Co-Branding

Co-branding is a potentially HUGE brand building tool

Usually, we only look at other brands as competitors. But the marketing world is changing: many marketers now perceive other brands not simply as rivals, but as potential partners in mutually beneficial projects.

There has been enormous growth in co-branding over the past 18 months: Puma has worked with Mini to produce a special-edition car; Acer has worked with Ferrari to create a laptop computer; Volkswagen has partnered with Apple to create an iPod-compatible Beetle.

Unexpected partnerships are springing up all over the world, transforming co-branding from a vague notion into a key marketing strategy for many major brands.

Academic research on co-branding can help to explain its sudden attraction.

Typically, academic marketing research is the last place marketers should look for inspiration. Most of it is arcane, pointless and over-complex.

But the literature on co-branding is the exception.

One of the earliest papers on the topic is still one of the most interesting.

Park, Jun and Shocker ran laboratory experiments in which subjects were asked to rate a fictional co-branded cake-mix product from Slim-Fast (known for bland-tasting, low-calorie slimming food) and Godiva (known for rich-tasting, high-calorie chocolates). The co-branded mix was rated far higher than a single-branded offering from either brand. It was also rated higher than a Godiva and Haagen-Dazs co-branded product, as the two were perceived as similar.

It appears that only positive brand associations are perceived by consumers who encounter a co-branded offering.Research has also uncovered the existence of 'positive spillover effects' on the contributing brands. For example, it is likely that SlimFast products would be perceived as less bland-tasting by those who had experienced the co-branded cake mix, while Godiva would have reduced the perception of its products as high-calorie. This opens up the tantalising possibility of using co-branding as a way to modify and improve brand equity while still making money from the co-branded product or service.

Then there are the practical advantages. When two brands work together there are enormous potential insights to be gleaned from working with a different organisation: both brands can bring their own loyal customers into the target market, thus increasing the potential attraction of the new offering; the product development and marketing costs are shared between the organisations; and the co-brand is eminently buzz-worthy. Consumers, the media and retailers are intrigued when they encounter two brands working together.

What's the catch? As usual, it is not the brands but the brand managers that are letting the side down. UK brand management has rarely distinguished itself in ambition or creativity (despite the crap that is spouted at marketing conferences). So while US brand managers have embraced co-branding to a remarkable degree in recent years, we have yet to see any major examples in the UK.

One notable exception is the partnership between the Ralph Lauren perfume Romance and Lindt's exclusive chocolates Petites Merveilles. The two brands were offered together as a Valentine's Day promotion in a rare example of two big brands stepping out of the marketing bunkers that most inhabit and driving awareness, sales and possibly brand equity through co-branding.

This alliance was initiated by ZenithOptimedia, the media agency for both companies; its growing client list could signal a developing role as a dating agency for those looking for co-branding relationships. The potential for the practice to grow brand equity while increasing sales should ensure that there will be plenty of suitors.

30 SECONDS ON ... RALPH LAUREN AND LINDT

- Zurich chocolatier Lindt & Sprungli was formed by the merger of two family confectionery companies at the end of the 19th century. Ralph Lauren has built his fashion, fragrance and home furnishings empire since opening a tie shop in 1967.

- The co-branded promotion between Petites Merveilles and Ralph Lauren Romance ran from 21 January to 15 February this year in UK fragrance stores and department stores.

- Lindt and L'Oreal (which produces the Romance perfume under licence) worked together to ensure the brands were presented in a consistent and unified way in-store.

- During the promotional period Romance was one of the five top-selling female fragrances in most of the stores where the co-brand was offered. This is despite the fact that in 2005, 220 fragrance brands advertised, and the perfume has been on the market since 1999.

Tommy's Brand Problems

Can Tommy bring its brand back to life?

It has been quite a decade for Tommy Hilfiger. During the 90s, it seemed his brand could do no wrong. The business experienced meteoric growth and, by 2000, was generating $2bn in worldwide sales.

But then came the new century, and Hilfiger struggled to maintain the momentum. Last week, the brand was bought by Apax Partners, a global private equity firm, for $1.6bn (£850m).

Perhaps the first step under the new regime will be to look back on some of the major errors that the brand made in 90s, because Tommy Hilfiger learned some of the key lessons of brand management the hard way.

First, growth and success are the two biggest enemies of all strong brands.

Hilfiger's global sales grew tenfold during the 90s. On a Powerpoint slide to investors, this looks fantastic. But, internally, this kind of growth is a major challenge. It is a classic conundrum for most niche brands that experience market success. Their scale increases, they lose focus and, eventually, all the elements that made the brand successful are lost.

Second, watch out for retail 'partners'.

Hilfiger, like most fashion brands, relies both on its own outlets and selling through major department stores. The latter are not necessarily motivated to protect and care for brand equity over the long haul. Hilfiger experienced first-hand the classic one-two-three of retail sales. 'The problem was the department stores in the US,' he said. 'First of all they copy you, then they under-price you and then they discount the brand. They don't take care of your shop areas in stores.'

Third, the financial markets are run by brand morons with unreasonably short-term profit goals. Tommy went public relatively early in its history in 1992. When a brand is in the ascendancy, being a publicly listed company confers only advantages. But with this status come analysts, expectations and impossible quarterly sales growth.

