Multiple Co-Branding

Table of contents

Table of figures

Table of images

1 Introduction
1.1 Background
1.2 Problem Formulation
1.3 Aim of the study
1.4 Disposition

2 Theoretical Part
2.1 Consumer perception and attitudes
2.1.1 Consumer perception
2.1.1.1 Sensory thresholds
2.1.1.2 Selective attention
2.1.2 Consumer attitudes
2.2 Branding strategies
2.2.1 Branding
2.2.1.1 The concept of a brand
2.2.1.2 Basic branding strategies
2.2.1.3 Brand equity
2.2.2 Co-branding
2.2.2.1 Defining co-branding
2.2.2.2 Delimitation
2.2.2.3 Types of co-branding
2.2.2.4 Co-branding as a brand extension
2.2.2.5 Opportunities of co-branding
2.2.2.6 Risks of co-branding
2.2.3 Multiple co-branding
2.2.3.1 Defining multiple co-branding
2.2.3.2 Types of multiple co-branding
2.2.3.3 Opportunities of multiple co-branding
2.2.3.4 Risks of multiple co-branding
2.3 Prior research on the impact of co-branding on consumer perception and attitude
2.4 Conclusion theoretical part

3 Methodology
3.1 Research purpose
3.2 Data collection
3.2.1 Secondary data collection
3.2.2 Primary data collection
3.3 Research approach
3.4 Research strategy
3.5 Research design
3.5.1 E-mail survey
3.5.1.1 Design of the cover note
3.5.1.2 Design of the questionnaire
3.5.2 Sampling process
3.6 Possible limitations
3.6.1 Validity
3.6.2 Reliability

4 Empirical Part
4.1 Portrait of Smarties and its co-branding partners
4.2 Portrait of Langnese and its co-branding partners
4.3 Empirical results
4.3.1 Socio-demographic sample characteristics
4.3.1.1 Gender, age and regional provenance
4.3.1.2 Education, profession, children and income
4.3.2 Findings concerning Smarties
4.3.2.1 Unaided knowledge
4.3.2.2 Aided knowledge
4.3.2.3 Product rating
4.3.2.4 Attitude towards Smarties
4.3.3 Findings concerning Langnese
4.3.3.1 Unaided knowledge
4.3.3.2 Aided knowledge
4.3.3.3 Product rating
4.3.3.4 Attitude towards Langnese
4.3.4 Evaluation multiple co-branding
4.4 Analysis
4.4.1 Socio-demographic sample characteristics
4.4.2 Unaided knowledge
4.4.3 Aided knowledge
4.4.4 Product ratings
4.4.5 Brand attitudes
4.4.6 Evaluation multiple co-branding
4.4.7 Target groups

5 Final conclusion
5.1 1st research question
5.2 2nd research question

6 Further suggestions
6.1 Suggestions for companies
6.2 Suggestions for further research

References A

Appendix 1: Cover letter (original German version)

Appendix 2: Cover letter (translated English version)

Appendix 3: Questionnaire (original German version)

Appendix 4: Questionnaire (translated English version)

Appendix 5: Target group analysis

Table of figures

Figure 1: The perceptual process

Figure 2: Attitude components

Figure 3: Aaker’s model of brand equity

Figure 4: Hierarchy of co-branding types

Figure 5: Simonin’s and Ruth’s conceptual and structural model

Figure 6: Schematic illustration of our research questions

Figure 7: Smarties’ co-branding partners

Figure 8: Langnese’s co-branding partners

Figure 9: Gender distribution: sample vs. Germany

Figure 10: Age distribution of the sample

Figure 11: Regional provenance of the respondents

Figure 12: Graduation and profession of the respondents

Figure 13: Net monthly household income distribution of the sample

Figure 14: Smarties: Experience with co-branded products

Figure 15: Smarties: Number of known co-branded products (aided knowledge)

Figure 16: Smarties: Unaided and aided knowledge of (multiple) co-branding

Figure 17: Smarties: Product ratings

Figure 18: Smarties: Influence of multiple co-branding on consumers’ attitude

Figure 19: Langnese: Experience with co-branded products

Figure 20: Langnese: Number of known co-branded products (aided knowledge)

Figure 21: Langnese: Unaided and aided knowledge of (multiple) co-branding

Figure 22: Langnese: Product ratings

Figure 23: Langnese: Influence of multiple co-branding on consumers’ attitude

Figure 24: Impression of multiple co-branding

Figure 25: Comparison of mean pre- and post-attitudes

Table of images

Image 1: Smarties Santa Claus

Image 2: Milka Santa Claus

1 Introduction

1.1 Background

Nowadays, producers of nearly all kind of products have to deal with increasing competition in a globalizing world (Kotler et al., 1996). The good old times when there was a demand backlog and producers could simply focus on production and neglect marketing aspects do usually not exist anymore. As a consequence, most companies have been forced to shift from a production to a marketing concept.

