From reputation endorsement to collaboration on core competencies

Brand alliances: From reputation endorsement to collaboration on core competencies

Cooke, Sinead

Brand alliances are a particular type of strategic alliance which have been growing rapidly in popularity in recent years. However, much debate exists as to the nature and definition of a brand alliance. This article reviews the literature on brand alliances and proposes that this type of strategic alliance involves the linking or integration of the attributes of two or more brands to offer a new or perceptually improved product to the consumer.

We discuss the nature of brand alliances as a form of symbiotic marketing and examine the rationale behind this business strategy. We propose that brand alliances tend to range between two primary forms based on two different strategic objectives: reputation endorsement and collaboration on core competencies. It is suggested that these extreme forms of brand alliances constitute a continuum rather than discrete alternatives.

In recent years, there has been significant growth in.strategic alliances and reliance on various forms of collaborative partnerships. A particular type of strategic alliance which has experienced rapid growth in the past decade is the brand alliance, also referred to as co-branding. Defined in this paper as a form of strategic alliance which involves the linking or integration of the attributes of two or more brands to offer a new or perceptually improved product to customers, a strategy of allying brands within the framework of a common project is increasingly being used by firms.

In this article, we discuss the nature of brand alliances as a form of symbiotic marketing and examine the rationale behind this business strategy. We then review the various forms of brand alliances that we observe in practice. Previous authors have suggested that brand alliances may involve physical product integration or may simply involve the promotion of complementary use (Rao et al., 1999). In this paper, we propose that forms of brand alliances tend to be shaped by one of two primary strategic objectives: reputation endorsement or collaboration on core competencies. We argue that rather than being discrete alternatives, brand alliances exhibit varying degrees of both objectives and thus constitute a continuum.

What Is a Brand Alliance?

A review of the literature on brand alliances produces a variety of definitions for this collaborative effort which reflects the large range of uses to which the technique has been put in the field.

These definitions range from being concerned with the idea of several brands coming together to an emphasis on the nature of the alliance and the brand attributes involved in the agreement. Those that have focused principally on the brand have described brand alliances as the combination of existing brand names to create a composite brand name for a new product (Park et al., 1996). For example, Kotler et al. (1999) define co-branding as the practice of using the established brand names of two different companies on the same product. Berkowitz (1994) also describes this strategy as the pairing of two brand names on a single product. Those that have focused on the nature of the alliance take a broader perspective and focus more on the collaboration involved in the alliance. For example, Kapferer (1999) defines co-branding as the pairing of the respective brand names of two different companies in a collaborative marketing effort. Others define the collaborative effort from the viewpoint of certain operational areas of marketing, for example denoting brand alliances as merely advertising or promotional agreements (Collomp, 1995). Others view the link between brands as running deeper than the publicity or promotional level to incorporate a joint venture of production or commercialisation between competing firms (Saunier, 1996; Visser, 1998). This view is compatible with the concept of ingredient branding where the purpose of the link that is established between two brands involves both image transfer and the integration of a new physical attribute into the existing brand (Waters, 1997). At their core all co-branding alliances share the same strategic principle; they involve the putting together of the identities and brand equity of the brands involved (Aaker, iggi; Upshaw, 1995). Levy (1995) best captures this with his view that the goal is to convince the customer that a double signature on the product represents increased value.

In this paper, we propose that a brand alliance is more than a simple combination or joint display of brand names on a particular product or in a particular type of marketing activity, such as a co– promotional agreement. We view a brand alliance as a particular type of strategic alliance which is carefully conceived and built around the linking or integration of the symbolic or functional attributes of the brands of two or more different companies with the objective of offering a new or perceptually improved product to the customer. A brand alliance will have as its primary objective the leveraging of the brand associations of the brands involved in the alliance, thereby enhancing each brand’s image and reputation.

Why Marry Your Brand?

Interfirm branding agreements are commended in the literature for their ability to create new markets and products, to provide market entry opportunities and to expand the product range of both partners (Hagedoorn, 1993). The overriding strategic intent behind a brand alliance is to combine a firm’s unique brand identity and brand equity with that of its partners to create a new or stronger competitive position in the marketplace. If properly conceived and executed, such a strategy may afford both partners access to hitherto untapped markets and enhanced custom through leveraging the strength of both brands. From a brand equity perspective, the rationale behind a brand alliance is that since brands are valuable assets, they may be combined with other brand names to form a synergistic alliance in which the sum is greater than the parts (Rao and Ruekert, 1994). A critical aim of many brand alliances is to provide a profitable quality boost for the brands involved, real or perceived (Waters, 1997). This is of particular value when the objective of the brand alliance is to introduce a new product where the quality of the product is unknown. A quality boost will also result from the image reinforcement that results from a brand alliance which is formed primarily to create reputation endorsement.

