Best of Both Worlds?

May 31, 2007

But brand alliances are not always so sweet. When one brand aligns with another, each must be willing to go forth in unison into what may be uncharted, risky territory. Yes, there are natural symbiotic relationships between certain brands that help both gain more market share. But there are also dangers to co-branding or brand association that could potentially tarnish a brand's reputation.

Branding expert Martin Lindstrom, author of the book BRAND sense, says over 90 percent of brand alliances fail, half of them for three reasons: there isn't equal value for the brands in the relationship, the brands' values don't match each other, and the strategy isn't easily understood by consumers.

So why do brands join hands? Very simply, they believe the payoff is real. It is getting much, much harder for a brand to stand out in its respective category today. As a brand scrambles for consumer attention, aligning with another brand could be an attractive end-run around its competition. It might even propel a brand into a new category.

Co-branding has become so common we may not even be aware that it is all around us. Yum! Brands, owner of such fast-food icons as KFC, Pizza Hut, and Taco Bell, has combined its brands into about 3,400 multi-brand locations. Yet this is more a matter of business efficiency than strategic brand alliances.

Credit card companies now routinely offer "affinity cards" that take advantage of a consumer's personal affiliation. Chase, for example, offers over 40 university alumni credit cards, as well as cards that support non-profit organizations and promote sports teams. While this serves to co-promote the organization along with Chase, it is a financially driven business arrangement rather than a brand marriage made in heaven.

Similarly, brands standing together may not always represent deep alliances. Serving Starbucks-brand coffee on United Airlines flights is no more than making "the friendly skies" a little friendlier.

Then there are paid sponsorships—a whole category of relationships that bring brands together in what may not always seem like logical pairings. What does Nextel have to do with NASCAR? Nothing, except that it paid for the right to have its name on the "NASCAR Nextel Cup Series." And do we really need a "Tostitos Fiesta Bowl"—or any other college football bowl game with a branded name?

The question, then, is this: Are there brand alliances that really work? Trend watcher Reinier Evers of the Netherlands says the best alliances occur when brands "come up with a truly new product or service that embodies and unites their respective core competencies."

Evers founded and publishes the international newsletter trendwatching.com. One of the significant trends he watches is "Branded Brands." Evers extensively studies global brand pairings, some of which include:

* BeerTender, a collaboration by Heineken and Krups to produce a professional beer tap and special kegs for home use

* South Korean mobile phone manufacturer VK Mobile teaming up with Swarovski to create crystal-encrusted handsets

* Italian luxury products company Bulgari and Marriott Hotels collaborating to launch new Bulgari Hotels and Resorts.

Evers cites Philips as one of the global companies that aggressively pursues smart, complementary brand alliances. Philips and Unilever introduced a new iron in the Netherlands called Perfective, which combines Philips' iron with an anti-creasing agent from Unilever. Philips uses Sara Lee coffee pads in its Senseo coffee machine, highly popular in Europe. Philips and Nike created PSA Play, a line of portable sport audio products such as headphones designed by the latter and manufactured by the former. Philips launched the Cool Skin electric shaver that uses Nivea For Men replaceable cartridges.

When brand alliances click, the results can be dramatic. A brand pairing that broke new ground in the automotive industry is actually 10 years old. In 1996, when other car companies were offering discounts and lower finance rates as incentives, Volkswagen instead teamed up with a hip brand, the Trek mountain bike. The result was a new product, the "Jetta Trek"—a special edition of the Volkswagen Jetta, equipped with a bike rack and a Trek mounted on top of the car.


Trek provided the mountain bike, valued at US$ 1,000, for a few hundred dollars and achieved breakaway brand exposure, while Volkswagen appealed to some 15 million mountain bikers. The Jetta Trek became a true sub-brand with its own vehicle badge and cloth interior in addition to the pre-fitted bike rack. The promotion was a sellout success.

Volkswagen was the first car manufacturer to align itself with Apple, offering a free iPod with every New Beetle sold. Since that foray, other automobile manufacturers have aligned with the iPod, most notably BMW, which integrates the iPod directly into a car's stereo system via a glove compartment cable. Other brand alliances in the auto industry include the "Eddie Bauer Edition" of the Ford Explorer, the PUMA Mini Cooper S, and the 2007 Cadillac CTS Bose Edition.

McDonald's recently joined with Newman's Own coffee—a win-win, according to Michael Carey, senior vice president and director of brand promotions at Arnold, a leading US ad agency. Carey says the extensive McDonald's network introduces the Newman's Own brand to a large retail audience, while Newman's Own "elevates the McDonald's coffee experience to a whole new level. Now McDonald's is a real competitor in the coffee category."

A new charitable spin on the brand alliance is the Product Red, or (RED) campaign. (RED) is a brand that was created by the socially conscious performer Bono to help people with AIDS in Africa. (RED), via licensing, aligns itself with global brand names in a philanthropic win-win: The licensee creates and promotes a (RED) product in a category-exclusive arrangement and the money goes to the Global Fund, which funds programs to fight AIDS. American Express, Apple, and Motorola are three of the notable brands participating in (RED). (Brandchannel readers recently debated the merits of "Red" and other cause-related marketing.)

But some brand alliances may leave you scratching your head. Take the recently announced Coca-Cola/L'Oreal partnership. According to Brandweek, the two brands will introduce a "nutraceutical drink" called Lumaé in 2008. Supposedly, the drink will include ingredients "that will help women care for their skin." The brand reportedly will be marketed like a beauty brand, not a soft drink, and it will be sold in such upscale stores as Saks Fifth Avenue. Will consumers believe in the credibility of this brand pairing?

Ultimately, it seems, the most successful brand alliances are the ones that skillfully craft something bigger, better, and more meaningful than each brand could create alone. While achieving success with alliances is not guaranteed, brand marketers facing intense competition still pursue the elusive perfect match. Brand alliances will continue to grow, says Evers, because "consumers know which brands have a competency in what area, and they are relentlessly looking for the best of the best."

 

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