Additionally, the exchangeability of the products has led to the producers’ need to differentiate themselves from other offers. Due to the flood of advertising on TV, on the radio, in magazines or on hoardings, people usually do not perceive all these stimuli anymore. A well-known brand can help a company to attract new customers and to keep customers loyal. Therefore, a famous brand can be considered a key strategic asset of a firm (Rao, Qu, Ruekert, 1999)

Since there are already many well-established brands for most product categories, some producers have tried to improve their market position by using co-branding. Puma uses Gore Tex material (Focus, 2004). Ferrari and Fila have developed a sports shoe together (www.mkt-trends.com) and even Coca Cola, one of the world’s most well-known brands, has launched a new co-branded product with the beer producer Diebels called “Dimix” (Magerl, 2003). Already in 1998 co-branding was said to have a 40% annual growth rate in the US (Simonin, Ruth, 1998). Additionally, in 2000 a German survey revealed that 65% of the questioned brand producers considered brand alliances an important branding tool for the future (Decker, Schlifter, 2003).

This paper focuses on a new trend among co-branding companies: multiple co-branding. Co-branding one’s product not only once, but with several well-known brands one after another or simultaneously in independent agreements is a relatively recent marketing strategy.

It has to be said that even for co-branding in general there are only very few empirical studies giving evidence of co-branding’s effects on the consumer, but so far it seems that multiple co-branding has been ignored completely. We could not find any sources, giving special attention on this new, growing phenomenon. Therefore, we decided to do some research of our own in this field. To analyse if multiple co-branding helps companies to strengthen their brands and to defend their market position against competitors, we will examine how consumers evaluate this strategy.

1.2 Problem Formulation

Multiple co-branding is still an unexplored field in present marketing literature. Companies do not know what kind of impact this strategy might have on their brands.

Our empirical study aims at unveiling how consumers react to this new branding trend. The central questions that we try to answer are the following:

Q1: Do consumers perceive multiple co-branding?

Q2: How does multiple co-branding influence the consumer’s attitude towards the brand that uses this multiple co-branding strategy?

1.3 Aim of the study

The purpose of this study is to explore a gap in current marketing literature. We try to describe and to explain the characteristics and prevailing forms of multiple co-branding.

Showing the benefits and shortcomings of this strategy, as well as the consumers’ reactions towards it, will help marketers to evaluate if multiple co-branding is a strategic option for their company.

1.4 Disposition

The introduction will be followed by the theoretical part, which is divided into three main subchapters. In the first subchapter, this paper explains the basics of consumer perception and attitudes, which are important to understand consumers’ reaction towards multiple co-branding. The second subchapter deals with branding strategies, more precisely with branding, co-branding and multiple co-branding. The last part of the theory surrounds prior research on the impact of co-branding on consumer’s attitude. Thereafter, a concise conclusion of the theoretical part including an outlook on our empirical research can be found. Chapter three deals with the methodology of this thesis and also comprises a brief discussion about the validity and reliability of the study. The subsequent chapter four is dedicated to our empirical study. It starts of with a portrait of the example brands and their respective co-branding alliances. Moreover, the results of the empirical study will be presented and analysed. Chapter five offers a final conclusion regarding our research questions. The final chapter six includes suggestions for companies and areas of further research.

2 Theoretical Part

2.1 Consumer perception and attitudes

This chapter deals with the psychological background of how consumers perceive stimuli and which aspects are important to develop their attitudes towards new impressions. Some knowledge about consumer perception and attitudes is indispensable to analyse the consumer reaction towards multiple co-branding.

2.1.1 Consumer perception

To understand consumers’ reaction towards certain marketing strategies such as co-branding, it is crucial to know how they basically receive, treat and finally judge stimuli from their environment. Scientists have proved that the way a product is perceived is the most important factor in forming attitudes and making buying decisions. So, understanding perception is a key to loyal costumers, since this individual process influences people’s behaviour more than any objective quality (Jevons, 2001; Statt, 1997). That is why we will explain some physical and psychological aspects of human perception. According to Kotler perception is a “process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world” (Kotler, 2000, p. 173). As the following graphic shows this process involves several stages and occurs whenever external stimuli reach our mind.

Figure 1: The perceptual process

illustration not visible in this excerpt

Source: adapted from Salomon et al., 1999, p. 40

The stimuli address our five senses and cause first a purely biological reaction, leading to sensation or exposure. The exposure is the extent to which people notice a stimulus (Salomon et al., 1999). However, as not every stimulus is picked up by our senses, not every sensation automatically attracts our attention, as they need to be noticed consciously. If they catch our attention we interpret them based on our beliefs and feelings, which closes up the process (Salomon et al., 1999).

