The Pros and Cons of Co-Branding

It can enhance both partners—or put a dent in one. Make sure you pick a partner that's a good fit with your company's products, values, and image

By Steve McKee

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The moment Roger Penske announced his planned acquisition of the Saturn brand from GM, Saturn dealerships around the country initiated a spontaneous and organic co-branding campaign, erecting banners and billboards to celebrate the alliance.

Saturn of Wichita's advertising proudly proclaimed: "Finally, a car guy owns a car company." Scott Davies, owner of the dealership, explained the resulting traffic increase by saying: "People want to buy from someone they like. A lot of customers won't buy a car from GM, but they will buy a car from Roger Penske." That's why Davies—and many other dealers like him—were so eager to associate Saturn with Penske.

It was an odd and unintentional (at least from GM's perspective) co-branding effort, but it paid off. Saturn's marketing director, Kim McGill, said the Penske announcement led to a 35% sales jump in June over the prior year.

Co-branding is nothing new, and it's something that we as consumers take somewhat for granted. Visit a grocery store and you'll see dozens of examples, from the ice cream aisle (Breyer's (UL) and Hershey (HSY)) to the snack aisle (Lay's (PEP) and KC Masterpiece (CLX)) to the cereal aisle (Kellogg's (K) and Healthy Choice) to the dessert aisle (Cinnabon and Mrs. Smith's). You can also find co-branding examples in the automotive world (Coach (COH) and Lexus (TM)), the hospitality industry (Bulgari and Ritz-Carlton), the footwear business (Disney (DIS) and Crocs (CROX), the franchising world (Tim Hortons (THI) and Cold Stone, the airline industry (Southwest (LUV) and SeaWorld), and even in product catalogs stuffed into airplane seat pockets ("Order your Braun Oral-B Plaque Remover today").

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