We spotted this article and thought it important enough to share. Although we usually refer to the various brand architecture models as either monolithic, endorsed, free-standing or hybrid … brand extensions are fascinating to study, whatever the moniker/handle. In this day and age, co-branding seems particularly interesting and challenging to pull off, as the author explains here.
From Marketing Insider, article by C. W. Park:
With association branding, the new product is less strongly connected to the parent brand than is true for extension branding. As such, the company trades off potentially strong extension and feedback effects for lower risk of damage to the parent brand should the new brand perform poorly. Let’s take a closer look at the four association branding options in brand architecture.
Subbranding adds a new brand name to the parent brand name. The parent could be a holding company, corporation, strategic business unit (SBU), or a specific product. Here the company takes advantage of the equity (e.g., trust, reliability, luxury image, etc.) of the parent brand while also developing a unique name and identity for the subbrand. The subbrand is distinct from, but still a member of the parent brand family. Think about Microsoft and Microsoft Xbox. Xbox (the subbrand) has a younger, cooler image than the Microsoft brand does, and it appeals more strongly to a younger audience of gamers. The Toyota Prius leverages the qualities normally associated with Toyota (e.g., reliability and user friendliness) while developing new associations, such as fuel efficiency and environmental friendliness, in the subbrand Prius. Because a subbrand has its own identity, the extension and feedback effects are somewhat weaker than what can be realized with extension branding.
Subbranding is a viable branding option when the parent brand’s characteristics or associations do not readily transfer to the new product, and when the new brand needs to be somewhat differentiated from the parent brand. Take Porsche Boxster, Porsche Cayenne, and Porsche Macan as examples. On the one hand, the Porsche parent brand wants to establish a new business (e.g., in the SUV market and lower-price range segments, etc.) efficiently by supporting it with the trust, love, and respect that customers have for the parent brand. But the company does not want the new business too closely linked with the parent because the parent brand is known for high-performance sports car racing.
Subbranding indicates that the new brand is a special version of the parent brand. Subbrands have additional benefits. First, companies can gain cost efficiencies in advertising, promotions, and distribution. The subbrand also allows the company to target new, specialized customer groups whose needs may differ from those associated with the parent brand.
With subbranding, the parent name always comes first so that the new product is still strongly tied to the parent brand and its identity. But the subbrand is subservient to the parent brand. This can make it difficult for the subbrand to establish its own independent identity and equity unless the company promotes the new identity. For example, Ford’s Taurus (one of Ford’s many subbrands) was the number-one brand in the midsize car market several decades ago. Today its identity and distinctiveness from other Ford brands are less clear. Having too many subbrands aggravates this phenomenon. Other brand naming options may be better if meaningful differentiation from the parent is a key objective. However, when properly managed the parent brand and the subbrand can both drive demand for the new product (e.g., Toyota Camry, Honda Accord, etc.).
2. Endorsement Branding
With endorsement branding, an established parent brand introduces a new market offering. Examples include Courtyard by Marriott, Disney Presents … ,Polo by Ralph Lauren, and Solar Turbines— A Caterpillar Company. Here, the parent brand plays a supportive role by endorsing the new product. Endorsement branding assures customers that a strong, high-quality brand stands behind the new product offering. The parent (endorser) brand thus provides credibility and legitimacy to a new offering while allowing the endorsed brand to operate independently from the parent brand. Movies such as Frozen or Big Hero 6 might have been less successful had they not included the Disney name as an endorsement.
Endorsement branding and subbranding differ in two important ways. First, with endorsement branding, the emphasis is on strong extension effects because the new brand is supported by the parent brand. But with endorsement branding, the feedback effects on the parent are weaker than is true with subbranding.
Second, with endorsement branding, what gets transferred to the new brand are the legitimacy and credibility of the parent (endorser) brand. With subbranding, what gets transferred to the new brand are the memory associations and identity linked to the parent. Endorsement branding is preferred to subbranding when the new offering needs a unique identity that distinguishes it from the parent brand but when it can also benefit from parent brand’s credibility.
Sometimes companies use what might appear to be an endorsement branding option by endorsing a new product category.For example, the German brand Tchibo calls its line of yoga tops and leggings Active by Tchibo or its children clothing line “Kids by Tchibo.” These are not endorsement brands because the new brand is really just a different product category pursued by the company. We would only regard them as examples of endorsement branding if customers considered Active or Kids to be unique brand names. Otherwise, these names are simply variations of extension branding.
