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Integrated Services
Private Sector to Public Sector
Co-Branding | Applicability to Integrated Social Services | The Answers
Co-Branding
In its purest form, co-branding is a collaborative venture designed to advance the interests of two or more parties in a considered, strategic fashion. Legally, the parties remain separate entities. The intention is to create something new-a product, service or enterprise-the scope of which falls outside individual areas of capability and/or expertise. All participants' brand names are retained. Co-branding is usually of medium- to long-term duration, and its net-value-creation-potential is usually too small to justify setting up a new brand and/or legal joint venture.
Co-branding needs to be distinguished from partnerships and other joint ventures. The Hilton/American Express card is an example of co-branding. Each company conducts its business as it sees fit though both names appear on the card. Cardholders receive special recognition at Hilton hotels, encouraging them to carry the card and use the Hilton chain when they travel and it is expected that people who have the card will also be more likely to use it for additional purchases. Thus, the co-branding venture is seen as improving the position of both partners in relationship to rivals in their respective markets.
Co-branding can, however, go further than merely having the names appear together. The line between co-branding and other, more comprehensive joint ventures is not necessarily clear. A form of co-branding called "complementary competency" exists wherein the brands are not only marketed together, but the physical products are actually tied together. An example of this in the U.S. is the placement of 7-11 mini-marts in tandem with Mobile gas stations. This was so lucrative that Shell repeated the formula with 7-11 in Australia and England. Each company still runs its own part of the business, so this isn't quite a "joint venture," but is pretty close.
Other types of joint undertakings include
- joint promotions-short-term arrangements for generating extra publicity around particular events
- sponsorship-a company supports a not-for-profit organization for purposes of building links to that organization's constituency
- joint ventures-long-term arrangements in which branding issues are secondary to operational opportunities
- alliances-similar to joint ventures, but focus on marketing rather than operations; similar to co-branding in that way, but not going as far
Clearly, the strategy often has advantages to companies' bottom lines, and consumer reaction is often positive. While controlled studies would be nearly impossible, the "before and after" evidence is so overwhelming with the right partners doing things the right way that co-branding can be a very successful business strategy evoking positive reactions from consumers.
One of the keys to co-branding success is "binding logic." Putting a mini-mart with a gas station makes sense. People who stop for gas often want a quick snack and those refueling on their way home from work might need a few last minute groceries. A mini-mart or gas station by itself does not usually generate sufficient business to stay open all night, but by combining the two, nighttime travelers get all-night service. Consumers can see these benefits. If a furniture store was a partner with a gas station, the results would likely be different.
Other considerations include
- Investment - both partners need to invest fairly in the relationship to expect benefits
- Both partners need to enter the relationship with an expectation of problems and a commitment to working them out together
- Rules of "brand management" should be rigorously applied to prevent all brands from being weakened by the alliance
- Co-branding ventures may be tactical-designed to carry out a short-term objective
- Co-branding ventures may be of longer duration, designed to build a more permanent relationship between the parties, which is likely to be true when significant capital investments are involved
- Exit strategies - how the arrangement can be terminated if things do not go as expected
Co-branding offers the following potential advantages
- additional income from increased sales in existing markets
- access to new markets with minimum expenditure
- access to new financing
- royalty income (when one product is attached to another)
- risk reduction through shared risk
- quicker returns on investment (result of "brand synergy")
- higher price for one's product (because of value added by additional brands associated with it)
- higher credibility for one's product (added credibility from co-branded product[s])
- customer reassurance (more than one company's name now stands behind the product)
- easier access to partner's technology-potential to layer one company's technology over another's, producing a better product than either company could produce itself
- priming the market for a new product under a new brand to be produced by partnered companies at a later time
- increased exposure from joint advertising
- generating greater consumer interest than is possible with a single product name
- assimilation of positive values from brand partners
- opportunity to develop working relationships leading to future joint undertakings
Co-branding pitfalls include
- brand incompatibility-two brands that have very different customer profiles may not do well together
- greed-wanting too much from a good project too soon and giving up or blaming partners when early returns are modest
- incompatible corporate personalities
- over-extending brands into markets where neither brand has sufficient credibility to enhance the other
- adverse repositioning-if one party repositions their brand(s) this can have potentially negative effects on co-branded partners
- negative changes in partner's financial status
- one partner's inability to meet targets may result in termination of co-branding agreement to other partner's detriment
- takeovers and mergers involving one party can adversely affect co-branded partners
- changes in market attitudes can make a good arrangement a bad one, but ending or changing it can be difficult, especially if market changes are not affecting all concerned the same way
- co-brands can meld into one, costing each partner individually and brand recognition-a formerly well-known trademark-becomes more generic
- should the need arise, dismantling a co-brand and reestablishing a stand alone brand can be difficult once the public is accustomed to seeing brands together
- antitrust and other legal problems
In short, co-branding is a serious business venture that should not be entered into lightly. A company's brand is an important asset, the value of which will be enhanced or reduced by co-branding. At best, co-branding ventures offer consumers enhanced value at little or no additional cost to the companies involved. At worst, consumers can become confused and annoyed, negatively impacting the bottom line of the companies involved.
Applicability to Integrated Social Services top
Governmental social services and free market activities are fundamentally different many ways. Similarities also exist, and it seems that much of what is said about co-branding finds analogies in and can be applied to integrated social services models. For example
- Easier access to additional markets - one of the prime reasons for integrated services. For example, drug abuse treatment programs can easily and quickly receive many referrals from child welfare services (CWS), domestic violence and CalWORKs staff. Co-locating services in unified facilities allow "shoppers" to more easily access each "vendor's" product. People stopping for fuel are more likely to buy a cup of coffee and a pastry if the market is on the other side of the pumps. Mothers completing paperwork for financial assistance are more likely to have a child's eyes examined if the health facility is located in the same complex.
- Customer reassurance - the public sees that many disciplines are on the job, cooperating to solve problems.
- Higher credibility - one agency's success (e.g., reducing the number of children in foster care) lends credibility to all cooperating agencies.
- Incompatible corporate personalities - mental health and CWS have historically had different points of view regarding mandatory counseling. These views have sometimes made working together difficult. Law enforcement and CWS have different mandates that have also caused difficulties in trying to work as a team (prosecution/incapacitation vs. family preservation).
- Antitrust and other legal problems - cases handled by integrated child protection teams have been lost in juvenile court, because the CWS agencies bowed to prosecution needs, failing to deliver the services it was mandated to deliver.
The Answers top
In summary, business literature strongly supports the idea that co-branding and other joint undertakings can generate bottom line advantages and clearly indicates that consumers like the approach. As with any undertaking, inherent risks exist, which have to be managed.
Government social services are fundamentally different from private enterprises, because success is not measured by profits, but by specific outcomes and the costs attached to those outcomes. Consumers of government services may be viewed as fundamentally different from private sector consumers, because they have much less of a choice. Government agencies are not, for the most part, competing for these consumers' business both circumstances and courts often mandate these agencies' services for these consumers.
However, similarities also occur. Whether mandated or not, people like convenience. Good and bad feelings about one thing can be transferred to something else associated with the first thing. Also efficiency is efficiency, in the private sector, philanthropy or government service. We cannot simply take every model from business and apply them to government services; however, it does appear pending research of our own, private sector experience does support our efforts in co-branding and similar joint undertakings.
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