Certainly the above model is extremely simplified since these phenomena are very complex. Our senses have a wide range of interpretation alternatives: a touch can be felt as pressure, as painful, cold or warm or we can taste salty, sweet, sour and bitter things (Statt, 1997). Despite this variety, our senses are still limited in their capacity. We will never be able to see like a hawk or to hear like a dog. There are stimuli that exist but can only be measured or exposed by machines or certain animals. Besides, people are not equally skilled in receiving sensory information (Salomon et al., 1999). The capability of picking up such information is individual. Youths generally see and hear better than elderly people. A person, who has got the flu, smells and tastes less than usual.

2.1.1.1 Sensory thresholds

There are two sensory thresholds: the absolute and the differential threshold (Salomon et al., 1999). The first refers to the minimum strength of stimulus that has to arise until we actually sense it. As we live in a fast changing environment and are bombarded by uncountable stimuli competing for our attention, this threshold might have become more difficult to surmount. Kotler (2000) states that an average person in the United States is confronted with more than 1,500 ads per day. Consequently, companies have to be more creative in order to attract consumers’ attention as their products might otherwise be ignored. Multiple co-branding certainly aims at surpassing the absolute threshold by offering several products with not only one, but two brand names.

The differential threshold refers to the perception of differences between two stimuli. This means that two stimuli have to be sufficiently different in order to be picked up by our senses. This second threshold only applies to two simultaneous and distinct stimuli. It is essential for marketers to understand this threshold so they can use special tools for products to surpass the differential threshold and thus attract the consumer’s attention. A black-and-white TV spot on a colour television will stand out in between all the coloured spots, as it is clearly distinct from the other spots or programmes. Multiple co-branding may also be an opportunity to tackle the differential threshold. A brand cooperating with several other brands might create a more distinctive image in comparison with other brands in the same segment.

2.1.1.2 Selective attention

As described above, the stimuli are filtered through the perceptual process, which is comparable to a sieve. After having exceeded the absolute (and if necessary also the differential) threshold, we still have to cope with the stimuli consciously by giving our attention to them and finally judging them. This selective perception or attention is manifested by external and internal factors (Statt, 1999).

External factors include big contrasts that do not only go beyond the differential threshold, but are even strong enough to be actively noticed and interpreted. Movements are another factor, which influence the selection. People will more likely pay attention to moving pictures or lights than static ones. A frequently used tool in advertising is repetition, which might annoy people sometimes but also attracts our attention. Obviously, for advertisers it is often more important that commercials are noticed at all than that they appeal to consumers. The intensity of a stimulus can decide whether it comes to our awareness or not. So, a stimulus might be intense enough to overcome the absolute threshold, but it still does not achieve the next step of the perceptual process, gaining attention. All these external factors are environmental and thus not depending on the subjective view of the individual. Through our study on multiple co-branding, we seek to find out if this strategy is suitable to gain consumers’ attention.

Apart from the external factors, there are also internal factors to be considered. Different interests, goals and motives depending on individual emotional and physical states, vary from person to person. This explains why people react to identical external stimuli in different ways and why the same person does not always react in the same way, because his or her interests have changed. On the one hand, internal factors are flexible because our psychic and physical conditions are not stable; on the other hand, they also depend strongly on our experiences and on what we have learned which makes them relatively stable in the long run. Humans tend to transform those experiences to expectations and as a result a “perceptual set” (Statt, 1999) is developed. This perceptual set makes us more attentive to those external stimuli that we expect and know from experience. For example: family members, whose cat scratches at the door to make someone open it, and let it in, will hear this quiet sound more easily than a stranger who does not expect to hear it. Considering multiple co-branding, the perceptual set can have two consequences: either consumers feel attracted to co-branded products, because they are familiar with both brands or they reject such brand alliances, because they do not expect a product of two brands together.

Generally speaking, there is not much to argue about the model of human perception, as this is an area, which has been researched for many decades. Maybe there are still some aspects that have not been explored yet, like the question why people perceive impressions in a certain way. This is usually the job of psychologists, though; the main foundation has been sufficiently proved.

2.1.2 Consumer attitudes

Much research has been done on consumer attitudes, mainly in psychology and marketing. If you ask ten people for a definition, you might receive ten different answers. However, according to several sources, attitudes can be defined as lasting, general evaluations, emotional feelings, and action tendencies towards people, objects or issues (Salomon et al., 1999, Kotler, 2000). The ABC-model illustrates attitudes as consisting of affect, behaviour and cognition (Salomon et al., 1999). The affective aspect tells us how we feel about an object or issue; the conative aspect refers to our likely behaviour and the cognitive part answers the question what we think about a certain issue (Statt, 1997). All three components are interrelated and thus act together. So, a marketer must consider all of these aspects. For example, it is of no use only to know that a consumer likes dark chocolate, without regard to his or her opinion that chocolate is unhealthy.

