Co-Branding: Brand Association to Boost Profitability

Consumption of goods and services in Mexico decreased during the COVID-19 pandemic. According to data from INEGI and the Monthly Indicator of Private Consumption in the Internal Market (IMCPMI), Mexico recorded a 19.6 percent decrease in private consumption during June, compared to 2019. INEGI also revealed that consumers showed preference for domestic over imported products, as spending on imported goods decreased by 25.4 percent. 

Businesses are looking for innovative ways to reactivate their sales and increase profitability to brave the economic crisis, leading some to bet on co-branding. In an interview with Milenio, Yuliana Zermeño Gamboa, Senior Brand Manager of Blackwell Strategy, an organizational branding and crisis resolution company, explained that co-branding is a strategic market alliance used by two or more brands to make a product or service known. This enables them to combine their strength, values and credibility through a win-win approach in which each partner must benefit and be able to expand its brand values, enter new markets and, among other things, capture new customers. It is therefore an attractive and comprehensive strategy to enhance the image, brand and awareness of customers to increase sales.

There are successful cases of co-branding to date. For example, the brands Milka and Oreo joined to bring a chocolate bar with Oreo cookies to the market. Milka created a new product, while Oreo reaffirmed its presence in the chocolate segment. Synergies and collaboration between brands are visible in almost all sectors of the economy. Another example is the 2012 partnership between GoPro and RedBull in a campaign showing Felix Baumgartner jumping from the stratosphere while being recorded with a GoPro under the slogan “Be a Hero.” Another example was when Uber and Spotify teamed up for the "Spotify Your Uber" campaign to allow users to choose their own Spotify lists to enliven their journey without using their mobile data.

The benefits of co-branding are many. "Basically, you can generate a significant increase in sales, and many of those increased sales can flow to the bottom line if you can bring a customer in more often or attract more customers by having two well-known brands under one roof. You are expanding the potential customer base that you can attract," explained Sid Feltenstein, CEO of Yorkshire, to Entrepreneurs. 

With co-branding, however, there can also be risks as it not only combines two products but also essential parts of two companies, such as image and brand. "Depending on the case, there can be a conflict between the images of the two companies, which can be detrimental to one or both parties. Therefore, the great risk of co-branding is precisely in its nature, associating one brand with another," explains an article published by Movistar’s Business Blog. 

Channel Marketer Report explains that there are three pillars that should support all co-branding strategies: simple co-branding guidelines, sharing the spotlight with the branding partner and making co-branding communication a priority. This way, participating companies can have a clear idea from A to Z of their joint co-branding strategy, the role of each company, budget, goals, times and messages. The key to successful co-branding is the combination not only of the products but also of the strengths of the participating companies.

Enrique Castillo, Director of Marketing and Communication at Mexico Business News, explains that red flags in a co-branding strategy may appear at the beginning "as doubts regarding compatibility in brand values.” While collaboration between brands is a good thing, it can also have its risks. “Being associated with a good brand can give you a reputation boost, but it can also negatively affect you. Co-branding must not put your brand values at risk. Knowing if another business is compatible with those values comes from knowing your partner very well, understanding their company, culture and goals and seeing if they really match your brand before doing anything,” said Castillo.