Brand Alliances: A Form of Symbiotic Marketing

Adler (1966) first proposed the term `symbiotic marketing almost 35 years ago to refer to co-operation between companies other than those linked by the traditional marketer-marketing intermediary relationship. He defines symbiotic marketing as `an alliance of resources or programs between two or more independent organizations to increase the market potential of each’ (p. 60). In Adler’s view, the nature and scope of symbiotic relationships between firms can differ along a number of different dimensions, such as the level and focus of the symbiotic marketing relationship. However, the essence of the arrangement is that akin to symbiosis in biological terms, a symbiotic marketing relationship must involve collaboration on complementary marketing competencies that leads to mutual benefit. Synergy and mutual enhancement are thus key concepts here. A brand alliance which involves relationships between firms whose brands are in some form complementary in the marketplace embodies the essence of symbiotic marketing. The purpose of this type of marketing alliance is to amplify and build user awareness of the benefits derived from these complementary attributes.

An understanding of the meaning of the brand, and its value to the firm in terms of both financial and customer based brand equity, is necessary to understand the symbiotic nature of this type of alliance and, importantly, the stakes and rewards involved. Branding strategies play an increasingly important role in marketing, while the brand itself has become a tool of strategic importance. The branding of a product through the use of a `name, term, symbol, design or a combination of these is for firms a means of differentiating a product from those of competitors and of communicating to customers the benefits they may expect to derive from using the product’ (Kotler, 1988, p. 463). From the viewpoint of the consumer, brands provide convenience and clarity in decision making by providing a guarantee of performance and communicating a set of expectations, thereby offering certainty and facilitating the buying process (Murray and O’Driscoll, 1999; Visser, 1998). Much deeper than this, on the emotional side, the function of a brand is to evoke a set of associations and furthermore symbolise the consumer’s persona through brand imagery. This is because `much more than a graphic, a brand conveys messages about quality, price, dependability and many other attributes’ (Visser, 1998, p. 60). In summary, a brand can be described as a `trademark that communicates a promise’ (Phillips, 1998, p. 43). This promise involves a set of symbolic and functional attributes that the marketplace associates with the brand. Symbolic attributes are those that fulfil internally generated needs for self-enhancement, role position, group membership or ego identification (Park et al., 1986) whereas functional brand attributes solve an externally generated consumption related problem (Fennell, 1978).

The value of a brand lies in its ability to build relationships with consumers. As a result, brand names have become valuable monetary assets that can be traded. This realisation that brands were valuable assets led to the development of the concept of brand equity which was first used widely by US advertising practitioners in the early 1980s (Barwise, 1993). While there are different schools of thought on the precise definition of brand equity, `in large it meant the brand’s long-term customer franchise, and the financial value of that franchise’ (Barwise, 1993, p. 94). Brand alliances involve the putting together of the brand equity (Aaker, iggi) of the brands involved. Since the value of a brand lies in its ability to build relationships with a group of customers, it is apparent that there are high rewards or possible punishments involved in the formation of a strategic alliance at whose core lies the brand.

The traditional branding model that has been adopted has been the `one of a kind brand, a brand linked to a single function and/or a single application’ (Visser, 1998, p. 60). However, the increasing use of co-branding or brand alliances as a branding strategy calls into question the ability of a brand to communicate a clear message when associated with another brand in an alliance. In a brand alliance, when two or more brands are allied within the framework of a common project, the resulting product will encompass two or more sets of symbolic and functional attributes. Based on previous studies of brand extensions and their implications for co-branding arrangements (Aaker and Keller,1990; Tauber, 1988), we surmise that the formation of positive consumer perceptions of an alliance will depend on consumers’ perceptions of the degree of synergy and fit between the brands based on a number of different elements.

A brand name generally tells consumers who the manufacturer of a product is, and whom to punish should the product not perform as expected. Thus, it is clearly important to align with a brand which will not tarnish the current image but rather enhance its reputation. A diminished quality level may contribute to non-acceptance of a brand or even marketplace failure. Clearly, combining incongruous brands may present problems (Waters, 1997) and so a consideration of goodness of fit is essential. Higher fit, particularly on complementary attributes and transferability, leads to higher perceived quality ratings. An example of this principle is Sony’s alliance with Dolby to complement Sony’s technology with Dolby’s sound system expertise. This `quality boost’ principle seems intuitively plausible. Thanks to the partner brand, the consumer is made aware of some extra technical benefit. Perceived quality increases should translate into a positive effect on the other elements of brand equity, such as loyalty, awareness and image.