3. Indirect Branding
With indirect branding, the new offering is linked only indirectly to the parent brand. Indirect branding and endorsement branding both use a brand name that’s separated from the parent’s name. But with indirect branding, the parent is less visible, and support of the parent brand is less direct.
For example, Wheaties and Cheerios benefit from their ties to General Mills, given General Mills’ history in making cereals. But the General Mills name is not part of the Wheaties and Cheerios name. The General Mills name is inconspicuous, shown only on the top left-hand side of these brands’ packages. BASF, one of the world’s leading and most innovative chemical companies, uses indirect branding for its Novasil, Lucarotin, Lutrell, and Amasil brands. All aim to provide nutrition to cows and other ruminants, but the parent brand name BASF is only used indirectly.
In light of the relatively wide distance between the parent brand and a new brand name, the extension and feedback effects are weaker for indirect branding than for endorsement branding. This option is appropriate when the company wants to develop a unique identity for the new business. The parent brand provides some credibility and support (as with endorsement branding), but it’s the new brand name that’s prominent.
This is not to say that the parent brand in the indirect branding cannot play a powerful role in offering credibility and legitimacy or quality assurance to the new brand. In Korea, for example, PMO uses indirect branding with great success. Or consider the extent to which customers trust and value the “Bayer” parent brand name for a variety of consumer health care products. Depending on how a firm promotes its parent brand name (e.g., through corporate advertising), customers may consider the parent brand name as a strong and reassuring seal of quality even if the parent name is not displayed prominently with the new brand.
The fourth type of association branding is cobranding. Here, two brands (either from the same company or from different ones) come together to form a new market offering, product, or company. Examples include Adidas Porsche Design athletic shoes, Tide 2x Ultra with Febreze Freshness laundry detergent, or Disney • Pixar. With this branding option the goal is to convey that a new business (or product) has the strengths of each brand and/or that one compensates for the weaknesses of the other. Think about the hypothetical example of the Godiva SlimFast cake mix. Godiva is known for rich, sumptuous chocolate, but few would associate the brand with low calories.
SlimFast has the opposite association— it is well known for low-calorie (though not necessarily good-tasting) food. When combined, Godiva and SlimFast may compensate for each other’s weakness (e.g., Godiva SlimFast cake mix).
Cobranding is somewhat similar to endorsement branding, since there are two brands. But with endorsement branding, it is clear which is the endorsing brand and which is the endorsed brand. With cobranding, each brand endorses the other. Also, with endorsement branding, the endorsed brand takes a new name. With cobranding, established takes the form of endorsement branding, but it’s actually an example 0f cobranding, since Godiva and SlimFast are already well-known and established brands in their own right.
This is not to say that the parent brand in the indirect branding cannot play a powerful role in offering credibility and legitimacy or quality assurance to the new brand. In Korea, for example, PMO uses indirect branding with great success. Or consider the extent to which customers trust and value the “ Bayer” parent brand name for a variety of consumer health care products. Depending on how a firm promotes its parent brand name (e.g., through corporate advertising), customers may consider the parent brand name as a strong and reassuring seal of quality even if the parent name is not displayed prominently with the new brand.
One downside to cobranding is that it may be harder for customers to understand the identity of the cobrand, since it is blending associations linked to each individual brand. When two brands do not have strong built-in reinforcing or compensating identities, customers may not understand how or why they are related, or what this new product or company stands for. Cobranding creates an extension effect, which helps the cobranded product. Cobranding also has feedback effects. However, it’s often unclear as to which brand benefits more from the positive feedback effect. For instance, does Godiva benefit more from its cobranding with SlimFast (i.e., being perceived as a delicious chocolate brand with lower calories) or vice versa (i.e., SlimFast as a low-calorie cake mix with a sumptuous, mouthwatering taste)? When one brand is substantially weaker than the other, it is the weaker brand that benefits from stronger feedback effects. As with all branding options, it’s important for the cobranded product to deliver on perceptions. If it doesn’t, extension effects will be limited, and feedback effects on the parent brand will likely be negative.
Contributed to Branding Strategy Insider by: C. Whan Park, Deborah MacInnis and Andreas Eisingerich, excerpted from their book, Brand Admiration with permission from Wiley Publishing.