 Nowadays, one of the highly valued assets for a company are its brands, with branding being

every company’s top priority.

 But it often costs the companies huge amount of money and takes them a long time to build
their brand.
 Today’s market is suffering from a syndrome of sameness where all the products offered to the
customers look very similar both in terms of sameness in the physical brand element and in the
symbolic value proposition offered to market.
 Thus, it has become difficult to establish a unique position for new products with markets
cluttered with competing brands. Even innovative differentiated products can be imitated
quickly, leaving no strategic edge.

 Co-branding is a marketing arrangement to utilize multiple brand names on a single product or

service. Basically, it involves combining two or more well-known brands into a single product.

MARKET RESEARCH RESULTS

 before creating the co-branding strategy, BBP had conducted the market research by
independent research consultant, and the respondents obtained from 10 stores spreading in and
around the Jakarta area, with 75% of supermarket visitors respondents and 25% were material
shop visitors.
 The market segmentation could be breakdown into 3 groups, as shown in the exhibit.
 One was the segmentation for consumers who looked-for high-quality products.
 Another one was the segmentation for consumers who looked for value for money products.
 And the last segmentation was for consumer who were more concerned in the price of the
product which showed more than 50% were quality-oriented segments.

CO-BRANDING ANALYSIS

 So, this gradual approach would create less confusion on the consumers.
 As the brand of Mr. Safety was not that strong yet, they put out the tag line of Fischer.
 With BBP’s strong experience in the market and highly skilled personnel:
 This two-brand merger would be smoothly accepted by the customers.
 Instead of representing Fischer, the BBP people would start saying that they represented Mr.
Safety group with Fischer as their main brand.
 The Fischer brand mentioned to the customer was important because most customers were not
familiar with Mr. Safety yet and because of Fischer’s strong influence with almost became the
brand category of any fixing product.

PRODUCT

 BBP was an independent National Private company with majority of its trading and sales in these
following lines:

NEXT STEPS
  With all the dilemmas BBP was facing. The high competition with low price products, having
their own brand, and maintaining their relationship with Fischer, the brand owner of BBP’s
distribution products.
 In my opinion yes co-branding was the right choice for the BBP:
 because although there are a number of ways for a company to build its own brand, co-branding
may be a good branding strategy since it can offer fresh opportunities for companies to gain new
markets that may otherwise be difficult to reach effectively,
 and it is beneficial to the organizations involved to alleviate costs when entering new markets by
using the established equity of the second brand. Moreover, it can also help the company to
increase consumer’s perceived quality and image toward their brand.

 Yes, because based on my understanding, there are several reasons why some companies
especially BBP would want to pursue co-branding. The first one is that:
 Co-branding can attract a wide range of consumers. Because once company adopts the co-
branding, for consumers, it means that it provides more selection and more function of
products. For example, Nike and iPod
 In addition, co-branding can bring more opportunity for the company. It can improve the quality
of the product and influence the consumer judgment of the brand.
 Co-branding can also reduce the risk of company to enter new markets, because they share the
risk and responsibility from each other. Most of all, it can help the company reduce the costs and
expense of operation.

As globalization phenomenon continues to elevate competition in the marketplace, product introduction

has become highly fraught with risk. One reason of such risk is the incredibly high cost of building brands
for a product and another is that firms are facing the reality of high new product failure. Based on the
situation marketers are searching for alternative method of branding or creating sustainable competitive
advantage.

Risks posed by co-banding

However, co-branding can also provide bad effect to the company. Because collaborating with your
competitors is like a double-edged sword.

 Firstly, it is difficult for one of the parties to abandon the partnership and reestablish itself in the
market independently. Once a co-brand takes position in market, it becomes difficult to
dismantle co-brand and even more difficult to re-establish the bran alone. It’s not good for the
firm future because it more easily brings dependence.
 Secondly, brands are also exposed to the risk of devaluation, sometimes virtually overnight. At
times, both companies can be affected, as in the case of a partnership between a discount chain
and upscale house wares company.
 Thirdly, when establishing co-branding, choosing the right partner is very important. Sometimes
due to the different cultures and vision and even operational frictions, they are incompatible.
 Finally, in some extent, co-branding can lead to transfer of competitive advantage to the partner,
creating a potential competitor. Collaboration allows two firms to share their resources, tactic
 knowledge, and know how to align with a joint goal. Due to the collaboration, they lose their
own advantage in strategy.

Critical factors for a successful co-branding strategy

 Transition cost: it’s important to consider the transition costs for two companies embarking on a
successful co-branding strategy.
 Cultural differences: cultural differences are also a crucial consideration for two companies
planning a co-branding strategy.
 Consumer acceptance: the important thing is to know their customers. Consumer-centric design
will drive a successful co-branding strategy.
 Core positioning: the core positioning of a brand is fundamental in attracting large numbers of
customers. Since each individual brand has its own core competence, the synergy between two
brands is extremely important.

Various strategies for co-branding

 market penetration strategy: signifies a conservative tactic to keep the existing market and the
original brand names of two firms. In essence, the co-brand name is either a single brand name
or combination of two firms. The key assumption that drives the adoption of a market
penetration strategy is the horizontal convergence of two companies.
 Global brand strategy: signifies a firm’s decision to serve all its customers with an existing co-
brand name in a new market. The key assumption that drives the adoption of a global strategy is
convergence of cross-segmental preferences.
 Brand reinforcement strategy: signifies two firms decide to use a new name as a co-brand name
in the existing market. The key assumption that drives the adoption of a brand reinforcement
strategy is brand image reinforcement.
 Brand extension strategy: signifies two firms decide to serve a newly co-brand name in a new
market. The key assumption that drives the adoption of a brand extension strategy is union of
cross-segmental preferences.