Brand Alliances as a Continuum of Forms

We propose that forms of brand alliances range along a continuum from collaborative efforts which revolve around abstract or symbolic characteristics of the brand to those which are based on product related or functional brand attributes and which involve a physical combination of resources. The opposing ends of this continuum reflect the strategic objectives and nature of these different forms of alliances: reputation endorsement and collaboration on core competencies. This view of brand alliances mirrors the perspective developed in the literature that brand alliances range from publicity based agreements to alliances involving co-operation further along the value chain in coproduct development and/or commercialisation.

At one end of this continuum, the alliance which is built around a union of abstract or symbolic attributes aims to create a link between the brands in the minds of consumers based on image, reputation and brand personality. The objective of this type of brand alliance is reputation endorsement, each brand hoping to enjoy image reinforcement and/or a quality perception boost as a result of the association with the other brand. No co-product development is involved and the manifestation of the alliance is usually in the form of a joint publicity or promotional campaign. An example of this type of alliance was the joint television advertising campaign between McDonald’s and Coca-Cola where the television ad showed a link between the complementary consumption of McDonald’s fries and Coca-Cola. Another example was the promotional campaign between Shell and Ferrari which took the form of a series of television ads featuring both brands being used simultaneously thereby endorsing each other’s reputation. For example, one ad aimed at promoting Shell’s lubricant products included the line, `Only one oil contains all the experience, all the knowledge, all the protection, all the passion that comes from racing a Ferrari: Shell Helix’. In both these examples, the brands involved aimed to leverage the reputation endorsement that results from these synergistic brand alliances thereby reinforcing their own image and quality perception. This view of brand alliances is supported in the literature. Visser (1998) reports that in some cases two brands from related but different product categories and from different companies are linked with each other so that the authority of one brand is transferred to the other, leading to a phenomenon called `image transfer’. The brand alliance between Pepsi and Manchester United football club involving joint television advertising and other promotional events to help launch the football club brand and bolster Pepsi’s international sales in the developing markets of South East Asia is a good illustration of this strategy. In a sense, the brands are announcing to the marketplace that they `are engaged’ in an alliance based on these symbolic characteristics of brand personality and image which are complementary. A favourable consumer reaction will occur if consumers perceive synergy and fit between the brands in the alliance.

At the other end of the continuum, the primary objective of the brand alliance is to collaborate on functional brand attributes which represent the product competencies of each company. Of course, synergy on the symbolic attributes of both brands is still important, but it is not the primary driver of the alliance. We describe this type of alliance as collaboration on core competencies to reflect the nature of the collaboration involved. This term also refers to service brand alliances where the brands collaborate on functional brand attributes. Another term for this type of brand alliance is `ingredient branding’ (Rao and Ruekert, 1994; Visser, 1998), where a new attribute is added to an existing brand with the aim of providing certainty and strengthening the signalling function of the brand. Waters (1997) further explains that the purpose of the link that is established between two brands involves both image transfer and the integration of a new physical attribute into an existing brand. An example of this type of alliance is Philips’ collaboration with Nivea to develop Philips Cool Skin, a new Philips electric shaver for men that automatically dispenses Nivea shaving lotion. The two firms collaborated on their core competencies to develop a new product. The credit card industry offers several examples of service co-branding agreements which provide functional benefits to customers. The most commonly formed brand alliances in the credit card industry are those with airlines on frequent flier programmes, for example, American Airlines’ co-branding agreement with Citigroup on the Advantage Visa Card. Chase Manhattan is among the issuers taking a different approach to co-branding for its credit card, the Mastercard, with its partnerships with Shell Oil, Bell Atlantic and WalMart, where customers can earn free petrol, telecommunications service, and retail benefits respectively.

Between the two extremes of this continuum, we propose that forms of brand alliances exist which share differing degrees of both objectives: reputation endorsement and collaboration on core competencies. This can occur, for example, in the case of premium brands where branding was less of a functional and more of a symbolic nature. An example of this type of brand alliance is John Rocha at Waterford Crystal, where the Irish-based fashion designer John Rocha designed a range of contemporary crystal for the premium brand, Waterford Crystal. In this case, although there may be a clear link between the brands on coproduct development, the logic may not guarantee a favourable reaction from consumers if an inappropriate fit between the brands in terms of brand image is perceived. Another example of this type of brand alliance is the Lexus LS4oo Coach Edition co-branding programme, `It Takes Two to Make a Masterpiece’, which involved the introduction of a Coach edition Lexus featuring Coach leather seats and trim. In this example, while there was clear collaboration between the two brands on product competencies, the synergy between two luxury brands in terms of symbolism and image was equally critical to the success of the alliance.

Conclusion

This continuum illustrates various forms of brand alliances shaped by different strategic objectives. It is clear that brand alliances can serve many putposes in the marketplace from endorsing reputation and boosting an existing quality and image perception to collaborating on product competencies. A critical factor in the success of the alliance is to align with a partner sharing similar objectives and who brings a comparable offering of symbolic and functional brand attributes to the alliance.

