1. Academic papers
2 + 2 = 5? A framework for using
co-branding to leverage a brand
Received (in revised form): 26th November, 2002
LANCE LEUTHESSER
holds a PhD in marketing from the University of Texas at Austin, and is a professor of marketing at California
State University Fullerton. He has written on corporate identity, brand equity and business relationships. His
articles have appeared in a number of publications. He has held executive management positions in firms serving
business and consumer markets.
CHIRANJEEV KOHLI
holds a PhD in marketing from Indiana University, and is a professor of marketing at California State University
Fullerton. He specialises in the creation, measurement and management of corporate and brand identity. His
work has been reported in a number of publications. He has provided brand consulting services for several
clients including Autodesk, Canon USA, Conagra, Transamerica and Verizon Communications.
RAJNEESH SURI
holds a PhD in marketing from University of Illinois at Urbana-Champaign, and is an assistant professor of
marketing at Drexel University, Philadelphia. His work on branding and pricing has been reported in a number of
publications. He is an alumnus of McKinsey & Company, where he worked as a consultant and pricing expert.
Abstract
Co-branding involves combining two or more well-known brands into a single product. Used properly, it
is an effective way to leverage strong brands. In this paper, co-branding is defined and differentiated
from other types of branding alliance. The literature on co-branding is reviewed and a framework
proposed to help managers identify co-branding opportunities to enhance the success of their products.
The advantages and shortcomings of each of the proposed strategies are also discussed.
INTRODUCTION the product itself. Successful brands
As marketers seek growth through the provide quality assurances to con-
development of new products, they sumers and can be leveraged to
face markets cluttered with compet- introduce new products. The most
ing brands. It is difficult to establish common way of leveraging brands is
a unique position for new products. through line and brand extensions —
Even innovative differentiated products applying the brand to other products in
can be imitated quickly, leaving no either the same or different product
strategic edge. So, the risks inherent in categories.
establishing new brands are high, with An alternative for developing new
a failure rate ranging from 80 to 90 per products is co-branding, a branding
cent. strategy that has seen a dramatic
Chiranjeev Kohli
Department of Marketing, Established successful brands help to increase in use over the past decade.
College of Business, California
State University Fullerton, create differentiation through brand Co-branding involves combining two
Fullerton, CA 92834, USA
associations that go beyond the limits or more well-known brands into
Tel: 1 714 278 3796
E-mail: ckohli@fullerton.edu of the features and attributes of a single product. When it works
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2. LEUTHESSER, KOHLI AND SURI
well, co-branding has the potential to branding as the combining and retain-
achieve ‘best of all worlds’ synergy that ing of two or more brands to create a
capitalises on the unique strengths of single product or service. This defini-
each contributing brand (henceforth tion is adopted for two reasons. First,
referred to as ‘parent’ brands). In this despite the lack of universal agreement
paper previous research on co-branding on its definition, there appears to be
is reviewed and a framework offered general agreement that co-branding in-
that should prove useful to brand volves the creation of a single product
managers when assessing co-branding using two brands.5–7 This is, in fact,
opportunities. As shown, co-branding the criterion that is most often used
opportunities can be distinguished in specifically to distinguish co-branding
terms of both the nature of the from other types of branding alliances.
complementarity of the parent brands Secondly, it presents an alternative to
and their respective target markets. line and brand extensions for achieving
The advantages and potential pitfalls of growth through new product develop-
each of these strategic co-branding ment, and is therefore an attractive
options are also discussed. product-introduction strategy for brand
managers.
