Co-Branding: Who Owns What?
Marketers and strategists are finding many ways to advertise and propagate their brand to increase the value of their brand and keep the numbers effervescent. New techniques ought to be devised to ensure the presence of brands in the market is salient and brimming with an influx of consumers. One such manner devised to benefit mutually from a partnership is a way of co-branding or ingredient branding by finding a mid-point and urging the customers of the counterpart to engage with one's brand. Let us put this on a scale and see where this technique would stand.
What is Co-Branding? Although a great marketing technique, co-branding is fused with the concept of cross-licensing of trademarks of different entities. The entities forge their trademarks to bring about a new product to attract consumer interest, which, in turn, increases sales.
Taking a Look Back
There are many famous examples of co-branding where entities have come together. A few of those are as follows:
1. Red Bull & Go Pro: The two brands created an epic co-branding deal as the former is instrumental in the energy drink segment, and the latter has tools for extreme sports such as racing or stunts. Just in a single attempt, a skydiver jumped from a space pod with a Go Pro strapped to him and set three world records, ultimately putting both the companies on the first glossy page of electronic and print media. 2. Starbucks & Spotify: These two entities pooled a great deal of clientele by building a music ecosystem in
which
musical
artists
gained better access to the customers of Starbucks and the
customers
enjoyed
extensive access to music on Spotify.
3. Other Examples of Unprecedented Co-Branding: Versace came up with a collaborative line of clothing by working alongside H&M, which came to be known as 'Versace for H&M.'
The Indian traditional-wear giant, Sabyasachi, also paired with H&M running the store dry in minutes. Then Taco Bell co-branded with Frito-Lay to popularize 'Doritos Locos,' a new product only made available at Taco Bell restaurants.
Advantages of Co-Branding
1. Magnified Audience: Joining hands enables better participation and access to a much wider audience, which was earlier not inclined towards a brand. Therefore, it helps expand the consumer base while building brand loyalty.
2. Breaking the News: Co-branding helps stir the market and introduce freshness and unique chaos. It incites attention and creates good traffic on media handles and social media platforms, making the product more 'wanted.' The same throws a lot of spotlight on collaborating brands.
3. Expanded Horizons: It is good to serve a niche and build a palace around it but diversifying helps enhance the area of operation, enter into new trade channels, expand connections, and introduce fresh elements to break through the monotony.
4. Altered Brand Perception: Co-branding can also change or aggrandize the image a trademark carries. Some entities team up with those having a better social responsibility image, which, in turn, helps them gain considerable attention with the help of the ones who prefer sustainably conscious businesses.
5. Improved Resources: We often hear that information is the ultimate source of power. It's a learning experience where experts from different branches come together to create a distinct marketable good/service operating under a common trademark, which is a mixture of the essential components of the co-branding entities.
Disadvantages of Co-Branding The downside of using two different trademarks on a single object could be summarized as follows:
1. It creates marketplace confusion concerning the source of origin, the authenticity, and the utility of the object. 2. It increases competition between the participating parties after the dissolution of the cross-trademark licensing agreement. 3. There could be a loss of goodwill where a co-party has certain shortcomings or has a tarnished reputation. 4. Vulnerability to product liability lawsuits could be due to deficient delivery in maintaining a standard of products by the counterparty. 5. There could be dilution or loss of Trademark Rights due to overexposure or improper trademark use emerging from the co-branding campaign.
Breaking Down the Structure of a Trademark Licensing Agreement for Co-Branding A co-branding agreement should be meticulously designed to the benefit of both parties. The cross-licensing of trademarks must be able to rely on the existing Intellectual Property (IP) assets of each of the parties to introduce a co-branded product in the market with a risk management system intact or a strategic route map to enforce collective rights against potential infringers.
The draft agreement should unambiguously address the understated facts:
The details of the licensor and licensee
A clear definition and scope of the IP to be licensed
The ownership of co-branded properties
The percentage and manner of revenue sharing (for example, royalties)
Exclusivity
Jurisdiction of operation
Maintenance of quality control
Indemnifications
Representation and warranties
Distribution, marketing, and consumer relations
Trademark use requirements and ownership acknowledgments
Renewal, renegotiation, phase-out, and termination
Conclusion The negotiation stage is the most crucial aspect of a trademark licensing agreement while considering co-branding since each party contributes to the introduction of the product in the market; however, the degrees of participation and contribution may vary. Therefore, due to the unpredictable and dispute-likely magnetism, it is necessary to place a term sheet before entering into a licensing agreement of such sort to understand clearly where each party stands, specifically in terms of common concerns, such as channels of trade, advertising strategies, termination, royalties, etc.