A brand is a key strategic asset on a number of different levels. In addition to serving as an information cue to customers on quality and other product related attributes, a brand can help build relationships with customers through symbolism and brand personality. Given the power of brands as strategic assets, and the strategic value of alliances in today’s global marketplace, it is clear that brand alliances will continue to remain a powerful strategy for growth. Brand managers have to decide on types of allies, their relative reputations and expectations for their future performance, while being wary of the potential threat of opportunism. Critical to the formation and management process is an understanding of the strategic objective behind the alliance from reputation endorsement to collaboration on product competencies. This continuum presents a range of strategically powerful brand alliance forms for the brand manager. The challenge is to find the correct partner to allow a symbiotic relationship to take place.

References

Aaker, D. (iggi), Managing Brand Equity, The Free Press, NY.

Aaker, D. and K.L. Keller (iggo), ‘Consumer evaluations of brand extensions’, Journal ofMarketing, vol. 54, no. i, pp. 27-41.

Adler, L. (1966), ‘Symbiotic marketing” Harvard Business Review, 44 (November-December), pp. 59-71

Barwise, P. (1993), ‘Brand equity: snark or boojum’, International Journal of Research in Marketing, vol. 110, no. 1, PP- 93-104.

Berkowitz, E. (1994), Marketing, Irwin, Chicago, IL. Collomp, F. (1995), ‘Deux marques dans une seule pub’, L’Expansion, 493 (January-February), pp. 66-7. Fennell, G. (1978), ‘Perceptions of the product-in-use– situation’, Journal ofMarketing, vol. 42, no. 7, PP. 39-47.

Hagedoorn, J. (1993), `Understanding the rationale of strategic technology partnering: interorganizational modes of co-operation and sectoral differences,’ Strategic Management Journal, vol. 14, no. 5, PP. 37-85.

Kapferer, J.N. (1999), Strategic Brand Management, Kogan Page, London.

Kotler, P. (1988), Marketing Management: Analysis, Planning and Control, Prentice Hall, Englewood Cliffs, NJ.

Kotler, P., G. Armstrong, J. Saunders and V. Wong, (1999), Principles ofMarketing, Prentice Hall Europe, Hemel Hempstead.

Levy, J.M- (1995), ‘Nouvelle offensive des marques aux Etats– Unis’, Marketing Magazine, February, p. 17

Murray, J. and A. O’ Driscoll (tgg), Managing Marketing: Concepts and Irish Cases (2nd edn), Gill & Macmillan, Dublin. Park, C., S. Jun and A. Shocker (1996), `Composite brand alliances, an investigation of extension and feedback effects’, Journal ofMarketing Research, vol. 33, no. 4, PP. 453-66. Park, W., B. Jaworski and D. MacInnis (1986), `Strategic brand concept-image management’, Journal ofMarketing, vol. 50, no. 4, PP- 35-45

Phillips, P. (1998) `Buying a brand: what you can’t see can hurt you’, Design Managementjournal winter, pp. 43-6.

Rao, A.R., L. Qu and R. Ruekert (1999), `Signaling unobservable product quality through a brand ally’, Journal ofMarketing Research, vol. 36, no. 2, pp.z58-68.

Rao, A.R. and R. Ruekert (1994), `Brand alliances as signals of product quality’, Sloan Management Review, vol. 36, no. i, pp. 87-97.

Saunier, M. (1996), ‘Danone et Coca-Cola font just de fruits commun’, Marketing Magazine, 16, November, P. 20. Simonin, B.L. and J. Ruth (1998), ‘Is a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes’, Journal ofMarketing Research, vOl. 35, no. 1, pp. 30-42

Tauber, E. 0988), `Brand leverage: strategy for growth in a cost controlled world’, Journal of Advertising Research, vol. 28, no. 4, pp. z6-3o.

Upshaw, L. (1995), Building Brand Identity, John Wiley, New York.

Visser, E. (1998), ‘Multibranding: symptom of an unclear branding policy’, Design Managementjournal, winter, pp. 6o-4.

Waters, K (j997), ‘Dual and extension branding: using research to guide design decision and branding strategy’, Design Management Journal, winter, pp. 26-33.

Authors

Sinead Cooke is a lecturer in marketing at the Michael Smurfit Graduate School of Business, University College Dublin. Prior to joining UCD, she worked in marketing management with a number of international companies. Her research interests are in consumer psychology and branding.

Paul Ryan is a research fellow at the Michael Smurfit Graduate School of Business, University College Dublin, Ireland. Paul completed his PhD at the Judge Institute of Management Studies at Cambridge University. His research interests include inter-organisational behaviour, strategic alliances, buyer-supplier relations and industrial networks.

Copyright Mercury Publications Ltd. 2000

Provided by ProQuest Information and Learning Company. All rights Reserved