If a co-brand is a single product,
DEFINING CO-BRANDING AND THE the question arises, ‘Who owns the
SCOPE OF THE STUDY product?’ In fact, the product may be
There is no universally accepted defini- owned by one, or both, of the
tion of co-branding. In the marketing parent brands. Many co-brands, usually
literature the term has been used referred to as ‘ingredient’ or ‘com-
interchangeably with labels such as ponent’ co-brands, involve a primary
‘brand alliance’ and ‘composite brand- brand that ‘contains’ the secondary
ing’. Defined broadly, co-branding has brand. In some cases the secondary
been described as any pairing of two brand is always an ingredient; that is, it
brands in a marketing context such is not otherwise marketed as a separate
as advertisements, products, product product (eg DuPont Teflon, Intel
placements and distribution outlets.1 microprocessor). The primary brand
More narrowly defined, co-branding owner usually owns the co-branded
means the combination of two brands product and is mainly responsible for
to create a single, unique product.2–4 its marketing, while the secondary
When co-branding results in the crea- brand owner acts as a supplier or
tion of a new product, it usually signals licensor. In other cases, such as retail
to customers that the partners are co-branding (eg Circle K convenience
committed to a long-term relationship. store paired with 76 gasoline station;
In contrast, promotional alliances such Carl’s Jr. restaurant paired with Green
as joint promotions and product bun- Burrito restaurant), there is a more
dling are either not perceived as parallel relationship between the two
permanent (the former) or do not parent brands. These arrangements
result in the creation of a single often entail more complex alliances in
product (the latter). which the partners enter into joint
For the purpose of this paper the venture and profit-sharing agreements.
narrower definition is adopted of co- The financial structure of a co-
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3. 2 + 2 = 5? A FRAMEWORK FOR USING CO-BRANDING TO LEVERAGE A BRAND
branding arrangement is critically im- be a pre-requisite to assessing the
portant, for each partner must be relative attractiveness of co-branding,
adequately rewarded in order for the so it should not be surprising that the
relationship to endure. Whether a majority of research to date has
co-branding partner obtains revenue addressed the first of these broad
from royalties, from sales of ingredients areas.
or components, or from direct sales of Various theories such as infor-
the co-branded product, customers’ mation integration8,9 and cognitive
perceptions of the co-brand and any consistency10 have been used to explain
influence those perceptions might sub- how consumers reconcile their at-
sequently have on the parent brands titudes towards co-branded products.
should, however, be the same. In other Cognitive consistency suggests that
words, the market response to a consumers will seek to maintain
co-brand should be relatively inde- consistency and internal harmony
pendent of the legal or financial among their attitudes. Therefore, when
structure used to implement it, because evaluating a co-brand with two
ultimately brands are ‘owned’ in the (possibly conflicting) brands, consumers
minds and hearts of consumers. It is will tend to assimilate their attitudes
this aspect of co-branding that is the towards the parent brands such that
main focus in this paper. their attitudes towards the co-brand
will be an averaging of the parent
brand attitudes.11 Information integra-
FINDINGS FROM RESEARCH ON tion suggests that as new information is
CO-BRANDING received, it is processed and integrated
Co-branding is really a special case of into existing beliefs and attitudes.12
brand extension in which two brands Furthermore, among this new informa-
are extended to a new product. There- tion, salient and accessible information
fore, both co-branding and brand ex- is likely to be given greater weight.13 If
tensions raise the same basic issues, this is true, then better-known brands
namely, how brand equity transfers to are likely to play a greater role in the
the new product and how the new formation of attitudes towards co-
product subsequently has an impact on branded products.
brand equity. Empirical research on co-branding is
With the large base of attitude limited to a relatively few studies that
research as background, research on have typically examined product con-
co-branding has generally addressed cepts or fictitious products rather than
two broad areas: first, how customers’ real instances of co-branding. In a
perceptions of a co-brand are in- study involving co-branding of motor
fluenced by their perceptions of the vehicles and electronic components,
two parent brands and vice versa; Simonin and Ruth14 found that pre-
secondly, the relative merits of co- existing attitudes towards the parent
branding versus other new product- brands, the perceived fit (compatibility)
development strategies, such as line and of the parent brands’ product categories
brand extensions. It stands to reason and the perceived similarity of the
that a general understanding of how images of the two parent brands all had
customers perceive co-branding would a significant positive influence on
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4. LEUTHESSER, KOHLI AND SURI
attitudes towards the co-brand. These immune to brand dilution and confu-
findings are consistent with prior sion — risks associated with the alterna-
research on brand extensions, which tive of brand extensions18 — because if
suggests that attitudes towards brand a co-brand fails, it really ‘belongs’ to
extensions are more favourable the the primary brand.19 Therefore, a co-
better the perceived fit between the branding arrangement is likely to pose a
brand’s original product class and greater risk to the primary brand than to
the product class of the extension.15 the secondary brand.
