Page 314 - Foundations of Marketing

Product, Branding, and Packaging Concepts | Chapter 10 281

Co-Branding

Co-branding is the use of two or more brands on one product. Marketers employ co-branding
to capitalize on the brand equity of multiple brands. Co-branding is popular in several
processed-food categories and in the credit card industry. The brands used for co-branding
can be owned by the same company. For example, Kraft’s Lunchables product teams the Kraft
cheese brand with Oscar Mayer lunchmeats, another Kraft-owned brand. The brands also may
be owned by different companies. Credit card companies such as American Express, Visa,
and MasterCard, for instance, team up with other brands such as General Motors, AT&T, and
many airlines.
Effective co-branding capitalizes on the trust and confi dence customers have in the brands
involved. The brands should not lose their identities, and it should be clear to customers which
brand is the main brand. Nike and Apple successfully teamed up to release a co-branded run-
ning shoe, the Nike +. It syncs with an iPod to track running performance. The co-branded
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shoe and iPod accessories helped boost sales for both brands. It is important for marketers to
understand that when a co-branded product is unsuccessful, both brands are implicated in the
product failure. To gain customer acceptance, the brands involved must represent a comple-
mentary fi t in the minds of buyers. Trying to link a brand such as Harley-Davidson with a
brand such as Healthy Choice will not achieve co-branding objectives because customers are
not likely to perceive these brands as compatible.

Brand Licensing

A popular branding strategy involves brand licensing , an agreement in which a company
permits another organization to use its brand on other products for a licensing fee. Royalties
may be as low as 2 percent of wholesale revenues or higher than 10 percent. The licensee is
responsible for all manufacturing, selling, and advertising functions and bears the costs if the
licensed product fails. The top U.S. licensing company is Walt Disney Company. The NFL,
the NCAA, NASCAR, and Major League Baseball are all leaders in the retail sales of licensed
sports-related products. The advantages of licensing range from extra revenues and low-cost
or free publicity to new images and trademark protection. The major disadvantages are a lack
of manufacturing control, which could hurt the company’s name, and bombarding consumers
with too many unrelated products bearing the same name.

PACKAGING LO 7 . Describe the major
packaging functions and design
considerations as well as how
Packaging involves the development of a container and a graphic design for a product.
packaging is used in marketing
A package can be a vital part of a product, making it more versatile, safer, and easier to use.
strategies.
Like a brand name, a package can influence customers’ attitudes toward a product and so
affect their purchase decisions. For example, several producers of jellies, sauces, and ketchups
have packaged their products in squeezable plastic containers, sometimes upside down, to
make use and storage more convenient, whereas several paint manufacturers have introduced
easy-to-open and pour paint cans. Package characteristics help to shape buyers’ impressions
of a product at the time of purchase or during use. In this section, we examine the main func-
tions of packaging and consider several major packaging decisions. We also analyze the role
of the package in a marketing strategy.
c o-branding Using two or
Packaging Functions more brands on one product
brand licensing An agreement
Effective packaging involves more than simply putting products in containers and covering
whereby a company permits
them with wrappers. First, packaging materials serve the basic purpose of protecting the prod- another organization to use its
uct and maintaining its functional form. Fluids such as milk and orange juice need packages brand on other products for a
that preserve and protect them. The packaging should prevent damage that could affect the licensing fee

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