How Co-Branding Is Combining the Strengths of Two Already Successful Brands Co-branding is when…
How Co-Branding Is Combining the Strengths of Two Already Successful Brands
Co-branding is when two companies form an alliance to work together. The idea is to create marketing synergy. Synergy is the concept of 2 + 2 = 5. Synergy is achieved in a co-branding relationship when two brands working together achieve more than the brands could have cumulatively achieved on their own. This is possible, in a successful co-branding relationship, when each brand benefits from the brand loyalty and the reputation of the other. Two companies that recently formed a co-branding partnership are Caribou Coffee and Bruegger’s Bagels. The idea grew out of a relationship between Caribou CEO Mike Tattersfield and Claude Bergeron, co-CEO of Bruegger’s parent company, Le Duff America. It also grew out of a recognition that the two companies do best when located near each other. As of late 2013, Caribou Coffee and Bruegger’s Bagels operated stores literally next door to each other in 10 Minneapolis-St. Paul locations, along with an 11th location in Raleigh, north Carolina. Those stores are some of the best performing for both chains. Caribou and Bruegger’s have complimentary offerings. People often eat bagels and drink coffee together. So the two executives concluded that trying co-branding was a reasonable decision to reach. The companies decided to start slowly. As of early 2014, three co-branded stores are open, with more to follow if the initial stores are successful. The co-branded stores project a cohesive brand by incorporating both company’s logos. The stores to follow will incorporate design elements of Bruegger’s new store prototype. They’ll include large glass windows to separate the bakery from the dining room and give customers an unobstructed view of the baking process. They’ll also include a full barista system. This is where the co-branded restaurants will create synergy on the customer side. The restaurants will include bakeries where the food products will be made and barista stations where the specialty coffees and other beverages will be prepared, all visible to the customer (to provide a unique experience). This combination will provide the co-branded stores a source of differentiation and a hoped for competitive advantage in the marketplace. unseen to the customer, the co-branded stores will have significant synergies in the back of the house as well. In instances where Caribou Coffee and Bruegger’s Bagel stores are situated side-by-side, each store has its own manager, its own purchasing system, its own accounting systems, etc. The co-branded stores will operate as a single store and eliminate these redundancies. So far so good. “We’ve been thrilled with the performance of our dual operations so far,” Judy Kadylak, director of marketing for Bruegger’s, said in an article posted on the Foodservice Equipment & Supplies website (http:// fesmag.com). If the initial test sites remain successful, the next co-branded stores will open in Raleigh, north Carolina, in Iowa, and in the Minneapolis-St. Paul area. Along with co-branding stores, like Caribou Coffee and Bruegger’s Bagels are doing, co-branding can take on other forms. To learn more about co-branding, go to www.google.com, type the term “co-branding” into the search engine, and select images. You’ll see hundreds of example of co-branding. In many instances, companies will co-brand products rather than their entire companies. An example is a co-branding relationship between Element Skateboard and TOMS shoes. The TOMS logo is placed on the underside of Element skateboards. Each brand presumably benefits from the brand loyalty and the reputation of the other.
Questions for Critical Thinking
1. Make a list of the potential pluses and minuses of the co-branding relationship between Caribou Coffee and Bruegger’s Bagels. Indicate whether you believe the potential pluses will outweigh the potential minuses for this co-branding relationship. Explain your answer.
2. To what degree do you believe brand management is more difficult in a co-branding setting?
3. Provide three additional examples of co-branding. Describe the rationale behind each co-branding relationship.
4. Examine the You Be the VC 11.2 feature, which focuses on COOLEST, a revolutionary new type of cooler. Suggest some potential co-branding relationships for COOLEST.
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