Simonin and Ruth16 further found that Park et al.20 examined the effects of
where one parent brand was more product complementarity on evalua-
familiar than the other, it had a tions of a co-branded product, using a
stronger influence on attitude towards hypothetical co-brand of Godiva (fine
the co-brand than the less familiar chocolates) and Slim-Fast (weight-loss
parent, which supports the notion of products). Brand attribute ratings con-
attitude accessibility. Finally, attitude firmed the complementarity of the
towards the co-brand exhibited a two brands: Godiva rated high on
significant ‘spillover’ (post-effect) on taste and richness whereas Slim-Fast
attitudes towards the parent brands, rated favourably on calorie content
but the effect was stronger when and value. In terms of global brand
the parent brand was less famil- evaluation, Godiva was rated very
iar. Replications with a Northwest favourably, Slim-Fast significantly less
Airlines/Visa card co-brand and an so. A hypothetical cake mix extension
assortment of Disney/retailer co-brands by either brand alone (ie Godiva cake
produced similar results. Taken to- mix and Slim-Fast cake mix) was
gether, the findings of these studies judged to be similar to the parent
suggest that strong parent brands in- brand. That is, Godiva cake mix was
fluence the perceptions of co-brands perceived to be good tasting, but
more than weaker parent brands, and high on calories, whereas Slim-Fast
strong parent brands are less influenced cake mix was perceived to be low
by attitudes towards the co-brand. on calories and low on taste. Co-
As previously mentioned, in in- brands (‘Slim-Fast cake mix by Godiva’
stances involving a primary and a and ‘Godiva cake mix by Slim-Fast’)
secondary brand, the secondary brand is were, however, judged to possess the
usually a supplier or licensor to the desirable attributes of both brands (ie
primary brand, an ‘arm’s length’ ar- good taste and low calories). Similar
rangement that is relatively simple findings were reported for another
from both strategic and operational study involving a hypothetical motor
viewpoints.17 In such cases, the secon- vehicle co-brand ‘Jaguar sedan by
dary brand generally has little at stake Toyota’, where the co-brand was
except its reputation. Findings from perceived as possessing the salient
the co-branding literature suggest that attributes of both brands.21
secondary brands are relatively immune Another study conducted by Park et
22
to negative spillover effects, particularly al. paired Godiva with Haagen-Dazs
¨
if they are well-known and well- (a brand associated with premium ice
respected brands. Furthermore, secon- cream), thus mating two products with
dary brands also appear to be relatively highly favourable global ratings, but
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5. 2 + 2 = 5? A FRAMEWORK FOR USING CO-BRANDING TO LEVERAGE A BRAND
low complementarity (both perceived its Silverstone, Kevlar, StainMaster
as rich-tasting, high-calorie products). and other brands to a wide range
Choice and preference measures of manufacturers, from ones offer-
revealed that this combination per- ing high-profile, high-equity primary
formed about the same as extensions by brands to ones with marginal, low-
either brand, and not as well as the equity marks, and nearly all of those
Godiva/Slim-Fast co-brand. instances have involved co-branding.
In summary, the above results sug- DuPont has been highly successful,
gest that product complementarity may achieving market dominance and near
be a key appeal in co-branding, be- monopoly status in some instances.
cause complementarity allows the co- Finally, Blackett and Boad31 iden-
brand to inherit the desirable qualities tified another source of value that a
of each of the parent brands. brand could offer. ‘Reach/awareness
The pairing of ‘high-quality’ or co-branding’ refers to cooperation
‘high-image’ brands with brands of where a partner increases awareness by
lesser status is another area that has quickly gaining access to the other’s
received attention in the co-brand- customer base. Credit card co-branding
ing literature.23–25 Rao et al.26 found (eg American Express’s Optima card
that high-quality brands can confer with Delta Airlines’ SkyMiles pro-
quality perceptions to partner brands gramme) represents a commonplace
(eg Coca-Cola ‘endorsed’ Nutrasweet example of reach/awareness co-brand-
by using it in Diet Coke, thereby ing.
