The world in which companies operate has become much less predictable. Business environments are now more diverse, dynamic, and interconnected. One strategy for surviving in this framework is coopetition. A model in which several stakeholders cooperate and compete together to create maximum value.

Collaboration strategies They can provide a significant strategic advantage. While competition involves winning or losing, cooperation can mean a win-win strategy. Its basis is that collective intelligence is an unlimited resource that facilitates and accelerates the generation of ideas. And for any company, innovation is crucial for it to compete in saturated markets.

The term “coopetition” combines “competition” and “cooperation” into a single idea. It may seem that these two concepts are diametrically opposed, but, in fact, competitors can often benefit from cooperating with each other strategically. Doing so, however, requires a high level of creative thinking. Coopetition finds in differences new opportunities for organizations and their brands to complement each other, rather than compete. Competitors thus become collaborators, developing joint solutions that better meet customer needs.

It could be said that in coopetition one plus one is not equal to two, since the benefits of the sum can be much greater than the mere sum of the parts. This is something that applies to corporate brands but can also be applied to product or service brands.

In this case, it should be clarified that collaboration through co-branding is not the same as collaboration through co-marketing. In co-branding, two brands come together to jointly build and promote a shared solution. Their strategy is to aggregate the capital of each brand and improve the result of the final product. In co-marketing, more tactical objectives are pursued and each brand maintains its own individual offer.

TYPES OF BRAND RELATIONSHIPS

  1. Specific agreement. The one-off agreement is usually for tactical or promotional reasons and represents the lowest level in the relationship between brands. Example: Limited Edition TicTac & Cocacola Candies
  1. Licensing Logo. It can make it possible to take advantage of the image/reputation synergies of both brands respectively, as a result of the sum of each of the product or service offerings, allowing the controlled use of the brand in complementary, or even totally different, contexts. Example: McDonald’s
    McFlurry
    with Oreo or Kit Kat
  1. Ingredient: Branding. Ingredient brands complement other brands without conflicting, reinforcing the perception of quality. Their value-added message is conveyed directly to the brand they are on. In turn, the resulting products benefit from the association with the ingredient’s brand and presumably the consumer gets a better product. Example: Patagonia and Polartec’s technical fibers
  1. Alliance. The alliance (designed for the long term) facilitates the realization of joint operations that involve a high degree of ambition and commitment. It is part of joint business strategies. Example: British Airways and the
    oneworld®alliance
    with 14 other of the world’s leading airlines. When one of the two brands leads the operation, then it is defined as a dominant alliance. Example:
    Oral-B and Braun
    .
  1. Endorsement. The endorsement strategy is made up of individual and distinct product brands that are linked together by an endorsing parent brand. The endorsing parent brand plays a supporting or collateral role for the other brand. It can be strong or weak, depending on the degree of relationship in the presentation of both brands. Example:
    Sony Pictures
    would be a strong endorsement, while Vaio (of Sony) would be a weak endorsement. On the other hand, from the perspective that people can also be brands, the endorsement with celebrities allows the celebrity to act as a spokesperson for the brand, certifies a certain positioning and extends their personality towards the brand. Example:
    Pepsi with Beyoncé
  1. Fusion. It can occur as a result of any of the above agreements or by merger or acquisition between companies. Mergers can be divided into three categories based on their branding strategies:
    • Assimilation, which includes organizations that retain the name and logo of one of the original companies and discard those of the other, as Pfizer did when it took over Warner-Lambert.
    • Respect, to identify those cases in which each company kept its name and logo. For example, when Procter & Gamble bought Gillette.
    • Merger, to describe organizations that used branding elements from both companies, either combining the two names (as at JPMorgan Chase) or taking one company’s name and the other’s logo (Boeing kept its name, but adopted the McDonnell Douglas logo).

Exceptionally, there are other formulas such as when merging companies opt for an entirely new name, as GTE and Bell Atlantic did when they merged to form Verizon.

STRATEGIC FACTORS

  1. Draw a map of equities: It is essential to analyze the possibilities of co-branding diluting the image and value of our brand in the minds of customers and stakeholders. The strategy should delve into how the sum of values can be perceived from the customer’s mind. By translating this set of attributes and values into an
    Equities
    map, we will be able to get a closer approximation of the new scenario.
  2. Define roles: Communication is going to be essential from the very beginning. It is necessary to establish an adequate communication program, where the role of each brand is very clear. To this end, it is desirable to develop appropriate guidelines to objectively assess potential opportunities. Large companies have established formal guidelines for this purpose, such as AT&T which even incorporated into its intranet a “Co-branding Decisions” tool to help guide managers through a variety of decision factors related to co-branding opportunities and the different ways to approach it. Along with this, it is advisable to define and guide in co-branding guidelines the provisions related to the appearance and prominence of the respective brands; i.e. location, color, size, proximity.
  3. Analyze the costs and benefits: We must not forget to start from the previous analysis of whether there is any other way to reach the desired objective. We must not only think in the short term, we must plan the future scenario and define what the long-term benefit is. Depending on the objective set – to accelerate the growth of the market, to open up to new targets, to increase positioning, etc. – we can obtain one type of response or another from consumers. Similarly, total control over our product or service may be diminished. We need to think about how we are going to carry out the appropriate quality controls.
  4. Time: Short-term agreements facilitate the transfer of partnerships from one brand to another while avoiding distortion. Long-term agreements could distort the brand image and encourage tensions between the parties.
  5. Measurement: Logically, without measurement there is no control. Part of our strategy should be to set out what the evaluation indicators are and what the milestones should be during the process. Some of the relevant KPIs, which should be contrasted with the previous situation, are the following:
    • Cost per lead (CPL) or cost per action (CPA)
    • Incremental Revenue
    • Return on Investment (ROI)
    • Average Order Value (AOV)
  6. Define and plan the output: Finally, we must be very clear about what the exit strategy should be. Both because our agreements with the other brand come to an end, and because we discover that the alliance harms our brand. In this way, we will be able to react quickly to any crisis and identify new scenarios.

PROS AND CONS OF CO-BRANDING

  • Advantages:
    • Access to shared resources for both brands.
    • Opportunities to expand or improve market share.
    • Reinforcement of the brand’s personality.
    • New marketing and sales opportunities for each brand.
    • Stronger customer relationships, built through affinity.
    • Increased access to finance.
  • Cons:
    • Reputational costs. If something goes wrong, both brands will struggle.
    • Dilution of the brand image, if the partner has not been properly chosen.
    • Risk of loss of image if too many alliances are concatenated.
    • Customers may prefer the shared product to the individual offer.
    • Customers could lose focus on the individual brand.

THE FUTURE BELONGS TO ECOSYSTEMS

It is important to remember that in many cases competitive advantage is not driven by the resources that one controls, but by those that one can access. In reality, growth accelerates from the sum of shared interests, through interconnected networks that collaborate to create value for themselves and for the rest of the ecosystem within one or more market environments. The ability to innovate, whether by improving existing products, services or processes or generating new ones, is crucial to business success. Knowing your competitors will lead to more chances to cooperate.

 

Carlos Puig Falcó
CEO of Branward