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Co-Branding and the Halo Effect

Marketing and psychology are closely related. While psychology is basically the study of human behavior, marketing can be seen as the study of human behavior in the marketplace. Marketing is an effort to emblazon a message in potential customers’ minds (both consciously and subconsciously) through various multi-sensory approaches. Empirically, one such strategy that many companies of every size are increasingly using is co-branding. Co-branding is designed to instill automatic credibility in the eyes of the consumer, increase popularity and sales for both of the partnered brands. It also provides the medium for the Halo Effect.

 

Co-branding is nothing new, and yet its strategic employment is on the rise given the likely ROI. It’s a form of synergy or synthesis of mutual assets to produce a greater result. Some businesses use this approach to suggest enrichment of their current offerings. Others create an entirely new product by combining their resources.

 

One major goal of co-branding focuses on introducing one’s assets (brands, products, services, etc.) to the loyal following of another’s. Intel, for example, was a premium OEM brand but enjoyed little consumer brand awareness. Its strategy to co-brand with leading computer hardware companies gave its “ingredient brand” status a quantum leap into consumer awareness.

 

Another tangible benefit to co-branding is cost savings, which is even more important during difficult economic times. Sharing the same labor or property is increasingly common. Look at what Pizza-Hut and Taco Bell have done in recent years – these synergies have had significantly positive returns.

 

Co-branding is also a low cost alternative for companies seeking higher margins. Charging a premium is easier to justify on a new product or service that’s marketed under two or more brands – it’s differentiation at its best and that’s the road to margin! When Ford partnered with Eddie Bauer, the co-branding effect was enormous as realized in mega sales. Without the brand mystique of Eddie Bauer, this line of automobiles may have been successful, but not to the extent it was.

 

Among my favorite goals of co-branding is differentiation preservation. A well-defined co-brand initiative raises significant barriers for competitors to steal your thunder and copy you. If your innovation is more proprietary in nature, effective co-branding can also raise the bar to commoditization and low-cost import parity.

 

It can be a powerful offensive and defensive strategy. You may be able to build your own core competency, increase revenues, expand your brand awareness and increase your overall corporate value. Likewise, it provides the means to respond to the changing marketplace and your customers’ needs while providing the avenue to margin and differentiation. Ultimately, successful co-branding is the synthesis of energies, or synergy, manifesting a whole that is greater than the sum of its parts.

 

The Halo Effect

Another important facet of co-branding is the Halo Effect. Co-branding enables one brand to benefit from the “halo of affection” that belongs to another. The lift in sales and market share as a result is a quantifiable benefit. The potential increase in brand awareness and perceived value – priceless!

 

Edward Thorndike, an eminent psychologist in the 1920s, coined the term, “Halo Effect” to effectively describe a process in which humans develop a biased perception. Business owners and marketers can create leverage, awareness and the Halo Effect by associating their businesses with other successful brands. This association is intended to elicit positive, endearing, impactful thoughts and emotions of high quality, performance and reputation. We seek attributes in others we wish our customers to associate with us, thereby absorbing the “Co’s” value and awareness.

 

When a celebrity spokesperson endorses a particular item, marketers are taking advantage of the Halo Effect. Beliefs and perceptions of the product are increased given the positive perceptions and feelings of the endorser.

 

When a licensee is able to display and promote the licensed product in the myriad physical and digital venues of the licensor, an enormous Halo Effect is realized for the licensee.

 

Cited often with overwhelming results was the effect on Apple computers via success of the iPod. The entire breadth of Apple’s offering saw a dramatic increase in sales and market share from the success of the iPod - the Halo Effect in full glory. What makes this story more incredible is that Apple had relatively little brand marketing investment in those other products and services during the explosion of the iPod and iTunes.

 

As you consider your marketing strategies for the balance of 2015 and into 2016, pay particular focus on what you do best – your core competence. Regardless of the product and service you offer and where you lie in the food chain to the consumer, consider investing the lion’s share of your marketing and PR budget into your greatest asset - the one that has earned you the reputation and sets you apart. You will want to promote differentiation and other facets of your business, but carefully weigh your marketing investment dollars. If you can focus on the one or two resounding assets of your company, you gain the financial leverage of the Halo Effect and your entire company benefits, if even by association, when co-branding.

 

Looking Ahead

“Sprint to the Finish” remains a phrase used to describe a corporate posture for the balance of the fiscal year. Whether at half way through the year or right at the beginning of Q4, how you prepare to finish your year will speak volumes. With six months behind your corporate belt, and no unforeseen issues, you should have a rather solid forecast of what your fiscal (calendar) year-end will look like. You can choose to develop a co-brand strategy now or choose to refine your best practices and begin a value optimization process for which you make 2016 your explosive year. Every company must evaluate where they at in the timeline for this process and understand their strengths, weaknesses, opportunities and threats.

