 In the Tuesday morning of February 15th 2005 a senior representative for NOKIA, the world’s largest mobile phone manufacturer, stood up in front of the expecting audience at the 3gsm world congress, the mobile phone trade fair in Cannes, and declared, among a lot of product news, that NOKIA for the first time had decided to allow co-branding on handsets and to co-operate more with mobile operators around the world. The spokesman of NOKIA, told the media: «we have intensified our dialogue with operators…we have put our attentive ear to work like never before».
For the audience of journalists and analytics this was interesting news in many ways. First of all Nokia was showing it’s humble side, nothing the Finnish manufacturer have been very well-known to do earlier, this after a rough time on an ever more competitive market on which Nokia had seen it’s market shares drop.
Another interesting observation is that this almost internal piece of news regarding co-branding with other operators was made important enough to become a statement on a press conference and it also made headlines in the mobile phone community media. Why?
The reason for this is due to the fact that Nokia is probably the last major manufacturer that until now had not accepted co-branding with operators. All the other big ones have had been forced to before in a market situation where operators are continuously gaining territory. Like food retailers with their private brands, the mobile phone operators have become increasingly self conscious about the value of their brands.
Most mobile phone operators have now their logos on many of the phones sold in their channels and «Sony Ericsson», «Motorola», «Samsung» among others in their turn has accepted to put their logos next to «Vodafone», or «3» or «Orange» all big international brands. But Nokia with its strong market share had been able to resist co-branding with operators for a long time.
Sony Ericsson is co-branding one of its first 3G-phones with Vodafone, before actually launching it to rest of the market. Most of the manufacturers have done it happily to increase the value of their brand, because that is the big idea with co-branding. To increase your own brand value and your business result, by simply appearing side by side with another strong brand.
Co-branding have become a very popular brand strategy in several different cases, here are some of the usual: A weaker brand is strengthened by a stronger.
When your brand is new or need to be re-launched, the stronger brand supports the weaker; like when VAG restores the trust in Skoda, taking it on as a group family member. Or when the UK-based Virgin Group didn’t own a telephone network in USA and made a partnership with Sprint to position itself on the US market as the first virtual network operator—a business model already highly successful in Europe.
Ingredient branding is co-branding.
Ingredient branding certainly is one of the most common forms of co-branding. It’s used when you need to signal to the consumer that you carry a very attractive brand as a component or ingredient in your offer, important for the choice of your own brand – like when McDonalds co-brand with Coke in order to differentiate against a multitude of fast-food restaurant that carries the competitor Pepsi (and vice versa for Pepsi, of course).
The master case of B2B ingredient branding of course is Intel the microprocessor manufacturer that is co-branded with most leading computer brands; serving like a guarantee for the novice technology user. Intel marketing executive Dennis Carter was noticing that microchips were increasingly playing a defining role in personal computing, but it was still a brave idea in a technology and not at all branding driven business to actually decide that the company needed a better way to communicate direct with end users. Computer manufacturers such as Dell and Compaq quickly reaped the benefits of the generated consumer awareness and demand for Intel components and took advantage of the chipmaker’s offer of co-marketing dollars. To date, more than $7 billion has been spent on this advertising program by the more than 2,700 computer makers licensed to use the Intel Inside logo.
Join the world standard.
Co-branding proves to be a very operative way to standardization in customers minds; like when VISA or Master Card is co-branding with most banks in the world. VISA’s shared network supports nearly $2 trillion in transactions annually. This level of global success makes VISA – a name chosen becau-se it is pronounced the same in almost every language one of the strongest co-brands, practically a world standard for cash transactions. VISA itself used sponsorship and co-branding to gain worldwide recognition as a brand – most notably with the Olympics, but also with others such as the National Football League in USA.
Separate roles and responsibilities
To use co-branding as a tool is used when you need to separate roles, competencies and responsibility; like when IKEA is co-branding with Whirlpool as a preferred supplier of kitchen equipment instead of branding it with IKEA like with most of its other products.
Or when you want to make something unprofitable more profitable by making it clear who has what competencies; like when U.S. offline bookselling giant Borders teamed with its online competitor, Amazon.com, to create a co-branded website. Before partnering with Amazon.com, the Borders Online website had lost more than $18 million. After the launch, however, the co-branded site quickly became profitable. If you can’t beat them join them! Amazon, for its part, gained an additional revenue source, and also took a valuable step toward establishing itself as a viable supplier of outsourced online retailing capability.
 Forming brand alliances
To make vertical co-branding by forming alliances with similar companies is common. Famous are all the airline alliances; Oneworld and Star Alliance are two examples among several. The reasons are among others globalization, fighting costs by joint marketing, or simply the chance to create a better, broader offering through cooperation.
But the alliances don’t have to be in the same industry or business. It can be an alliance to reach a certain target group; like WILL a true multibrand that was created to capture a larger share of Japan’s youth market, Toyota and several partners, including consumer-products giant Kao and Japan’s largest brewer, Asahi Breweries, co-created the WILL marketing program. WILL brought a range of Japanese lifestyle products, from candy to cars to beer, under a single brand name. Since its launch in 1999, however, the concept has yet to achieve the expected level of attention and cross-product tie-ins.
Value chain co-branding
Starbucks has recently partnered with wireless provider T-Mobile and Hewlett-Packard to offer customers cable-free broadband Internet connection in its participating stores. T-Mobile and HP now get exposure in upscale coffee shops on Main Streets around the world, while Starbucks gets publicity for being on the cutting edge of technology. What does this have to do with selling coffee, which is, of course, Starbuck’s core business? The company believes wireless Internet access will bring in additional revenue by attracting more paying customers outside the morning hours, when Starbucks does the bulk of its business.
Sponsorship and co-branding with celebrities
Maybe co-branding actually got its start with co-branding with personal brands and not other corporate or product brands.
Some celebrities are more popular than others – one is the coloured super-golfer Tiger Woods who co-brands with Nike, GM’s Buick line and consultancy Accenture, to name a few of his million dollar contracts.
Why have co-branding then become so popular?
Most probably the current economic environment has played an important role, with its burdensome spending constraints, co-branding is an increasingly important tool for generating additional value. Besides reducing costs – including many R&D and marketing expenses when brands do innovation work with other brands — co-branding is attractive for its ability to quickly transfer the stature, imagery and approbation of one brand to another.
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