CHAPTER 7 : CO-BRANDING

NAME OF MEMBERS :FATIN NADZIRAH BT AHMAD ROSDI 62212215244FILZAH AQILAH BINTI ABD RAHIM 62212215230AHMAD FAIZ BIN ABDUL RAZAK 62212215556NUR AIN FARHANA BT AZIZ 62212215063MIMI NURAZLEEN BT MAZLAN 62212215410NORHANISMA BT ZURAIMI 62212215419

NAME OF LECTURER : DR. ROSNI BINTI AB WAHIDGROUP: ME30

CHAPTER OBJECTIVE

▪ Learn The Importance Of Branding In Franchising▪ Understand The Nature Of Co-branding In The

Franchising Industry▪ Learn The Motivating Factors Behind The Co-branding

Phenomenon▪ Appreciate The Different Methods Of Co-branding▪ Recognize The Importance Of Collaborating For Success

INTRODUCTION

▪ Co-branding▪ Occurs when two brands are combined in a business offering▪ Two or more franchisors combine forces to offer a franchisee

the opportunity to operate two or more franchises in one outlet.

▪ The use of multiple brand names together on a single product or service

▪ There also called as dual branding, multi branding, cross-system franchising & strategic alliance.

▪ Example : Stella McCartney & Adidas

BRANDING

A franchise system depends on its uniqueness or brand equity.

Some franchise system have experienced the halo effect, when the strong and well-known brand links with a lesser known one and the second brand is lost in the halo of the first.

For lesser known brands, co-branding may result in increased sales, but building brand identification may not occur if partnered with a significantly larger company.

From the foreign market, they suggests that consumer evaluations of the unknown brand from one country were more positive when a brand ally was used.

Emergence of Co-Branding

PROS CONS

PROS CONS

CO-BRANDING METHODS

FROM THE FRANCHISOR’S PERSPECTIVE

The basic motivation to involve in partnering activities is often a result of a firm’s evaluation of its resources and expertise.

FROM THE FRANCHISOR’S PERSPECTIVE

RESOURCESYES NO

EXPERIENCE

YES

Internal development

of second brand

1

Sell its brand to acquisitor

2

NO

Acquisition of second brand

3

External development

of second brand

4

FROM THE FRANCHISOR’S PERSPECTIVE Q1 – If the franchisor does indeed feel that it can answer yes

for both question and does not desire to partner with another franchisor, then it will develop the second brand internally.

Q2 – The franchisor has developed a brand with high equity but does not have the internal resources that will enable it to pursue co-branding on its own.

Q3 – The franchisor lacks the expertise to develop a second brand but does not have the resources to either buy the entire system of a complementary system or simply enter into a franchising agreement.

Q4 – The franchisor lack both the expertise and the resources to secure a second brand.

FROM THE FRANCHISEE’S PERSPECTIVE

▪ The decision to open a co-branded unit has historically been a franchisee-driven initiative.

▪ While a franchisee may develop an overall co-branding strategy that implement consistently from unit to unit.

▪ The owner can also approach each unit in isolation by considering its unique strengths and weakness , threats and opportunities.

Franchising consultant Mark Siebert recommends that franchisees ask the following question when considering co-branding :

▪ Do I get a competitive advantage?▪ Do I need to co- brand for defensive reasons? ▪ Should I look for an exclusive relationship?

In addition, franchisees should follow an eight-step process when evaluating and choosing a co-brand :

▪ Identify your positioning strategy for your local market▪ Contact industry insiders to learn more about the nature of co-

branding▪ Define exactly what you want to do in terms of your co-branding

partnership▪ Meet with principles from the second brand , as well as your first

brand ▪ Perform feasibility analysis to determine the potential returns on

investment▪ Make decision to co-brand or not to co-brand▪ Negotiate contract with second franchise system▪ Renegotiate contract with your first brand if necessary

FORMAT FOR SELECTION :

▪ Single Franchisee/ single Franchised Brand/Additional Non Franchised Brand

occurs when a single franchisee obtains the rights to distribute a second brand or vice versa

Single Franchisee/Dual Franchised Brand Occurs when a single franchisee obtains the right to franchise a second system Dual Franchisees/Dual Franchised BrandsOccurs when two local franchisees decide to coexist and build their store together Portfolio Management of multiple Brand Occurs when a franchisee brings together numerous franchise systemto provide a

comprehensive and market-tailored opportunity at the retail level.

7.5 Degree of Collaboration

▪ Only a few cases was co-branding being initiated from franchisor level down specifically when a franchisor owned more than one concept.

▪ Typical decision to co-brand was driven by franchisees wanting to get involved on an individual basis.

▪ When a franchisor select a co-branding method that involves joint marketing efforts across independent systems, collaboration on franchise-related issues must occur

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▪ And also one essential thing is to choose a partner that is closely related to the product or service that the company offering or the partner is mature.

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▪ There are few reason why franchisor want to use co-branding method

Expanding the number of customer.Increase their sales income.Reduce business risk.▪ Co-branding may fail when there is a difference in vision

and mission, and even value of the two companies

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▪ Example of collaboration of co-branding company