allaying fears about the safety of Based on the preceding review, the
the ingredient). Also, replacing little- following conclusions can be made:
known or unidentified ingredients with
nationally branded, high-quality in- — Co-branded products can acquire
gredients has been shown to enhance the salient attributes of both parent
the perceived quality of lower quality brands, making co-branding a
and private label products.27,28 It is particularly attractive alternative to
noteworthy that associating a nationally brand extension where the parent
branded ingredient with a private label brands complement each other
product (eg Heartland Raisin Bran strongly.
with SunMaid raisins) did not adversely — Perceptions of a co-branded
affect the evaluation of the national product can have spillover effects
brand.29 Similarly, Washburn et al.30 on the parent brands; lesser-known
found that low-equity brands gain parent brands are likely to be
more in a co-branding situation than affected the most.
high-equity brands, but do not damage — Pairing a ‘high-status’ parent brand
the high-equity brands they partner with a ‘low-status’ parent brand is
with. Therefore, it seems that well- not necessarily detrimental to the
respected, powerful brands have rela- high-status brand.
tively little to lose in co-branding — Each partner to a co-branding ar-
ventures, even when the partner brand rangement brings a customer base,
is a weak one. DuPont’s practices which is potentially available to the
seem to reflect the above think- other, as in reach/awareness co-
ing. For years DuPont has supplied branding.
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6. LEUTHESSER, KOHLI AND SURI
Figure 1 Co-branding strategies
A FRAMEWORK FOR CO-BRANDING tinction is not made in this paper. The
STRATEGIES idea of a ‘total’ product highlights the
A model of co-branding strategies is multitude of factors that make up a
shown in Figure 1. Following the product’s complete bundle of benefits,
above review of co-branding research, and encourages marketers to think
two principle dimensions can be iden- broadly and creatively about their
tified that distinguish among different products.
types of co-branding arrangements. A co-branding situation in which
The first dimension is the nature of the each brand makes a significant
complementarity of the parent brands. contribution to the co-brand’s core
The nature of the complementarity benefits represents ‘core’ complemen-
between the parent brands, and thus tarity. Examples of co-branding ar-
the way in which each brand con- rangements that frequently involve
tributes value, could, however, vary a core complementarity include in-
great deal. gredient and component co-branding
A useful way to distinguish the (eg Reese’s Peanut Butter Cups with
nature of the complementarity be- Hershey’s chocolate, Dell computers
tween the brands is from the perspec- with ‘Intel inside’). In core com-
tive of the ‘total’ product, a view plementarity, the attributes of both
that focuses on the entire bundle of brands are required for the essential
benefits, tangible and intangible, that functioning of the product.
the product delivers to the customer. It is not always easy to know
From this perspective, products consist whether a co-brand involves core
of a core, or essential, group of benefits complementarity. This requires a
along with a set of additional benefits thoughtful examination of the
that comprise the extended product. product’s benefits from the customer’s
The extended product is sometimes perspective and a careful inventorying
divided into tangible and augmented of its determinant attributes — the
components. For simplicity that dis- satisfaction-producing attributes that
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7. 2 + 2 = 5? A FRAMEWORK FOR USING CO-BRANDING TO LEVERAGE A BRAND
customers regard as both highly at lower cost. Intel’s stronger brand
important and meaningfully different name and image, however, offset
across competitive offerings. If both AMD’s price/performance advantage.
brands contribute to the set of So, while it is possible to distinguish
determinant attributes, then core conceptually between pure core
complementarity exists. Core com- complementarity and pure extended
plementarity ensures that each partner complementarity, in practice there will
is contributing to this success. be many hybrid instances where
If core complementarity does not product complementarity must be
exist, ‘extended’ complementarity is a assessed both ways.
possibility. In these situations, a brand The other dimension reflected in
lends its good name to the co-brand. Figure 1 is target market. This is
As previous research has shown, a based on the common observation
strong brand may lend quality percep- that co-branding can bring together
tions to an otherwise unknown partner, brands with different market franchises,
or a partner with a weaker quality thereby offering opportunities for ac-
image, or a partner for which quality is cess to new markets. In fact, one
difficult to judge independently. Alter- partner may be able to gain access to
natively, two brands with comparable the other’s market, or the co-brand
images may join forces because they may provide an opportunity to develop
believe that there will be synergies in a market entirely new to both. Where
endorsing each other. A brand name the co-brand’s target market is substan-
may be a part of extended complemen- tially different than a partner’s existing
tarity. A brand name is a surrogate customer base, the co-branding effort
for product benefits, the validation is effectively a market-development
of which is always pending. Brand strategy for that partner. On the other
name clearly can, and often does, hand, where the co-brand’s target
influence customer choice, however. market is substantially the same, then
Swaminathan32 found that for co- the co-branding effort is a market-
branded consumer packaged goods, a penetration strategy for that partner. It
positive experience of a parent brand should be clear, then, that the measure
enhanced the possibility of a consumer of target market and thus the co-
trial. branding strategies depicted in Figure 1
While core and extended product are partner specific, and that the same
complementarity are mutually ex- co-branding arrangement might entail
clusive for classification purposes (that different co-branding strategies by each
is, ‘extended’ means ‘not core’), this is partner.
