Co-Branding on Industrial Markets

Article #25 - Co-branding on Industrial Markets

By Anders Bengtsson, Per Servais

Presented by: Tracy Cessna

Co-branding: co-operations between two or more marketable items that in one way or another connect representations of several brands in the marketplace. ("Co-branding on industrial markets")

1. Who are the authors?

Anders Bengtsson is an assistant professor of marketing at Suffolk University's Sawyer Business School in Boston, Massachusettes. He received his Ph.D. and M.Sc. (Specialist Masters Degree) at Lund University, the largest institution for education and research in Scandinavia. His areas of expertise include: brand strategy, consumer culture theory and consumer brand relationships. He has written a number of articles on co-branding: "When Hershey met Betty" (2004) and "Co-branding and the impact on inter-organizational relationships". He is a member of the Association for Consumer Research and speaks Swedish, Danish, English and German fluently. (Suffolk University)

Per Servais is an Associate Professor of Marketing at the University of Southern Denmark. He received his Ph.D. in international marketing from Odense University in Denmark. Similarly, he received his M.Sc. in International Business Administration from Aalborg University in Denmark. His areas of expertise include: international marketing, business-to-business marketing and global sourcing. He has written many books and articles related to these topics. His "Born Global or Gradual Global? Examining the Export Behavior of Small and Medium-Sized Enterprises" is one of the most cited articles in International Marketing according to the American Marketing Association. (Marketing Power)

2. What is the authors' message?

While it has not been fully realized in industrial marketing, co-branding can be a good strategy to increase value and competitive advantage.

Bengtsson & Servais' Point:

Until recently, brand management has been focused on consumer marketing. While there are similarities in consumer marketing and business-to-business (B2B) marketing, there are still several key factors that need to be addressed differently in B2B marketing. One key factor that is presented in this article is the difference in the buying process. In B2B marketing the buying process is much more complex and involves more decision makers.

3. What evidence is offered to support this theme? (All quotations are taken from "Co-branding in industrial markets")

A. "Co-branding may also have effects on the perceived quality of the product."

According to a study conducted by Rao et al. (1999), the quality of a product may be enhanced when a second brand is added to the product that consumers have no previous experience with. Similarly, McCarthy and Norris (1999) conducted a study indicating, "Consumers evaluate a low quality host brand more favorably when a high quality host brand ingredient is added." The high quality brand may not benefit in the same way as the low quality brand, but it is still beneficial to enter a co-branding relationship. The DEVI/JUNCKERS co-branding case is a good example in this instance. JUNCKERS, which was identified as the stronger brand, benefited from co-branding by gaining the trust of buyers and dispelling the myth of incompatibility of wooden floors and floor heating.

Point: While the low quality brand is viewed more favorably, the same cannot always be said for the high quality brand. Yet, it can still be beneficial to the high quality brand to co-brand.

B. "...growing interest (in brand management) was partly due to the success of some large and very well known companies whose main asset was their brand name."

Brand strategy has become increasingly important. In today's business

environment, almost all firms have access to the same technologies, forcing

competition to be based on more than just product attributes.

Point: Co-branding can help a company differentiate its products from

competitors. Both companies can take advantage of the others core

competencies such as distribution.

C. "An important role of branding in industrial markets is therefore to reduce risk and uncertainty." Industrial customers are in the business of developing relationships based upon trust. By reducing risk and uncertainty, industrial markets can capitalize on the trust and confidence their customers have in the brands involved. (Pride-Ferrell Marketing)

Point: Co-branding is a good way to reassure the industrial customer by pairing a well-known brand with a lesser-known brand.

D. "...through unique co-operations, it can be possible to generate added values that from the buyer's perspective enhance the overall perception of quality." It has been argued that co-branding is used to make a product appear better than what it is. In B2B marketing, co-branding can create added value from the buyer's perspective.

Point: Branding may not always be used to enhance the technical quality of the product, but rather, as a means to improve the customer's perception of the supplier through value added characteristics.

E. "...by creating a bundle with one of this existing actors the other actors may build up an image of this newcomer not so differently from the image held by the firm already in the network." Co-branding can serve as a method of entry into a new market.

Point: In the pre-relationship stage of relationship development, actors begin to develop ideas about each other. This stage is key to the customer's buying decision because it is where the customer assesses his impressions of the supplier. Therefore, co-branding can ease some of the uncertainty in the customer's mind. (Managing Business Relationships)

4. How well is the argument presented?

Bengtsson and Servais's argument is consistent with what we have been learning in class in