Before a company makes any branding decision, it should be very well aware of its goals. In order to make the right marketing decisions, the company has to decide what it wants the consumer to think and feel and how to act in response to its brand.

Figure 2: Attitude components

illustration not visible in this excerpt

Source: adapted from Statt, 1997, p. 194

In general, attitudes are said to be quite stable psychological constructs, though, according to the information integration theory, attitudes are not only formed, but modified by the stimuli received, interpreted and evaluated (Simonin, Ruth, 1998).

Many people - family, friends and teachers - influence our attitudes. However, personal experiences are most crucial (Statt, 1997). Even if our respected brother had got a high opinion of Japanese car producers, we would have a rather negative attitude towards that car manufacturer if we ourselves had had bad experiences, because our Toyota broke down several times.

Like the concept of the perceptual process, the attitude model or the ABC-model is widely accepted in literature. Contrary to co-branding, which is a relatively new science, the forming of attitudes in general has been investigated for a long time. However, the complex and deeply psychological aspect makes it difficult to judge or to predict attitudes in practice. Thus, we can study the attitudes towards co-branded products, but it is hardly possible with this model to find the exact reasons why these attitudes exist.

2.2 Branding strategies

2.2.1 Branding

As this paper focuses on multiple co-branding, we decided to tackle this topic by its foundations. First, we will give a brief review about some basic information on branding in general, followed by explanations about co-branding and multiple co-branding. Evidently, many companies have opted for a branding strategy. Only some of these have chosen a co-branding strategy and even less have attempted a multiple co-branding strategy.

2.2.1.1 The concept of a brand

“A brand is a name, term, sign, symbol or a combination of these, which is used to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors” (Kotler et al., 1996, p. 556).

Brand names and logos can be legally protected by registering them as trademarks. Usually a brand helps a consumer to make his or her buying choice, because a brand guarantees a certain performance and communicates a set of expectations to the customer (Cooke, Ryan, 2000).

2.2.1.2 Basic branding strategies

Based on Kotler (1996) every company implementing a branding strategy has to make a choice between two basic strategic options:

1. Corporate brand strategy
2. Multibrand strategy

When using the corporate brand strategy, the company name appears in the brand name of all products. This strategy results in economies of scale of marketing expenses and a wider recognition of the brand name. A corporate brand is also very helpful when launching new products. Philips might serve as an example of a company using a corporate branding strategy, as it sells many different products under its company name.

In contrast, the multibrand strategy uses an individual brand for each product. This strategy allows companies to conduct finer market segmentation and reduces the risk of damages to the company’s overall reputation in case of an individual brand failure. Frequently cited examples of companies using a multibrand strategy are Unilever and Proctor & Gamble, e.g. Unilever offers the following distinct brands of cleaning products in Germany: Coral, Domestos, Kuschelweich, Sunil and Viss (www.unilever.de).

In-between these two basic branding strategies there are mixed forms. Some companies, like Kelloggs, use both strategies, others use range brands for certain product families, as the Nivea products made by Beiersdorf.

2.2.1.3 Brand equity

As stated by Randall (2000) the term brand equity stands for the value of a brand. He refers to Aaker’s brand equity model, which defines brand equity as: “a set of assets and liabilities linked to a brand, its name and symbol that add value or subtract from the value provided by a product or service to a firm and/or to that firm’s customers” (Randall, p. 23). The assets and liabilities mentioned are grouped into five categories exposed in the following graphic, a simplified version of Aaker’s model of brand equity.

Figure 3: Aaker’s model of brand equity

illustration not visible in this excerpt

Source: adapted from Randall (2000), p. 24

According to Randall, Aaker admits a validity problem in his model. It has to be concluded that although the mentioned categories might influence a brand’s value, the exact value cannot be calculated. To say it in Randall’s words: “no valid, reliable way of measuring brand equity has yet emerged” (Randall, 2000, p. 25).

However, Aaker’s model of brand equity is important to understand how a brand can increase its value, because it offers a general idea of factors influencing the value of a brand. One central argument for a company to form a brand alliance is to build brand equity (Carter, 2002).

2.2.2 Co-branding

2.2.2.1 Defining co-branding

There are many definitions of co-branding. We decided to follow the definition by Simonin and Ruth (1998, p. 30), based on the terminology by Rao and Ruekert (1994) stating that brand alliances “involve the short- or long-term association or combination of two or more individual brands, products, and/or other distinctive proprietary assets”. They use the term brand alliance interchangeably with co-branding.

