What Are the 3 Types of Co-branding?

Read our guide and get to know what does co-branding mean and use it to your advantage to effectively promote your products or services.

Category: Business     Written By: Eva William

What Are the 3 Types of Co-branding?

Building alliances is an effective strategy not only in politics or international relations. Market promotion with other brands is one of the most widespread marketing strategies. Its uniqueness lies in the fact that it is mutually beneficial. Unless, of course, both brands have a good reputation and sufficient coverage of the target audience. It could be called with a simple word — co-operation, but new times require new terms. Therefore, in the marketing literature, such a strategy is referred to as co-branding. Find out what does co-branding mean and use it to your advantage to effectively promote your products or services.

Co-branding as a Form of Strategic Partnership

Adhering to one or more marketing strategies, at some point, the company may realize that it has exhausted and reached the limits of growth. Then, the synergy of cooperation with another brand with its own market and target audience can come as a rescue and open new perspectives for further growth. If the brand has already built up a good reputation and a significant base of loyal customers by this point, it will have something to offer to other partner brands. Such mutual cooperation will increase sales for both parties. Having studied its target audience with the help of market research, the company can evaluate its attitude towards possible potential partners. It remains to choose the brand whose reputation is the best and offer it a plan of strategic cooperation.

Most Popular Types of Co-branding

Co-branding Ingredients

This is one of the safest ways to co-brand since the companies entering into a partnership do not compete in the market. A company that produces more complex goods uses products from another brand as one of the key components. For example, the well-known guitar brand Epiphone Les Paul completes its models with Gibson strings of different gauges.

Composite Branding

This is a more unsustainable type of co-branding as it involves companies collaborating to create new, authentic products. In the case of co-branding of ingredients, the breakup of relations does not cause significant damage to both brands. You simply change the company whose products you use as components. Or you can simply not focus the attention of the target audience on who supplies the parts of your products. In the case of composite branding, the project falls apart. An example of composite co-branding is the collaboration between the well-known guitar brand Fender and the equally well-known denim brand Wrangler:

  • As a result, fans of undoubtedly one of the best guitar brands will buy Wrangler products to reinforce their identity. 

  • And loyal Wrangler consumers, who substantially consist of musicians, will pay closer attention to the advantages of Fender models of guitars.

Co-branding from National to Local

The two previous types of co-branding involve collaboration between more or less equal brands. In contrast, this type has a more vertical structure, where one brand is known to a wide national or global audience, and the other is recognizable only locally. But at the same time, this strategy is beneficial to both parties:

  • The well-known brand penetrates the local market more deeply.

  • The regional brand becomes more recognizable at the national level.

For example, a local coffee shop chain might use a certain well-known brand of coffee to attract customers, or a nationwide bank might offer credit cards to customers at a local supermarket chain.

The co-branding strategy is widespread and quite effective. If you start paying attention to it, you will be surprised to find its manifestations everywhere. For example, by buying a constructor kit Lego Fender Stratocaster for a child on their birthday, you form their consumer preferences for many years to come. And that's exactly what co-branding intends to do!