Co-Branding: Types and Examples with British Petroleum

Abstract

Co-branding is pairing of two products in marketing context such that a new product, revised price, different distribution channel or promotional deal comes into existence. The two main types of co-branding; corporate co-branding and retail co-branding are for a global organization; British Petroleum is discussed in the following document. A corporate co-branding partnership is formed with Siemens Power Generation and retail co-branding partnership is formed with Starbucks.

Co-branding can be defined as pairing of two products in marketing context such that a new product, revised price, different distribution channel or promotional deal comes into existence. Specifically it is used when two brands come together to form a new product which signals to consumers that the partnership is strategic and a long term commitment on part of businesses (Leuthesser, Kohli, Suri, 2002). Corporate Co-branding and Retail Co-branding (distribution channel related) from view point of British Petroleum are discussed below.

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British petroleum

British Petroleum is a global organization operating in more than 100 countries with revenues of more then $200 billion. Its products and services, generally, are based on oil exploration, production, marketing and developing alternate energy sources. Some of its brands include BP, BP Solar North America, ampm, ARAL, ARCO, Wild Bean Café. Recently, British Petroleum has re-defined its BP initial to demonstrate its global nature to Beyond Petroleum. This re-positioning also takes into account all non-petroleum oriented brands of BP such as BP Solar North America, ampm and Wild Bean Café (BP Global, 2007).

The brand of BP that is chosen for corporate co-branding is BP Solar North America, this service is for household consumers and provides them with an in-house system of solar energy power production providing them with sustainable, environment friendly and cost effective energy alternative (BP Solar North America, 2007).

Corporate co-branding

BP Solar North America & Siemens US Power Generation

Green Solutions is an innovative product as a result of corporate co-branding of BP Solar North America and Siemens US Power Generation (Siemens Power Generation, 2007). The concept behind this innovative power solution is that it delivers power to consumers produced through solar and wind sources. A combination of these two cost-efficient and innovative energy resources will enable both organizations to deliver dynamic solution.

Partner's brand values

• Over the years, Siemens objective has been to come up with newer and cutting edge technologies.
• Main priority of Siemens is sustaining success and providing value to its consumers, shareholders and employees.
• Siemens has identified innovation as its core competence with more then $6.15 billion invested in research and development in 2006 (Siemens, 2007).
• It has worked toward diversifying its portfolio which includes products and services related to automation and control, information and communications, lighting, medical, power, transportation and water technologies.

Target audience's demographics/psychographics

Target audiences demographics incase of Green Solutions are North American households and industries from higher income bracket. This classification easily covers target audience of BP Solar NA which is targeted towards households and higher income bracket of consumers. Consumers of Siemens Power Generation are also targeted through this segmentation that is industries with resources and drive to switch to a newer power supply method.

Psychographics of target audience are also very important as far as this co-branded product is considered. The target audience will be innovators who prefer trying unique and newer products. Also, the consumers will be socially aware of the need of product and are concerned for the environment and conserving natural resources.

Benefits to customer from partnership

The existing consumers of BP Solar will able to use another form of cost effective and environmental friendly power generation option. Green Solutions offer them an alternate on days when there is no sunlight.

Industrial customers of Siemens will be able to use and explore the solar energy for their electricity needs which has efficiently used in space and technological projects globally.

A combination of solar and wind power for generating electricity will enable bring cost of electricity consumption to even lower levels then its existing cost. Providing consumers higher value and benefits for the cost incurred.

Advantages

BP Solar North America will be able to increase its reach to existing consumers because Siemens is a partner that can contributes significantly to co-brand’s bundle benefit.

Siemens power generation is not only provider of home solutions but also provides environmental friendly solutions for industrial use. BP Solar North America can capitalize on their strength and move towards providing combined solutions with Siemens to industry instead of only solar based home solutions.

BP and Siemens both have strong images and perception in market. While BP is renowned for its expertise in fuel quality, Siemens is a renowned expert of electrical and mechanical aspect of technology. A combination of two brands will result in a stronger more forceful brand.