We chose this definition not only because Simonin and Ruth are among the most cited authors in this field (Rao, Qu, Ruekert, 1999, Abratt, Motlana, 2002, Carter, 2002), but also because other definitions we found were contradictory or unclear at least to some extent (see Blackett, Boad).

2.2.2.2 Delimitation

When scanning the relevant literature, we came across a lot of different terms related to co-branding, such as co-marketing, symbiotic marketing, joint marketing, joint promotion, joint advertising and brand alliance. These terms were often not clearly delimited and even leading researchers decided to use all of them interchangeably (Simonin, Ruth, 1998, Russel, Motlana, 2002, Bengtsson, 2004).

However, there are differences in meanings, even though sometimes only in small details. The terms co-marketing, symbiotic marketing and joint marketing are more extensive than co-branding, because branding is only one part of marketing. A company could decide to sell generic products instead of branded products, e.g. a Taiwanese clothes producer in the B2B market might decide to concentrate just on the production. Consequently, it can offer the clothes at a more favourable price to the consumer. Marketing should be understood in the sense of satisfying consumers’ needs (Kotler et al., 1996). In order to satisfy the customers’ needs, branding is not necessary in the mentioned case. Marketing is a more all-embracing concept than branding.

As we will show in the next chapter, we consider joint promotions and joint advertising as special types of co-branding and will not use these terms interchangeable with co-branding either. However, as we have already mentioned in the definition, we agree with the above cited authors that “brand alliance” is a good substitute for co-branding and consequently, we decided to use these two terms interchangeably.

2.2.2.3 Types of co-branding

Current literature does not give a systematic classification of the different kinds of co-branding and is sometimes even contradictory. Some authors (e.g. Uggla, 2002, Mehta, 2004) resort to the classification offered by Blackett and Boad. However, we consider this classification incomplete: in their definition, co-branding is only middle- to long-term. They exclude joint promotions and joint advertising (= short-term), which most researchers nowadays also regard as a type of co-branding. Nevertheless, as we have not found a more precise classification elsewhere, we will briefly present Blackett’s and Boad’s categorization. They differentiate four different kinds of co-branding, illustrated in the following graphic:

Figure 4: Hierarchy of co-branding types

illustration not visible in this excerpt

Source: Blackett and Boad (1999, p. 9)

Reach-awareness co-branding

This type of co-branding refers to co-operations to increase brand awareness “through exposure to their partner’s customer base” (p. 9). Credit-card companies often use this co-branding type. One example is the cooperation between American Express and Delta Airlines, which enabled customers to gain further SkyMiles when using their credit cards.

Values endorsement co-branding

The next level of co-branding “is specifically designed to include endorsement of one or other’s brand values and positioning or both” (p. 10). The French culinary academy Cordon Bleu represents the highest level of food quality. Many other brands aspire to decorate their products with the Cordon Bleu logo to emphasize their own products’ high quality. Other companies co-brand with WWF to obtain a more environmentally friendly image.

Ingredient co-branding

In ingredient co-branding, “a brand noted for the market leading qualities of its product supplies that item as a component of another branded product” (p. 12). It has to be stressed that usually one brand is a supplier of just a component, which is generally of no use for the end-user – or could you imagine buying just a Tetra Pack packaging, some Gore Tex material or a single Intel processor? One of the products is a substantial ingredient of the other one and thus they both depend on each other.

Complementary competence co-branding

According to Blackett and Boad the highest level of value creation is reached when “two powerful and complementary brands combine to produce a product that is more than the sum of the parts and relies on each partner committing a selection of its core skills and competencies to that product on an ongoing basis” (p. 14). The cooperation between the Swedish supermarket chain ICA and the petrol station Statoil presents such an example. Statoil offers its customers a broader and probably better choice of products by the ICA express and ICA profits from this alliance by reaching customers 24h a day. Contrary to ingredient co-branding, they do not necessarily need each other, as they can also sell their products independently.

Joint promotions/joint advertising

Apart from these four categories, we also consider joint promotions and joint advertising types of co-branding. Both refer to short-term arrangements between two (or more) well-established brands. Joint promotions have been used repeatedly by McDonald’s and Walt Disney, but they are also popular in supermarkets. When a customer buys a certain product he or she sometimes receives a free sample of another product. An example of joint advertising is the German TV spot in which Bauknecht and Ariel promoted their washing machines and detergents together.

2.2.2.4 Co-branding as a brand extension

It is interesting that some researchers also associate co-branding with brand extensions. Using brand extensions refers to “leveraging the values of a brand … to take the brand into new markets” (Blackett, Boad, p. 133). Usually it just refers to one brand that uses its good image to enter a new market. In the context of co-branding, one could talk about a “composite brand extension” according to Park, Jun and Shocker (1996). Following the mentioned authors “two firms (brands) ally themselves to enter a new product market by sharing manufacturing and marketing expertise” (p. 453).