Hilfiger himself accepts the pressure of the market made his life very difficult and had a negative impact on the brand: 'I was under the public auspice for around 10 years. It's a whole different ball game. Everything you do is looked at under a microscope, so you make decisions based on Wall Street agendas, and maybe those aren't always the right decisions to make.'

Fourth, pressure from Wall Street often leads to a focus on short-term sales at the expense of long-term marketing focus. There is a big difference between marketing and sales. When you are sales-oriented, all customers are equally valuable additions to your quarterly sales figures. Marketers, however, know that all customers are not created equally.

To succeed over the long term, a fashion brand must aim high and deliberately avoid appealing to customers lower down the fashion hierarchy. According to the company's new chief executive Fred Gehring, this is something that he will attempt to redress. 'Over the past couple of years, everything was top-line-focused,' he said. 'In a (non-publicly listed) situation, we don't have to have an obsession with the top line anymore and can focus on quality, not quantity.'

Fifth, beware sales promotions. The single fastest way to kill any brand is to over-produce and then discount heavily through sales promotions.

Price-based promotions kill brand equity and, when the former is more prominent than the latter, disaster is rarely far away.

In recent years, it has been hard to find Hilfiger clothing that was not on sale. There is no sadder sight in branding than a sign saying 'non-sale items over here'. For Gehring, his number-one priority will be to raise price points gradually and restore brand equity: 'One overriding principle will be to try and trade up, not overnight, and become a materially higher brand,' he said. 'It will happen in due course, (a little bit) every season.'

30 SECONDS ON ... TOMMY HILFIGER

- The Tommy Hilfiger Corporation was founded in 1984 by fashion designer Tommy Hilfiger.

- The company designs, sources and markets men's and women's sportswear, jeanswear and childrenswear, as well as footwear and fragrances.

- Its brands include Tommy Hilfiger and Karl Lagerfeld.

- In 2004, the company had 5400 employees and revenues of more than $1.8bn (£955m).

- In 2002, Hilfiger went public and, this month, completed its merger with Apax Partners, which purchased the company in a $1.6bn all-cash deal.

- In the same year, The Cut, a TV reality show featuring 16 contestants competing for a design job with Hilfiger, was broadcast on CBS.

- Hilfiger produces three fragrances: the Beyonce Knowles-endorsed True Star and True Star Gold; and True Star Men with Enrique Iglesias.

Pfizer Breaks Brand in Africa

Ten years ago, with a meningitis epidemic raging in the region, a team of Pfizer researchers travelled to the city in what the company claims was a philanthropic mission. The team arrived with large quantities of Trovan, an experimental and, at that time unapproved, drug. What follows is one of the darkest chapters in the already black book of Big Pharma ethics.

One would expect that an annual marketing budget of $3bn (£1.6bn) would buy you a very well-positioned corporate brand. But that has not been the case for Pfizer.

The world's biggest pharmaceutical corporation has recently launched some very successful drugs, including Lipitor and Viagra. But when it comes to its own corporate brand Pfizer is, like many multinationals, a mess of generic and insipid bland values.

All the usual suspects are there: integrity, innovation, customer focus, respect for people, community, teamwork, performance, leadership and, of course, quality. It is a roll-call of the generic from a corporation that sees branding as a superficial patina and not the fundamental core of its business.

Does it matter? With profits of $8bn (£4.3bn) last year, does it even need brand values at the core of its business?

We might get a different perspective from the people of Kano in Nigeria.

Ten years ago, with a meningitis epidemic raging in the region, a team of Pfizer researchers travelled to the city in what the company claims was a philanthropic mission. The team arrived with large quantities of Trovan, an experimental and, at that time unapproved, drug.

The Pfizer team recruited a Nigerian doctor to act as its leader, who has since claimed that he was little more than a front man. They then administered Trovan in oral form to 100 children selected from meningitis sufferers admitted to a Kano field hospital.

The Pfizer team also administered cef-triaxone, a registered drug for meningitis, in lower-than-recommended doses to another 100 children also suffering from the illness.

Pfizer said that it had received the verbal approval of the families of the patients, although in filing a lawsuit, the families have claimed that the company did not obtain their consent.

Meanwhile, those children admitted to the hospital who were not selected by the Pfizer team were treated with the correct dosages of the antibiotic chloramphenicol, an internationally accepted treatment for bacterial meningitis, by a team from Medecins Sans Frontieres.

Once the Pfizer team had ended its mission, it returned to the US, though the epidemic continued.

Of the 200 children involved in the trial, 11 died - although there is no evidence to suggest the drug played any part - and many others were afflicted with serious medical conditions, despite surviving.

Since the affair came to light Pfizer has rejected any wrong-doing, claiming it is 'proud of the way the study was conducted'. A Nigerian commission, however, has concluded that the episode was a 'clear case of exploitation of the ignorant'.

Where are brand values when you need them? Respect for people does not seem to stretch to gravely ill African children. Community, I would suggest, does not apply to the 30 families from Kano now trying to sue Pfizer. Integrity did not apparently preclude the drugs company from using a forged ethics document as evidence that the Trovan trial was legitimate, something to which it has since admitted.

When an organisation takes branding seriously, it goes beyond the superficial and instils in its products, its people and its operations the values that define it.

There are companies, such as Pret A Manger, BP and Nike, that take their brand values very seriously and, as a result, are able to make money and make the world a better place at the same time.

There are also companies such as Pfizer that see brand values as a page on a corporate website and which, as a result, operate with an inherent imbalance between what makes them money and what makes them human