Below is an excerpt from John McKeown’s March 2017 Monthly IP Blog.
Co-branding occurs when two brand names are used together at the same time. In the most extreme form of co-branding, two brands are presented together to create synergies and increase consumer demand.
In some franchised businesses, co-branding has become popular and consumers are familiar with the concept of ordering their favorite franchised brand of hamburgers, submarine sandwiches, ice cream or frozen yogurt at the same location where they purchase gasoline for their automobiles.
MasterCard International Inc. has used co-branding as a means to segment the credit card market. The GMcard, which allows the user rebates on General Motors’ vehicles, is an example of this approach.
Co-branding allows the participants to leverage their respective brands. Each of the participants in the co-branding scheme relies on the other’s image, products, services or location to increase their own market penetration and share. Each of the brands can potentially gain access to new markets.
The challenge is to achieve clarity concerning the joint brand position. There are concerns that co-branding may result in mixed consumer perceptions leading to possible confusion and diminution of the value of the participating brands. In addition, if one of the participants is viewed negatively by the public such negative publicity may be attributed to the other participant.
It is important to keep in mind that it may be difficult to unwind the co-branding arrangement in the event that the participant’s businesses change and the co-branding arrangement is no longer advantageous. There may be significant costs associated with educating consumers when the co-branding arrangement is discontinued.
A less extreme form of co-branding occurs when a branded ingredient is referred to in the presentation of another brand. A common example of this type of approach involves the INTEL INSIDE brand. This brand name is widely used to indicate the presence of INTEL technology in personal computers, tablets and related devices. Maintaining appropriate licensing programs and trade mark use are key issues for this type of a brand name.
The legal issues relating to co-branding will be discussed next month.