2.2.2.5 Opportunities of co-branding

Companies with well-known brands have certain motives to enter a co-branding agreement. Interestingly, neither the advantage of sharing promotion and production costs, nor the fact that co-branded products are more convincing to retailers than single brands (Hollensen, 2001) are predominant in co-branding decisions. Indeed, the companies’ goals concern rather the relation to the consumers. The opportunities in this respect will be presented in the following.

Companies hope to make consumers more aware of their brands by co-branding. It probably helps products not only to surpass the absolute threshold, but also the differential threshold, because co-branded products are indeed different from both generic (Magerl, 2003) and other branded products. So, consumers first become aware of the product, and then they are probably curious about the new item and might try it. Moreover, showing new ideas to use a product often arouses the consumer’s interest. For instance, some people adore Milka chocolate but have never bought Langnese ice cream (in Sweden known as GB Glace, in England as Wall’s). With the new co-branded ice cream with Milka chocolate pieces, new customers can be acquired and an innovative way of consuming the original chocolate has been created (Magerl, 2003). Showing new ways of consumption can also offer the customer additional benefits since the good can be used in different situations.

“Consumers do not buy products – they buy benefits” (Hollensen, 2001, p. 90). So, it is crucial that goods be beneficial from the consumer’s point of view. The consumer’s perception determines the value of the product and the brand. 32% of companies considering co-branding want to increase the perceived quality of their product through a brand alliance (Decker, Schlifter, 2003). In fact, researchers have found that products with two (or more) brands give the consumer a higher perceived quality than one single brand (Rao, Qu, Ruekert, 1999). Apart from perceived quality, customers might directly profit from a brand alliance. For example, a co-branded credit card can provide discounts when the cardholder buys a product of the partner’s company.

Besides, a change in image can also lead to added brand equity. A rather conservative and old-fashioned brand image might be modernized with the help of another brand, making the first more valuable.

In conclusion, all these opportunities, i.e. enhancing brand awareness, creating distinctiveness and new ideas of consumption, gaining new customers, raising perceived quality and real additional benefits, will lead to a sales boost and an increase in brand equity (Blackett, Boad, 1999).

2.2.2.6 Risks of co-branding

Despite all these promising opportunities, there are several risks, which should not be ignored. Besides possible conflicts between the co-branding companies, consumers’ reactions towards the new product are the main threat. The success of brand alliances strongly depends upon the consumers’ reactions; they are after all supposed to buy the products. If they are not willing to try them the marketing strategy has obviously failed. So, the most important risks are the following:

Simonin and Ruth (1998) found that product fit and brand fit are very important factors for the success of a brand alliance. If the consumer does not consider the product types as harmonious or if the brands have different positionings, the consumer will probably not purchase the co-branded goods. The image of a premium brand risks being devalued, when cooperating with a low quality brand. In the same way, products not fitting together in the consumer’s eyes are rejected. For example, it can be argued if Heinz is a suitable brand for pet food. That is why a company has to choose its partner very carefully in order to avoid those negative effects.

Another undesired consequence of co-branding could be that it confuses the consumer, because he or she is not used to buy one product with two brand names. Therefore, the consumer first has to build trust in the new product and get used to it. Once the consumer has become familiar with the co-branded good, the risk of creating a “single hybrid brand” (Blackett, Boad, 1999, p. 42) occurs. That means the consumer does not distinguish the two individual brands anymore. This problem becomes even worse when separating the brands again (Blackett, Boad, 1999). As a consequence, each brand might suffer since the customer’s approval based on the brand alliance suddenly disappeared.

All these aspects can cause brand dilution, because the original brand “loses its meaning to customers” (Nunes et al., 2003, p. 22). Therefore, co-branding can admittedly increase a brand’s equity, but it might also weaken a brand if there is a poor product or brand fit.

Finally, it is also possible that consumers do not pay any attention to co-branding activities. Bengtsson (2004) already mentioned that co-branding might be “overlooked by consumers in their every day lives” (p. 12) and suggested further research on this issue.

2.2.3 Multiple co-branding

2.2.3.1 Defining multiple co-branding

The new trend among co-branding companies, which we have named “multiple co-branding”, refers to the strategy of co-branding one’s product with several brands simultaneously or one after another in independent agreements. Multiple co-branding does not mean co-branding agreements involving more than one partner in one agreement such as the co-branding agreement between Ferrari, Lego and Shell in 1999-2000 (Hollensen, 2001). Consequently, we analyse brands that are involved in various brand alliances with different companies.