not to suggest that products with core Figure 1 defines four co-branding
complementarity lack extended com- strategies:
plementarity. It is certainly possible that
a co-branding partner could contribute — Reaching in to achieve greater
at both the core and extended levels. market penetration by choosing a
The example of Intel illustrates this. partner that adds significantly to the
For a long time AMD has tried to co-brand’s core bundle of benefits.
compete with Intel by providing — Reaching out to tap new markets by
microprocessors of similar performance choosing a partner that adds sig-
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8. LEUTHESSER, KOHLI AND SURI
nificantly to the co-brand’s core not directly tied to Intel; in Dell’s case
bundle of benefits, while bringing by delivering industry-leading service
in a new customer base. and customer satisfaction. Alternatively,
— Reaching up to achieve greater the co-branding partner could try to
market penetration by choosing forge an exclusive agreement with the
a partner that contributes posi- component supplier, or an arrangement
tive brand image and associations in which the component is customised
that, while not essential to the and thus unique to the partnership.
core functioning of the co-brand, This is precisely the kind of
nevertheless significantly elevate the accommodation that Disney has made
co-brand’s image and value. in the past by licensing apparel designs
— Reaching beyond by choosing a co- unique to individual large retailers such
branding partner that brings both as Wal-Mart, K-Mart and Sears.
strong image and access to new Another risk that may be present
customers. in co-branding situations characterised
by high core complementarity is the
In the following sections examples are potential that a co-branding partner
provided and the managerial implica- will ultimately become a competitor.33
tions of each of these strategies are When IBM partnered with Microsoft
discussed. to develop the DOS operating sys-
tem for its personal computers, it trig-
gered a well-known sequence of events
Reaching in that eventually led Microsoft to the
This strategy involves core product pre-eminent position in personal com-
complementarity, with the objective of puter operating systems. This occurred
reaching in to achieve greater market even though Microsoft had very little
share in the current target market. brand equity compared to IBM at that
Many instances of component or time. So, where core complementarity
ingredient co-branding exemplify this is very high, a partner to a prospective
strategy. For example, a personal co-branding arrangement should ex-
computer manufacturer chooses to amine to what extent a potential exists
co-brand with Intel because the to spawn a future competitor. Such a
computer manufacturer’s customers risk is particularly great if the partner’s
place high value on the performance primary target market is at stake.
and reliability delivered by Intel So far, this discussion has focused on
microprocessors. In these situations situations where a co-branding partner
customer value is intimately linked to teams up with a very powerful, or
both brands, and in many instances potentially very powerful, brand ally. In
more strongly to Intel than the other cases, the partners may make
computer brand. This presents a danger more balanced contributions. For ex-
to the computer manufacturer, for ample, Dreyer’s M&M Ice Cream,
without a strong franchise of its own, Jell-O No Bake Oreo Cheesecake,
the co-branding strategy will provide it Smucker’s 3 Musketeers Sundae Syrup
with no sustainable differential ad- and Brach’s Jif Peanut Butter Bars are
vantage. So, successful manufacturers among a growing list of food products
like Dell achieve excellence in areas for which the primary brand owner has
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9. 2 + 2 = 5? A FRAMEWORK FOR USING CO-BRANDING TO LEVERAGE A BRAND
chosen co-branding in lieu of line reaching out to serve a new market.
extension. Among these examples, Retail co-branding is an increasingly
the Dreyer’s/M&M and Jell-O/Oreo popular method of accomplishing this.