 

Because co-branding’s success relies as much on the partner’s ability to benefit from you, YOU must be in prime position to offer your best to the partner. That said, there are a few things you can focus on immediately in preparation.

 

Corporate Image

Successful businesses will immediately conjure up positive thoughts and emotions in their target’s consciousness. If you have been truthful in your representation, delivered more than what was expected in an aggressive time frame and satisfied every need and more of your customer, you have created that priceless lasting impression via positive emotional association. One’s brain will tend to remember the feelings attached to a memory a lot more than the details of that memory. Therefore, generating the most positive feelings about your company can last a long time and drive good will for many years to come.

 

 Alignment

 We’ve all heard it said, “You are only as strong as your weakest link.” All too often, what we want or script our businesses to be is not what is manifested and delivered to the consumer and/or your employees. When a company is out of alignment, this disconnect is what is revealed and is sorely expensive. Every company should have a mission statement and set of core values shared with and accessible by every employee:

  • Leadership at every level, down to the individual leading him or herself, must use the corporate mission and core value principals in his or her daily decisions.
  • Marketing must make clear to the entire company what messages are behind the campaigns and make everyone in house a champion before going to market.
  • Customer service must deliver on the mission and values in how they communicate, process orders, resolve issues and provide all assistance.
  • Outside teams: Drivers, installers, salespeople, etc., must embody and deliver the mission in every interaction with a customer.

 

A corporation is a team. When the team is aligned and working in concert, there is a harmony delivered to the consumer that polishes your corporate halo with every interaction. It’s a cumulative process and consistency is key.

 

Sales, Marketing and Differentiation

 Sales and marketing are inextricably related but distinct disciplines. Some predict marketing efforts will more successful in the coming years. With so many products in our market being near or slightly passed maturity, innovation seems lacking, and the barrage of imported goods cause prices and so too, gross margin to decline.

 

Where your sales team comes in is to ABC – always be closing, yet while finding opportunities for products and services while they are relating to their clients. One large aspect of marketing is envisioning or predicting trends, so your sales team should be gathering information to assist. Systematically and regularly pooling this information can provide a foundation for innovation, new products, new bundled offerings and more. This is part of aligning your business and a team centered on sharing the voice of the customer to make strategic product offering decisions is helpful.

 

Practical Advice for any Fabricator

Find a technique, new piece of machinery, tool or process that focuses on how your customer wins and market it. Some examples would be faster turn-around time; better aesthetics; better edging or cutout choices; or added durability to your product. Critically look at what and how you fabricate and install, find those things that set you apart and sell them. Each one that brings tangible benefit to the end user and can be differentiated from others is an asset that can be converted into profit.

 

Consider any or all of the following:

  • Create your own branded color offering that includes the best and unique colors from several surfacing suppliers. Brand loyalty is important but so is your solvency and overall value proposition. Exploiting the best of the best also lessens the cost of yield-loss.
  • Vanity offering. Most everyone has a vanity offering using remnants by now, but do you offer a sink and/or faucet as well? Would you be willing to give an incredible incentive to do a bathroom top while doing the kitchen? Consider the win/win: Your incremental cost to template and install is minimal because it is done at the same time. Regardless of how you price that top, you win by either converting remnant inventory into cash or making a nice profit on the top, sink and faucet. You’ve turned a dead remnant into a three-pronged profit center and provided a real value to the consumer.
  • Create your own branded bundles: Can you bundle a sink, faucet, strainer, garbage disposal, grid, soap dispenser, cutting board, etc. and create a brand name for them – set yourself apart and capture the margin from accessories.
  • Would you consider a reciprocal lead-generating program with your local plumbing wholesaler, hardware store, paint store, interior-furnishing store, etc.?
  • Analyze your cabinet partners and fabricate a sink in a color, edge, style and depth that elegantly matches the look and feel of a particular cabinet line. Seek their input on the design and you both can win by extolling the virtues of each other’s assets.

 

Co-branding can certainly be a powerful tool to create depth, breadth and awareness of your brand. The synergies created can catapult your business, and leverage gained via the Halo Effect can be priceless.

 

Among the caveats to co-branding are something called the Horned-Effect, which centers on lack of due diligence and exit strategy. Your best defense is to focus on optimizing your company and its ability to stand-alone. This diligence creates sustainability and becomes the tool that succeeds in realizing a valuable co-branding option. What is your ultimate goal: To be the Brand, not the Co.

 

About the author

P. Max Le Pera is principal partner of Global Surfacing Alliance, LLC with 20 years’ experience in business and marketing strategy for the building materials industry. He can be reached at (908) 358-5252 or by email at [email protected]rfacingAlliance.com.