If another brand fits, co-opt it

Ingredient co-branding

Ingredient co-branding is the most used type of co-branding. The aim of this type of co-branding is to promote each brand's respective competitive advantage thereby creating a "new", united branded offering.

An excellent example of extremely successful co-branding is the initiative between Intel and IBM. "Intel Inside" provided customers with added value combined with IBM's expertise in computer manufacture. While this represents another form of brand "alliance" it needs to be made clear that ingredient branding involves a primary brand, in this case IBM, and a secondary brand, Intel, unlike the more equal status shared by brands in the previous two examples of co-branding.

Ingredient branding simultaneously strengthens each brand from competitors and also, if successful, creates a synergy where combined brand value increases to a level beyond the sum of the individual brand's value. As a result, the primary brand is often able to charge an increased brand premium as a result of the secondary, ingredient brand's presence.

While ingredient branding often offers huge benefits to both brands there are some potential drawbacks. For example, customers may become confused when presented with two brand names and both brands may suffer a loss of control once their association becomes set in the consumers mind.

Complementary competence co-branding

This is the more advanced form of co-branding in which each brand builds on the other's brand values and competencies to create maximum brand synergy. In order to maximize the synergistic effect both participating companies agree to work together long term and share expertise and knowledge in order to build combined brand value constantly.

A good example of this type of co-branding is the alliance between Acer and Ferrari. In this case, Acer produces a laptop computer in cooperation with Ferrari with all the features and attributes of the Ferrari brand, like the typical Ferrari "red" color. In so doing, Acer built on Ferrari's brand values of "fast", "exciting" and "fun".

In contrast to ingredient branding, this form of co-branding does not involve the absorption of one brand into the other but still leads to mutual brand benefits.

Even as we look at the various types of branding it is also important to understand the important success factors in a branding exercise.

Brand image fit

Brand image refers to the perception formed by a brand's current and potential customers. If a co-branding initiative is to succeed then customers' perceptions of the individual brands involved has to be favorable and either similar or complementary.

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