If another brand fits, co-opt it

Brand equity fit

Another factor critical for the success of any co-branding initiative is the effect on each brand's equity. Brand equity here refers to customer-perceived brand equity or overall brand value. Successful co-branding should lead to increased brand equity all round but will also probably alter each brand's equity too. Short-term gain needs to be set against any possible long-term deleterious affect on the customer-perceived brand equity here.

When two brands enter into an alliance each will have previous associations and perceptions among its customer base that will probably affect the other brand. It is, therefore, essential to consider the brand equity ramifications.

Product fit

Product fit is defined by the relatedness and compatibility of the product categories involved in the alliance. If customers do not perceive the products as appropriate partners then possibly positive attitudes will not be transferred to the alliance. Product fit can be measured by examining a complement dimension and a substitute dimension.

Products are perceived as complements if they are consumed together to satisfy a particular need. Products are considered substitutes if they are perceived as possible replacements and satisfy the same need. If there is fit here on both of these dimensions then it may well spillover to brand fit and further synergy.

Country of origin fit

For cross-border alliances country-of-origin effect or any country image is very important. Certain brands exploit a country image decisively, like French or French-sounding fashion clothes and cosmetics, Italian or Italian-sounding clothes and shoes. This definitely requires consideration when forming any alliance with a brand from a different country and possibly very different and incompatible country image.

Much has been made of the lack of any distinct China country image or the perception of any typical product association with China. Is this really a serious issue or indeed a handicap?

Not really, given China's rapid economic development and modernization. This transformation, which now includes the world's fastest trains and a leading pioneer in electric car technology, is gradually changing China's country image. However, what better way to accelerate such change than a few internationally successful brand alliances.

Chinese companies, not just those currently engaged in some form of strategic alliance or joint venture, must reconsider their business strategy and move toward a brand-development model. This may take time, quite some time, which is where co-branding offers an excellent and exciting halfway house.

Chinese brands, and not just Chinese companies, in alliance with successful (non-Chinese) brands not only allows for gradual, and therefore probably more permanent, change toward a brand-oriented culture and strategy, it also enables Chinese companies to learn from successful brands.

If China is to continue such impressive economic expansion and, in particular, wealth creation, Chinese brands have to emerge more and more internationally. Co-branding could well be the key that unlocks the door to a brand-focused Chinese industry.

Co-branding, however, does not come without risk. Extremely careful scrutiny and due diligence needs to take place of any possible brand alliance partners. In addition, cross-border brand alliances will only work if there is appreciation and understanding of very different national and corporate cultures.

The author is a visiting British professor of brand management at China Agriculture University.

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