Page 368 - Marketing Management

SETTING PRODUCT STRATEGY | CHAPTER 12 345

The main advantage of co-branding is that a product can be convincingly positioned by virtue
of the multiple brands. Co-branding can generate greater sales from the existing market and open
opportunities for new consumers and channels. It can also reduce the cost of product introduction,
because it combines two well-known images and speeds adoption. And co-branding may be a valu-
able means to learn about consumers and how other companies approach them. Companies in the
automotive industry have reaped all these benefits.
The potential disadvantages of co-branding are the risks and lack of control in becoming
aligned with another brand in consumers’ minds. Consumer expectations of co-brands are likely to
be high, so unsatisfactory performance could have negative repercussions for both brands. If the
other brand enters a number of co-branding arrangements, overexposure may dilute the transfer of
any association. It may also result in a lack of focus on existing brands. Consumers may feel less
sure of what they know about the brand. 48
For co-branding to succeed, the two brands must separately have brand equity—adequate
brand awareness and a sufficiently positive brand image. The most important requirement is a
logical fit between the two brands, to maximize the advantages of each while minimizing disadvan-
tages. Consumers are more apt to perceive co-brands favorably if they are complementary and of-
fer unique quality, rather than overly similar and redundant. 49
Managers must enter co-branding ventures carefully, looking for the right fit in values,
capabilities, and goals and an appropriate balance of brand equity. There must be detailed plans to
legalize contracts, make financial arrangements, and coordinate marketing programs. As one ex-
ecutive at Nabisco put it, “Giving away your brand is a lot like giving away your child—you want
to make sure everything is perfect.” Financial arrangements between brands vary; one common
approach is for the brand more deeply invested in the production process to pay the other a licens-
ing fee and royalty.
Brand alliances require a number of decisions. 50 What capabilities do you not have? What
resource constraints do you face (people, time, money)? What are your growth goals or revenue
needs? Ask whether the opportunity is a profitable business venture. How does it help maintain or
strengthen brand equity? Is there any risk of diluting brand equity? Does the opportunity offer
extrinsic advantages such as learning opportunities?

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INGREDIENT BRANDING Ingredient branding is a special case of co-branding. It creates
brand equity for materials, components, or parts that are necessarily contained within other
branded products. Successful ingredient brands include Dolby noise reduction technology, GORE-
TEX water-resistant fibers, and Scotchgard fabrics. Some popular ingredient-branded products are
Lunchables lunch combinations with Taco Bell tacos and Lay’s potato chips made with KC
Masterpiece barbecue sauce.
An interesting take on ingredient branding is “self-branded ingredients” that companies ad-
vertise and even trademark. Westin Hotels advertises its own “Heavenly Bed” and “Heavenly
Shower.” The Heavenly Bed has been so successful that Westin now sells the bed, pillows, sheets, DuPont’s Stainmaster carpets have
and blankets via an online catalog, along with other “Heavenly” gifts, bath prod- become a household name.
ucts, and even pet items. If it can be done well, using self-branded ingredients
makes sense because firms have more control over them and can develop them to
suit their purposes. 52
Ingredient brands try to create enough awareness and preference for their prod-
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uct so consumers will not buy a “host” product that doesn’t contain it. DuPont has
done so successfully.

DuPont DuPont has introduced a number of innovative products,
®
such as Corian solid-surface material, for use in markets ranging from
®
®
apparel to aerospace. Many, such as Tyvek house wrap, Teflon non-stick
®
coating, and Kevlar fiber, became household names as ingredient brands
in consumer products manufactured by other companies. Since 2004,
DuPont has introduced more than 5,000 new products and received over 2,400 new
®
patents. One of its recent award winners, Sorona is a renewably sourced or bio-based
polymer for use in carpet and apparel markets. 54