combinations appear to exhibit a By providing access to each partner’s
stronger degree of core complemen- customer base, retail co-brands can
tarity than the Smucker’s/3 Musketeers substantially increase the sales and
and Brach’s/Jif combinations, because profit potential of a single location
the secondary brands in the first pair without a proportionate increase in
have greater physical distinctiveness investment.
than the ingredients in the second pair. Since retail co-branding involves
It is likely, for example, that consumers little more than combining two
in a blind taste test would be able to separate services into what is essentially
distinguish the former two co-brands a single diversified one, it is not
from similar generic competitors more surprising that the strategy has been
easily than they could in the case of the applied mostly to retail businesses
latter two. In fact, the latter two where convenience is highly valued.
co-brands may have little sustainable Combinations such as Carl’s Jr.
advantage over line extensions in which (hamburgers)/Green Burrito (Mexican
the secondary brands are replaced with food), Togo’s (sandwiches)/Baskin-
generic ingredients. Assuming this to be Robbins (ice cream) and Circle K
true, what then are the drawbacks of (convenience store)/76 (gasoline) il-
such co-brands? Fortunately, there lustrate this. As these examples also
appear to be few, if any. In each case the illustrate, a retail co-brand might
primary brand is distinctive in its own combine offerings that are targeted
right, so the threat of competition from to more or less the same pur-
the secondary brand is likely to be chase occasion, making the offerings
small. Furthermore, any premium that mutually exclusive (eg few customers
the primary brand pays to incorporate purchase both a Carl’s hamburger and a
the branded ingredient (either by Green Burrito entre on the same visit);
purchasing the ingredient or by paying or, it might combine offerings targeted
a royalty to use the brand name) would to different purchase occasions but that
probably be offset by somewhat greater lend themselves to being consolidated
product trial and the likely result of in a single visit (Togo/Baskin Robbins,
more adopters. In the event that the Circle K/76). The first type of
secondary brand becomes overused in combination, greater depth of offering
too many competing products, it will for a common purchase occasion,
lose its effectiveness in this role, which should be particularly appealing where
will tend to put a brake on overuse. choice is the result of group decision
There is also the possibility that the making, because it provides a greater
primary brand will gain access to the chance of satisfying all the group
secondary brand’s customers. members. If all visits were by
individual customers this type of retail
co-brand would provide no synergy,
Reaching out other than a potentially lower
This strategy involves core com- investment compared to separate
plementarity, with the objective of locations. The second type of
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10. LEUTHESSER, KOHLI AND SURI
combination, which features offering for Ford in the future. Eddie
breadth, has synergies for both Bauer’s parent company, Chicago-
individual and group buyers because it based Spiegel, is experiencing serious
provides individuals with the oppor- financial difficulty, in large part due to
tunity to combine purchase occasions Eddie Bauer, which represents almost
and it provides the capacity to serve 60 per cent of its sales. In the 1990s
the different needs of group members. Eddie Bauer expanded aggressively into
In general, retail co-brands that offer shopping malls, and changed its earthy,
breadth appear to have greater outdoorsy image in an unsuccessful
potential for success than co-brands attempt to attract more Generation X
offering depth. customers. It later reversed it-
self, bringing back the traditional
Seattle-hiker look, but sales declined
Reaching up substantially.36 Now Spiegel is search-
This strategy involves extended com- ing for a buyer for the Eddie Bauer
plementarity, with the objective of business, and this could mean another
reaching up to achieve greater market round of brand repositioning. Sooner
share in the partner’s current target or later Ford will have to reconcile this
market. Reaching up is essentially an with its positioning for the Explorer,
image-enhancement strategy, in which for consistency is generally regarded as
a co-brand is chosen primarily for one of the linchpins of strong brand
the positive associations linked to positioning. So, when a co-branding
the brand, rather than for particular partner is chosen primarily for its
product attributes incorporated into the image, the stability of that image is an
co-brand. important concern.
