Co-branding vs brand licensing

Co-branding vs Brand Licensing

Brand development is an ongoing process of serving consumers. It is used to maintain the quality, distinctive marketing assets and consumer trust of a brand. For entrepreneurs, branding work is hard to lift, but sometimes, they don’t need to lift it alone. They could co-operation with other businesses. There are two ways of brand cooperation, Co-branding and Brand Licensing.

Co-branding

Co-branding is defined as combining two or more brands (constituent brands) to create a new product (composite brand; C. W. Park, Jun, & Shocker, 1996). Co-branding is not just putting two company names together on a product. Rather it combines the assets, resources, and identities of both companies to create a new product or service. By new product or service, it is meant to generate a new name, logo, brand image, and corporate identity.

To be victorious, co-branding corporations design a product or service that is distinctive and has added value for customers. That value could be anything such as a specialty food item or a better product depending on the target audience.

Example of Co-branding

Doritos and Taco Bell- The Doritos ingredient co-branding partnership with Taco Bell resulted in the new Doritos Locos Taco, which sold over 100 million units in its first 10 weeks. The partnership is still going strong, with continued benefits for both parties.

Doritos Locos Taco

Advantages of co-branding

• Reduced costs for both corporations.
• Enhanced sales.
• Better buyer-seller relationship.
• Shared risk-No single brand has to carry all the risk.
• Shared expenses.
• Enhanced brand recognition.

Disadvantages of co-branding

• Development of financial issues
• One organization or brand probably won’t have the option to keep up.
• Might cause confusion among buyers.
• Reduced risk doesn’t mean zero risk.

Brand Licensing

Brand licensing is using the brand name of another firm on one of its products. The process of licensing occurs when a brand-right owner (licensor) allows the brand user (licensee) to use the name of the brand on the licensee’s product or service for a fee, for a specific territory, and a specific period (Wiedmann & Ludewig, 2008).

In simple words, brand licensing is the act of permitting another company to use your business’s intellectual property (IP). Brand owners lease their patents, software, or characters to other companies.

A brand can compromise any of the following:

• Signs
• Symbols
• Name
• Term

An example of brand licensing is Marvel. As holders of the IP rights in its creative works, Marvel has been able to leverage the commercial value of its superheroes through a series of profitable licensing agreements. These agreements define and structure the business relationship between the licensee and the licensor, outlining the terms and conditions by which a manufacturer may produce, for example, a toy in the likeness of a given character.

Marvel Brand Licensing

Benefits of brand licensing

• Increase profit without cost risk
• Increase brand recognition
• Expand market share

Potential drawbacks of brand licensing

• Risks of intellectual property theft
• Competition in the marketplace
• No guarantee of income
• Loss of control of your brand

In final, deciding whether to go into brand licensing or co-branding should be part of a long thought-out process subject to conversations and meetings internally to make sure the strategy around potential partnerships is in line with the business and capabilities. There will always be risks associated with either licensing or co-branding, but it can also result in a successful move for the development and expansion of your business.

For any further information needed on trademark registration, please reach us here.

YouTube – Co-branding vs Brand Licensing

Let’s Make Awesome Brands, Together

Tell Us About Your Brand

Recent Posts

Who We've Worked With