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Article from a Guest Expert
How a Business Partnership Could Help Your Company
Strategic partnerships between companies have become a popular way of driving sales and increasing awareness about individual aims. Also known as cobranding, two companies that can find ways to mutually benefit each other are set to receive huge gains in their bottom line. If you’re considering a business partnership, the benefits could be well worth your efforts.
A New Customer Base
Taking two companies with very different target audiences and combining them opens each brand up to a new cache of consumers. These companies may offer products that would enhance the other; i.e. Cold Stone Creamery’s cobranding efforts with Jelly Belly. The ice cream company used Jelly Belly offerings to create new flavors, while Jelly Belly captured the essence of the creamery’s delicious ice cream tastes in a special line of Cold Stone flavored beans. A simple cobranding effort can introduce one company’s products to the devotees of another and vice versa.
Market Combinations
Sometimes, two companies seek to combine markets so they can reach a larger audience. This worked well for Apple and Nike when they combined to create a special shoe that runners could use in conjunction with Apple products. By offering a product that specifically played to Apple items, the powerful company tapped into a large audience base of fitness enthusiasts while Nike capitalized on those who are already Apple product loyalists. It was a win for both companies and culminated in the creation of a popular product that had never been seen before.
Increasing Revenue
For brands with complementary products, joining forces means creating a whole new product that is better than the two items or services on their own. For example, e-cigarette company NJOY joined up with Caesar’s Entertainment group in Las Vegas. Gambling and smoking are complementary services; where you see gambling, you generally see smokers. NJOY.com offers an alternative to regular cigarettes that does Caesar’s venues a favor; their vape products and e-cig offerings don’t burn and don’t produce smoke, meaning less air pollution for the casinos and less cleanup. Caesar’s offers a vaping bar where NJOY customers can enjoy the puffing wares, and both companies see larger profits in the end. Increasing revenue in this manner means capitalizing off of similar target markets, and it can improve profits for both companies.
Save Operational Costs
Sometimes cobranding helps companies utilize each other’s resources and save money on operational costs. The best example of this type of cobranding benefit comes in the shared building space of food brands like Pizza Hut and Taco Bell. The companies save money on staffing needs, leasing, maintenance, and equipment by offering both products in joint restaurant ventures.
Advertising Efforts
By cobranding, each company will get the most out of advertising on a smaller budget. If each company of similar consumer size includes the other’s brand on its personal ads, that’s already a doubled increase of exposure. To put it in layman’s terms, it’s an easy way to make sure the dollar spent on advertising goes further.
Exclusivity Draws
Some brands choose to join forces for limited periods of time. One of the best examples that illustrates this type of symbiotic relationship is Target’s multiple collaborations with varied high-end designers. Everyone from Lilly Pulitzer to Isaac Mizrahi have featured special collections at Target’s successful chain of stores, and many of these collections are met with instant popularity. Taking high-end products not usually monetarily available to Target’s core consumer audience creates a draw of exclusivity. Unique items will bring in crowds; the Lilly Pulitzer collection caused a tizzy with sold-out shelves and long lines of ready customers. Other retailers have joined forces with popular designer brands, like Madewell partnering with Alexa Chung, or Macy’s joining forces with Karl Lagerfeld. It’s as much about the hype behind the release as it is the product itself but it’s a model that works, and retailers know how to take advantage of it.
Cobranding is nothing new, but its benefits can’t be understated. Two synergized companies working off the success of each other’s brands can majorly impact sales in a positive way while spreading awareness and capturing larger consumer bases. Join forces with a brand who reflects your business aims and complements your product cache and you’re sure to have a valuable investment on your hands.
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