We found only one article addressing the same issue. In their article “Is a company known by the company it keeps? Assessing the spill-over Effects of Brand Alliances on Consumer Brand Attitudes”, Simonin and Ruth (1998, p. 40) stated that this could be a field for further research. However, they were not talking of ‘multiple co-branding’ but gave the advice to take “a closer look at the notion of ‘brand alliance portfolio’”. With this term they referred to “prior brand alliances affecting perceptions of ensuing alliances and related spill-over effects on a core brand”.

2.2.3.2 Types of multiple co-branding

In their advice for further research, Simonin and Ruth roughly classified possible multiple co-branding strategies:

First, they mention brands having “many partners in a same set” and state Intel as an example of a brand having independent co-branding agreements with Compaq, IBM, Hewlett Packard, and Dell. Unfortunately, Simonin and Ruth do not discuss in more detail what they mean by the expression “same set”. It could refer to a branch of business, a product category or simply to a product. As “set” usually is a synonym for ‘category’ or ‘group’ we conclude that they mean co-branding activities within the same product category. It is obvious that ingredient branding usually involves multiple co-branding in a same set if the ingredient producer does not want to depend entirely on one partner. Another example is Gore Tex, whose current partners are Bugatti, Mammut, Puma, Pierre Cardin, Schöffel, and Chiemsee and other clothes producers (Focus, 2004). We also consider it normal that Tetra Pack’s brand appears on the packaging of many different products. However, non-ingredient co-branding can also involve “many partners in a same set”. The ice cream brand Langnese co-operates on the German market with other brands that usually sell their products independently and do not depend on other brands. They co-branded new ice cream creations with Milka, Toblerone and Batida de Côco, Niederegger Marzipan and Lavazza Latte Macchiato.

Second, Simonin and Ruth talk about brands with “partners in many sets” and give Visa as an example that has got co-branding agreements with airlines, hotels and restaurants at the same time. Concurring with the above interpretation of “the same set”, “partners in many sets” co-operate not only with companies of the same product category but also with partners of other branches of business. Obviously, airlines, hotels and restaurants do not offer products and/or services of one category, but of different industries.

Apart from classifying multiple co-branding types, we intended to discuss the main risks and opportunities. Simonin and Ruth also prompted further research on whether brands getting into many alliances risk dilution and under what conditions such could arise or whether those brands would profit from brand enhancement.

2.2.3.3 Opportunities of multiple co-branding

Since multiple co-branding consists of co-branding with several partners in independent co-operations either simultaneously or one after another, it can be assumed that most of the effects described in the chapters 2.2.2.5 and 2.2.2.6 will be strengthened. The risks and opportunities are probably multiplied. Due to a lack of studies, which could provide information, we can only make assumptions about the consequences of multiple co-branding. However, we will try to give reasonable arguments for our suggestions.

The consumer’s attention is attracted by each single co-branding activity, thus the curiosity of trying at least one of the new co-branded products will possibly increase. As a consequence sales will boost. The one brand co-operating with many others will conquer a predominant position in its sector, because it is visible everywhere and thus constantly under discussion. The fact that the brand spreads its reputation over several new products increases word-of-mouth advertising. People might tell each other what kind of co-branded product(s) they have tried and then try another one. It is obvious that multiple co-branding addresses more customers, i.e. several target groups. The coloured chocolate lenses Smarties, for instance, known by most children, want to address different target groups by cooperating with McDonald’s, the chocolate brand Ritter Sport and the traditional cake-maker Coppenrath & Wiese. So, Smarties hopes to attract completely new customers. Furthermore, the example of Smarties illustrates how many different ways of consuming the product are possible. The brand therefore offers supplementary benefits.

The phenomenon of continuously launching new co-branded products could be called the “Madonna-effect” (Engeser et al., 2003). The famous singer Madonna has changed her appearance every now and then, succeeding to keep the people interested over many years. Multiple co-branding follows the same strategy. A brand will probably be perceived as more innovative and dynamic by multiple co-branding, because the company is evidently constantly active and seeks to launch new products and to start new partnerships. Though, this change in image of course assumes that people get to know more than one of the co-branding activities. The awareness has to be communicated either through the company’s own promotion or word-of-mouth.

It is likely that a customer will have a higher opinion of a brand, cooperating with many other approved brands, than of a brand operating with fewer or no partners. However, we must not forget that personal experience is most crucial for a customer’s opinion. A brand’s good image can be destroyed at once if the consumer has a bad experience.

2.2.3.4 Risks of multiple co-branding

The risk of choosing unsuitable partners for co-branding multiplies automatically when co-branding with several companies. Since every new agreement involves the danger of ignoring the product fit or brand fit, multiple co-branding certainly is a risky undertaking.

Brand dilution occurs more likely with multiple co-branding, because consumers might mix up all the products, and worry about quality and benefits. The public exposure with many other brands increases the risk of watering down the brand’s image, as people are not sure anymore what the brand actually stands for, and thus the brand’s equity decreases.

