stimulus in context, and not individually. This explains the phenomenon of grouping highly familiar brands together on the supermarket shelves, so that they can borrow from each other’s associations.
There are three main criteria to which we evaluate alliances, namely:
Simonin & Ruth tried to incorporate these assumptions into a study aimed at gaining a better understanding of how brand alliances are evaluated, and came across some interesting findings. Their study was based on a microprocessor and car brand pairing, and was conducted mostly using university students as test subjects, a practice quite common in the academic world. Here is what they found out:
1. brand alliances do affect partnering brands
2. brand alliances can add to or alter a brand’s existing associations in the mind of the consumer
3. alliances might exist in the mind of the consumer even when managers do not necessarily plan for them
What does this mean for brand managers out there? Well, as a start, keep in mind when partnering with other brands that you should pick one that combines with yours and results in favorable perceptions of both product and brand fit, and not just a well-known brand. Also, brands should make sure to do extensive research on their partner in order to identify any possible risk that the partnership holds (probably partnering up with banking brands is no longer seen as the safe idea it used to be years ago).
Secondly, the distribution channel of your choice will affect your brand in the mind of the consumer, so choose one that portrays your values; at the same time, pick one whose assortment fits your brand characteristics (a luxury brand surrounded by Kmart brands will lose its shine and glamor and be rated poorly by its targeted consumers).
Moreover, highly familiar brands will add more to an alliance, so the questions one must ask is what is the added value of your partner? If they are not highly familiar, do they contribute with expertise (e.g. PUMA AG initially chose to partner up with Dobotex because of its knowledge of legwear, and not its notoriety). If your partner has little added value, you should probably refrain from creating a brand alliance, as the dangers of doing so outweigh the benefits.
If you have a new brand on the market and would like to gain some notoriety, then partnering up with a well-known brand is the safest way for you to do so. The free rider effect holds little disadvantages for the unfamiliar brand, as there are little associations in the mind of the consumer that can be negatively altered if the partnership does not succeed; the benefits of such a partnership definitely outweigh its possible risks.
On the other hand, for big brands, a partnership with unknown or new brands is only recommendable if both the product fit and the attitudes towards the alliance are positive. Thus, one should not enter into such an alliance without a previous market study on how consumers would evaluate the brand alliance.
What if you partner up two highly familiar brands? Simonin & Ruth prove that there is a limit to how aware consumers can be of a brand. This ceiling effect shows that although you can associate two highly familiar brands to become even more famous, the alliance will probably have a very small effect on the consumer’s awareness of the two brands.
All in all, brand alliances should be seen as possibly risky, and managers should only engage in such a practice if the benefits of the association outweigh its disadvantages and inherent risk levels. I just hope this blog entry and the attached presentation will help managers make an informed decision about brand alliances.
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