In 2014, over 18,000 businesses filed for bankruptcy protection, according to the U.S. Bankruptcy Courts. Co-branding is how major retailers are regaining their financial stability and growing. Some take this intuitive after filing for bankruptcy, with the approval of the court, but it is a consideration for businesses on the brink, as well.
What is Co-Branding?
Branding means a company successfully creates awareness about a product or service by associating their business name with it. For example, when you reach for a Kleenex, you are actually grabbing a facial tissue, but that brand name has become synonymous with this product.
Another example of branding in action is Crayon. If you ask for a Crayon, you could be handed any type of wax color, because the public has made a connection with the brand name and the item.
Co-branding combines two brand names in one marketing campaign or product. Co-branding is a brand partnership with both companies working to develop the association. Sponsorship is a form of co-branding, for example. Everything from oil companies to office supply stores sponsor race cars associating their brand with the sport.
How Co-Branding Helps Failing Businesses?
One electronics retailer has been in the news recently after filing bankruptcy. The salvage plan, according to Reuters, includes co-branding with a cellular phone company. The company filed for chapter 11 bankruptcy. By co-branding, this company can stay in business and save jobs. The deal to keep the stores open includes allowing another business to occupy some of their retail space in order to create a co-brand.
Although this company used co-branding after bankruptcy, it could have been a plan to prevent it just as easily. By partnering up with another business, the company gains a larger market for new revenue and increases their potential.
What are Some Co-Brands that Work?
Inc. suggests innovation is the key. Thinking outside your safety zone may be a way to revitalize a dying brand. The magazine offers some examples of co-brand scenarios that work.
- A luxury car brand partners with a leather manufacturer – The co-brand still makes sense even though these are two distinctive fields.
- A swanky hotel creates co-brands with a number of shops and restaurants – By opening its doors to retail businesses, a New York hotel managed to remain open and expand even further.
- A mainstream soda company lends its brand to a clothing designer – Neither company is at risk for bankruptcy, but this partnership allows them both to create distinctive marketing campaigns and reach new audiences.
How can Businesses Co-Brand Successfully?
Whether a company is looking at bankruptcy or just wanting to grow, there is a trick to co-branding well. Consider three essentials to creating a successful co-brand.
- Find a connection – Effective branding requires personality, so make that your connection when creating a co-brand. A bank, for example, tries to establish a sense of trust in their marketing campaigns. A car repair shop has the same need, so trustfulness would be an effective connection.
- Develop a target audience for the co-brand – The electronics retailer and the cell phone service is going to target a younger market and professionals who rely on mobile technology. This creates a focus for the co-brand.
- Figure out how both brands benefit from the partnership – For a company facing bankruptcy, the benefit is financial stability, but what does the partner company get? It may be both have the same goals, but each should identify their end game.
If you are a business owner thinking about bankruptcy, ask your lawyer if co-branding with one or more companies might be part of a restructuring plan or help keep you out of court entirely.