However, the potential risk of creating a single hybrid brand, as suggested by Blackett and Boad (1999), does not exist with multiple co-branding.

If it is possible that consumers might not be aware of co-branding, as mentioned above, it is of course even more likely that customers do not notice multiple co-branding either. In this case, opportunities and risks will both diminish. We also have to ask if the company wants all consumers to be interested in all of its co-branding activities or whether it only aims at addressing different (and separate) target groups with each action. This question surely depends on the company’s aims and its product and thus cannot be answered generally.

2.3 Prior research on the impact of co-branding on consumer perception and attitude

As already stated in the introduction, not much research has been done so far on co-branding impacts on consumers’ attitudes. Nonetheless, we have to mention at least some pioneers.

In 1999, Rao, Qu and Ruekert discovered that consumers’ perception of quality can be improved by providing a second brand name for a product that has unobservable product attributes. Nutra Sweet might serve as good example in this case. The quite unknown sweetener gained great acceptance among consumers when it started co-branding with Pepsi-Cola and Coca-Cola in the beginning of the 90’s (Hollensen, 2001).

Several articles (e.g. Jevons, Gabott, Chernatony, 2001, Bengtsson, 2004) report of a study conducted by Washburn, Till and Priluck (2000). They found out that by doing co-branding, consumers’ brand equity perceptions improved, irrespectively of whether one of the co-branding partners was a high or low equity brand. Moreover, their study indicated that a low equity brand can gain considerable value by co-branding with a high equity brand.

Probably the most cited scientists in this field are Simonin and Ruth (1998), who examined how attitudes towards individual brands influence the attitude towards the brand alliance and how this attitude again influences the post-attitude towards the constituent brands.

They developed a complex model about attitude influences in a co-branding partnership. Figure 5 shows a simplified version of their model:

Figure 5: Simonin’s and Ruth’s conceptual and structural model

illustration not visible in this excerpt

Source: Adapted from Simonin and Ruth (1998), p.31

They showed that not only consumers’ pre-attitudes towards the individual brands and product and brand fit are important, but that brand familiarity also influences how consumers evaluate a partnership.

Among their results are some, which are of special relevance to our study:

- “Brand alliances of various types affect the respective partnering brand”
- “Even brands that have engaged in many prior alliances (e.g. Visa) are effected significantly”
- “The impact of product fit and brand fit on the core brands is mediated fully by the alliance.” (Simonin and Ruth, 1998, p. 40)

These findings pace the way for our empirical study, because they give evidence of possible impacts of multiple co-branding on consumers’ attitude. Simonin and Ruth showed that brand alliances always have an impact on all the brands involved and that subsequent co-branding agreements (= multiple co-branding) all influence the core brand considerably. Therefore, we suppose that the consumers’ post-attitude differs from their pre-attitude. Additionally, the product and brand fit of the alliance effect the core brands.

2.4 Conclusion theoretical part

Evidently, much research has been done on consumers’ reactions towards different stimuli. There are already many models and theories trying to explain consumer perception and attitude. Branding has also been investigated for many years.

Surprisingly, co-branding, which came up in the beginning of the 90’s has not yet been much explored. Few authors have conducted primary research on the impact of co-branding on the consumer. Multiple co-branding is still a white spot in marketing literature.

If we look again at the model by Simonin and Ruth (see figure 5) for one brand alliance, it becomes obvious that co-branding with multiple partners automatically multiplies the complexity. Therefore, we decided to focus only on the post-attitude towards the brand involved in various partnerships.

However, we want to focus on brands engaged in several co-branding agreements, independently of whether the agreements are simultaneous or one after another. Thus, we do not only want to analyse the influence of prior alliances as suggested by Simonin and Ruth (see chapter 2.2.3.1).

As figure 6 shows, our aim is to study if consumers perceive multiple co-branding and how multiple co-branding influences the consumers’ attitude towards the brand following this strategy.

Figure 6: Schematic illustration of our research questions

illustration not visible in this excerpt

Source: own creation

Based on the knowledge gained in discussing the different theories, we deduct the following hypothesis:

H1: The majority of the consumers do not perceive multiple co-branding.

Due to the large amount of stimuli they are exposed to, we suppose that even multiple co-branding is not able to make its way into the consumer’s conscience.

Even though many people might be unaware of this strategy, we still want to study their general attitude towards it.

H2: Multiple co-branding will positively influence the post-attitude towards the original brand.

Simonin’s and Ruth’s research has already shown that each new alliance has an influence on the consumers’ attitude towards the brand. Assuming a good product and brand fit, we suppose that an agile and innovative marketing strategy of multiple co-branding will satisfy the consumers’ curiosity, making their attitude towards the brand more positive.

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