COMMENTARY Co-branding: A sweet business strategy? By Kelly McCarthy, Esq., and Samantha Von Hoene Sideman & Bancroft In today’s brand-centric world, co-brands are over 23 new versions produced since the everywhere. From fast-food joints to credit original design was first sold in 1984.1 Benefits of co-branding card companies to fashion, co-branding has In a typical co-branding deal, two or more Introduce loyal customers of one been making its mark on business strategy companies come together and strategically brand to the other. since at least the 1950s. When brands merge, merge some of their own products, services, Build wider customer base for the results can propel a brand’s popularity designs, colors or logos to come up with new products and advertising. and success to soaring new heights. But a new marketable product or service. A Use another brand’s strong be careful — those same collaborations can successful pairing results in automatic reputation when trying something sometimes leave a brand fighting to save a credibility in the eyes of the consumer, new or different. once-polished reputation from tarnish and increasing popularity and sales for both of disrepair. the partnered brands. Save money. Create illusions of exclusivity through limited-edition or A successful pairing results in automatic credibility limited-duration products. in the eyes of the consumer, increasing popularity Elevate brand’s reputation, and sales for both of the partnered brands. popularity and financial success. Risks of co-branding Over the past 60 years, co-branding has been A co-branded product usually crosses into used to form a multitude of new partnerships. a new marketplace for at least one of the Dilutive effect because two companies share success of the Popular examples of co-branding exist across brands involved, allowing both brands to co-branded item. a variety of marketplaces. Eddie Bauer, reach a new audience. Martha Stewart’s famed for quality clothing and adventure co-brand with Home Depot is a prime Relying on another brand’s equity gear, paired with Ford Motor Co. to make a example of an expansion of a brand into and reputation. series of successful sport utility vehicles. The a new customer arena. Martha Stewart Need to closely monitor the Girl Scouts of America partnered with Dairy Living is a predominately female-oriented co-brand. Queen to sell a limited-edition Blizzard, home goods brand, while Home Depot is a mixing the famous door-to-door cookies in classic home improvement store targeted an ice cream shake. at the “Mr. Fix It” male consumer. With the GOOGLE AND KITKAT merger of these two brands, each company Celebrity partnerships commonly make their The most recent example of an unexpec- has the opportunity to speak to a new market mark on the co-branding world. Prominent ted co-brand is the new KitKat Android segment. examples include basketball legend Michael operating system put out by Google. Not Jordan teaming up with Nike to produce a Co-brands range from the intuitive and surprisingly, this co-brand is the first time shoe. Through this co-brand, the Air Jordan expected, like the popular TGI Fridays and Google has paired with Nestle, a well-known became one of the most successful and Jack Daniel’s menu offerings, to the unique culinary and baking brand, that produces widely recognized shoes on the market, with and surprising. the Kit Kat candy bar. Many didn’t see the partnership coming, and this rare co-brand left some consumers wondering why either company would find it desirable to work together. Google’s Android OS already has over 1 billion activations, making it the leading Kelly McCarthy, an intellectual property attorney at Sideman & Bancroft mobile operating system in the world. in San Francisco, focuses her practice on copyright and trademark issues. She can be reached at [email protected]. Samantha Von Hoene Both Nestle and Google are listed near (not pictured) is an intellectual property intern at Sideman & Bancroft. the top of Forbes’ “World’s Most Valuable She attends University of California, Hastings College of Law and will receive her J.D. in 2015. Brands” list, and both have a net worth of well over $200 billion.2 It’s fair to say that neither brand needs the financial boost or © 2014 Thomson Reuters FEBRUARY 13, 2014 ■ VOLUME 31 ■ ISSUE 18 | 3 the increased popularity that this deal could FUTURE For example, a recent co-branding effort by potentially bring. superstar rapper Jay Z was temporarily on Only time will tell if this deal ultimately leads the rocks when, just before launching his So why bother? Some analysts suggest that, to increased profit for either company, but brand “Shawn ‘Jay Z’ Carter” in collaboration through this co-brand, Google may have what does this mean for other brands? been trying to link its products to a message with the retailer Barneys New York, an Most companies are not world brand of availability for all. Others says this brand alleged incident of racial profiling occurred giants like Google and Nestle, so they merger stands as a possible indication of at Barneys that forced Jay Z to publicly need a co-brand to be successful for lower prices on phones and tablets, selling comment on the scandal and consider many reasons, not just for smiles and fun. 6 the message to consumers using the tasty removing his line from the store completely. Luckily, co-branding does not discriminate; chocolate name. Yet others say this was just Although Jay Z had nothing to do with the successful co-branding has occurred with a fun and yummy way to advertise and build incident and Barney’s vigorously denied any both large and small companies, popular hype for the new system release.3 wrongdoing, Jay Z’s name and reputation, and unknown products, and regional and along with that of his brand, was quickly However, the system name Kit Kat is not as national entities. The idea is simply to affected by the link to the idea that Barneys random as some may think. The Android OS, respond to a changing marketplace in a would engage in racial profiling. in fact, has a rather sweet naming history. way that will increase product revenue and When co-branding goes wrong, not only is Every version of the operating system after generate consumer interest. Android 1.0 has been named with a popular a brand’s reputation put into jeopardy, but Co-branding has many benefits. It can confection or bakery item. In addition to unforeseen problems can occur, like the introduce loyal customers of one brand to the naming trend, Google has purposefully creation of new competitors. For example, a new brand, building a wider customer named each OS version to begin with the when firearms maker Wild West Guns worked base for new products and advertising. It next consecutive letter in the alphabet. For to facilitate a co-branding relationship with also allows for brands to rely on the strong example, in 2009, Android 1.5 became known another gun company, Marlin Firearms, to reputation of other brands when trying as “Cupcake,” which was quickly followed by add innovative levers to various designs, the something new or different. This is often Android 1.6 named “Donut” later that same plan backfired. What started as a strong referred to as benefiting from a brand’s year, and the trend continued. co-brand opportunity left Wild West Guns “halo of affection” and is seen in many of the fighting in court to keep Marlin Firearms from By the time July 2013 rolled around, Android popular co-brands displayed in stores today. claiming and using the new gun lever design 4.3 came out with the name “Jelly Bean.” By late October, Google was ready for Android 4.4 and was on the hunt for a sweet name Ultimately, this pairing seems like the perfect deal: that began with the letter K. Android low financial risk and a public relations and consumer followers immediately suspected Key Lime awareness success. Pie as the new OS name of choice, but they were as shocked as everyone else when 7 Sometimes, co-branding can even offer as its own. Although a co-branding effort Google announced the Nestle co-brand and the benefit of cost-savings, which can be may start on the right foot, it is important the OS name of KitKat. especially useful in times of economic to closely monitor the co-brand, or else a If you watch the promotional ads for the new downturns. Co-branding can give the solid partnership can quickly turn into a big operating system, you will catch the witty illusion of exclusivity, such as limited-edition problem. ways Google has turned its new Android OS co-branded clothing lines or limited-duration The risks are great in the world of co-branding, release into a sweet deal, one you will surely product lines. This business strategy can but when it is done correctly, the benefits 4 want to break off a piece of for yourself. transform an old, stale brand into something can truly transform a brand and a business. Most people would not immediately pair the new and hip, sometimes by simply adding If your company is considering a co-brand, two brands because they share no obvious another brand name to the label. When don’t dwell on the risks and problems that commonalities between either their products done correctly, co-branding can elevate a can come. Instead, be proactive and do your or their potential customers, but this may brand’s reputation, popularity and financial research.