The practice of motor vehicle This type of co-branding is also
manufacturers using ‘designer’ labels on gaining widespread use on the internet
upmarket versions of their models is an as dot.com companies search for ways
example of reaching up. When the to make money. A persistent problem
Ford motor company introduced the area for many internet sellers is transac-
top-of-the-range ‘Eddie Bauer’ version tion security. This gives a significant
of its Explorer sports utility vehicle, it competitive advantage to the larger
quickly outsold other versions of the online sellers such as Amazon.com that
Explorer costing considerably less.34 To have earned trust through extensive
date Ford has sold over one million media attention. To offset their disad-
Eddie Bauer vehicles.35 Clearly, the vantage, many online businesses are
designer label adds a greater measure of using branded services, such as PayPal,
distinctiveness than more generic labels to handle the purchase transaction.
such as ‘Limited’, and the strategy has With this service, purchasers provide
been applied by Ford to other models, credit card information, not to the
such as the Lincoln Town Car Cartier online seller, but instead to the PayPal
edition. While this strategy adds service, which processes the transaction
distinctiveness, it comes at the price of and in turn charges the seller a small
loss of control over that distinctiveness. fixed fee plus a percentage of the
Although still successful with its Eddie purchase amount. The PayPal website
Bauer label, there could be problems (www.paypal.com) highlights that ‘cus-
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11. 2 + 2 = 5? A FRAMEWORK FOR USING CO-BRANDING TO LEVERAGE A BRAND
tomers recognize and trust the PayPal In the realm of products, the
name and brand’. Hoover Company recently introduced
a new vacuum cleaner capable of
washing and drying hard floors. The
Reaching beyond idea for the product came from the
This strategy involves extended com- director of marketing development for
plementarity, with the objective of Reckitt Benckiser, the firm that
reaching up and out — reaching markets the Lysol (cleaning products)
beyond. and Old English (furniture polish)
Credit card co-branding is an ex- brands.39 The new vacuum, called the
ample of reaching beyond. In terms of Floor Mate, comes bundled with
volume, credit card co-branding leads specially formulated versions of Lysol
all other forms; an estimated 40–50 per cleaner and Old English polish that
cent of all credit cards issued world- carry the Hoover co-brand. The
wide are co-branded, and together special versions of Lysol and Old
MasterCard and Visa have more than English are sold separately, and Reckitt
20,000 co-branded programmes.37 Co- Benckiser clearly anticipates that
branded credit cards, specifically ‘af- purchasers of Hoover’s Floor Mate will
finity’ and ‘rewards’ cards, connect continue to consume these products
credit card issuers with market seg- whenever they use the Floor Mate.
ments served by the linked (secondary)
brand. Affinity cards (eg credit cards
linked to universities and charities) CONCLUSIONS
provide benefits to the linked organisa- Successful co-branding occurs when
tion — usually a portion of the both brands add value to a partnership.
transaction fees — so users of these The value-added potential should be
cards know that each time they make assessed by examining both the com-
a purchase it benefits an organisation plementarity between the two brands
with which they have a strong sense of and the potential customer base for the
commitment. Affinity cards, as a group, co-brand. A great deal of attention has
have a very low annual attrition rate of been given to the potential for inter-
around 5–6 per cent compared to brand effects in co-branding, that is,
25–35 per cent for other credit cards.38 the potential for enhancement or
Rewards cards (eg car, airline, lodg- diminishment of the brand equity of
ing and retail credit cards), on the either partner. Much of this attention
other hand, provide benefits such as has been directed to effects on brand
discounts or points directly to the attitudes. In general, research sug-
cardholder in an effort to encourage gests that consumers tend to respond
more, or continued, patronage with favourably to co-brands in which each
the linked brand. For the credit card partner appears to have a legitimate fit
issuer, a critically important aspect of with the product category, and the
this business is access to the customer attitudes towards the parent brands will
list of its co-branding partner, which be reinforced, or at least maintained, as
provides a very attractive means of a result of the partnership. Further-
acquiring new customers for its other more, attitudes towards strong, well-
products and services. known brands are less likely to be
HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 11, NO. 1, 35–47 SEPTEMBER 2003 45

12. LEUTHESSER, KOHLI AND SURI
influenced by co-branding than less- (2) Levin, A. M., Davis, J. C. and Levin, I.
(1996) ‘Theoretical and empirical linkages
known brands, a finding that is entirely between consumers’ responses to different
consistent with a long history of branding strategies’, Advances in Consumer
research on attitudes showing that Research, Vol. 23, pp. 296–300.