Disadvantages

The only drawback that could arise as a result of co-branding of BP Solar North America and Siemens Power Generation is that the product is completely new and innovative; it might not be very well received immediately in market. However, this is where strong brand images of BP and Siemens come in. Through active environmental marketing the product should be able to receive all due attention. Another important factor is that it is the energy solution of tomorrow and consumers would require time and understanding to completely understand its effectiveness in world of today.

Retail co-branding

British petroleum & starbucks

BP and Starbucks offer a retail promotional scheme; Starbucks @ BP. Starbucks will establish kiosks in BP ampm stores. Any consumers purchasing a Starbucks beverage from BP outlet and purchases any other BP product in the same visit will get 5% of the total transaction.

Partner's brand values:

• Delivering high quality coffee products through company’s retail stores.
• Operating more then 10,000 outlets all over the world (Starbucks Fact Sheet, 2006).
• Creating value for Starbucks through satisfying customers and employees.
• Understanding that profitability is essential to success.

Target audience demographics/psychogaphics

BP consumers who are purchasing any petroleum product from its outlets are on wheel. This makes anyone owning a car a target consumer. However, keeping in mind premium services that BP offers its consumers we can say that it is intending to target consumers aged 16 and above who belong to a middle to higher level of income. Demographics of Starbucks target audience, young working people, students or people on move who want a quick fill of coffee, is quite similar to those of BP.

Since both brands are associated with high quality as well as affordable pricing and exceptional service, we understand that these values have been associated with both products keeping their target consumers psychology in view.

Customer benefits from partnership

Customer who are on go normally get a fill of fuel for themselves (in form of coffee) and for their cars. Starbucks @ BP is inviting them to combine both their morning rituals into one and get a discount on their convenience as well.

In addition to earning a retail discount on Starbucks kiosks at BP customers are also doing time management while they refuel themselves and their cars at the same time for the day ahead.

Advantages

BP retail outlets will be able to increase its product offering by including Starbucks.
The co-branding will enable to BP to attract consumers who are regulars at Starbucks but use another service for their car fuel requirements, thus helping BP in increasing its market share and volume of sales.
The branding strategy of Starbucks and BP are similar yet unique as per their product offering and equally strong in their respective markets, therefore, there is no chance of one brand eclipsing another.
Starbucks is also benefiting from the co-branding by attracting existing BP consumers who usually go to another coffee house.
The kiosk establishment is line with current Starbucks strategy of expansion, it will help maintain it its presence where operating a complete retail outlet for a coffee shop is not viable, such as a national highway.

Disadvantages

The only disadvantage perceived of this branding partnership is that consumers might understand Starbucks kiosks to be in place of ampm convenience store. In fact, the kiosks are an addition to the products already offered at ampm and Wild Bean Café.

References

1. Leuthesser, Kohli, Suri 2002, ‘2 + 2 = 5? A framework for using co-branding to leverage a brand’. Retrieved February 6, 2007, from: http://www.brandchannel.com/images/papers/cobranding.pdf
2. BP Global – About BP 2007. Retrieved February 6, 2007, from: http://www.bp.com/marketingsection.do?categoryId=2&contentId=7013628
3. BP Solar North America 2007. Retrieved February 6, 2007, from: http://www.bp.com/sectiongenericarticle.do?categoryId=3050480&contentId=3060150
4. Siemens USA 2007, Retrieved February 6, 2007 from: http://www.usa.siemens.com/index.jsp?sdc_p=c194dfi1431748lmno1002155ps6t4uz1&sdc_sid=3554653738
5. Siemens Power Generation: Wind Power 2007, Retrieved February 6, 2007 from: http://www.powergeneration.siemens.com/en/windpower/index.cfm
6. Starbucks Company Fact Sheet 2006, Retrieved February 6, 2007 from: http://www.starbucks.com/aboutus/Company_Factsheet.pdf

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