(3) Park, C. W., Jun, S. Y. and Shocker, A. D.
well-formed attitudes are highly resis- (1996) ‘Composite branding alliances: An
tant to change. investigation of extension and feedback
Brand attitudes are, however, only effects’, Journal of Marketing Research, Vol.
one aspect of brand equity. In the 33, November, pp. 453–466.
(4) Washburn, J. H., Till, B. D. and Priluck, R.
end, brand equity must be reflected in (2000) ‘Co-branding: Brand equity and trial
market response — sales, profits and effects’, Journal of Consumer Marketing, Vol.
market reach. The authors conclude 17, No. 7, pp. 591–604.
(5) Levin et al., ref. 2 above.
that co-branding can, in many cases, be (6) Washburn et al., ref. 4 above.
a more effective strategy for achieving (7) Shocker, A. D. (1995) ‘Positive and negative
this than line or brand extensions, effects of brand extension and co-branding’,
Advances in Consumer Research, Vol. 22, pp.
because co-branding appears to have 432–434.
less potential to have an impact on (8) Anderson, N. H. (1981) ‘Foundations of
attitudes to the parent brand and on Information Integration Theory’, Academic
brand image. Press, New York, NY.
(9) Simonin, B. L. and Ruth, J. A. (1998) ‘Is a
There are also disadvantages to company known by the company it keeps?
co-branding. Co-branding can place Assessing the spillover effects of brand
differential advantage in the hands of alliances on consumer brand attitudes’,
Journal of Marketing Research, Vol. 35,
another partner. It can spawn a poten- February, pp. 30–42.
tial competitor. Co-branding places (10) Schewe, C. D. (1973) ‘Selected social
control of important product charac- psychological models for analyzing buyers’,
Journal of Marketing, Vol. 37, July,
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of the other partner to some extent. In (11) Levin et al., ref. 2 above.
some cases, co-branding may actually (12) Anderson, ref. 8 above.
limit market reach compared to line or (13) Fazio, R. H. (1989) ‘On the power and
functionality of attitudes: The role of
brand extensions. attitude accessibility’, in ‘Attitude Structure
The advantages, and potential pit- and Function’, Pratkanis, A., Breckler, S.
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Associates, Hillsdale, NJ.
be brought into view by examining (14) Simonin and Ruth, ref. 9 above.
the strategy in accordance with the (15) Aaker, D. A. and Keller, K. K. (1990)
framework presented here. As it has ‘Consumer evaluations of brand extensions’,
Journal of Marketing, Vol. 54, No. 1, pp.
been attempted to show, a clear defini- 27–31.
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of customer benefits and clear respon- (17) Sengupta, S. and Bucklin, L. P. (1995) ‘To
sibilities for delivering these benefits to ally or not to ally’, Marketing Management,
Vol. 4, No. 2, pp. 24–32.
customers will reveal the advantages, (18) Aaker, D. A. (1996) ‘Building Strong
and perhaps some unexpected disad- Brands’ The Free Press, New York, NY.
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(20) Park et al., ref. 3 above.
(21) Shocker, ref. 7 above.
References (22) Park et al., ref. 3 above.
(1) Grossman, R. P. (1997) ‘Co-branding in (23) Washburn et al., ref. 4 above.
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Management, Vol. 6, No. 3, pp. 191–201. ‘Improving competitive position using
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branded ingredients’, Journal of Product and Martin’s Press, New York, NY.
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258–268. age’, Managing Intellectual Property, Issue 94,
(26) Ibid. pp. 20–26.
(27) McCarthy and Norris, ref. 24 above. (35) Copple, B. (2002) ‘Fashionably late’, Forbes,
(28) Vaidyanathan, R. and Aggarwal, P. (2000) Vol. 170, No. 3, p. 46.
‘Strategic brand alliances: Implications of (36) Ibid.
ingredient branding for national and private (37) Punch, L. (2001) ‘Loyalty theater:
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(29) Ibid. (38) Ibid.
(30) Washburn et al., ref. 4 above. (39) Greenberg, K. (2001) ‘Hoover Lysol, Old
(31) Blackett, T. and Boad, B. (1997) English Floor Mate’, Brandweek, Vol. 42
‘Co-Branding: The Science of Alliance’, St (43), p. 6.
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