Co-Branding in the Luxury Industry

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If you have ever wondered what co-branding is, and why it is important in the luxury industry, read our expert guide and discover successful co-branding examples.

Co-branding has become an important strategy for marketeers across many different industries, but nowhere has brand partnerships been so prominent – and arguably, as successful – as in the luxury domain.

What Is Co-Branding and How Does It Work?

Co-branding is an alliance or association between two or more brands with the objective to create a unique product co-signed with their two names. In very simple terms, it’s when two separate brands join forces to build something extra-special together.

Also known as a brand partnership, co-branding is very much about sharing an experience and working side-by-side. There is typically no domination from either brand, with each company in the partnership contributing a part of its own identity to create a ‘new’ fused product representing both parties.

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This unique partnership is only possible if the collaboration between the two brands (or more) results in the co-creation and co-signature of a product, conceived through a shared vision and common values. The brand that initiates the partnership tends to seek out a collaboration with a brand that will bring added value to its operations. It is typically also the ‘initiating’ brand that takes responsibility for actually creating and producing the end product.

Different Types of Co-Branding

With an understanding of what co-branding is, let us now look at the different types of brand partnerships frequently used in marketing strategies, which can be divided into two categories; functional co-branding and symbolic co-branding.

Companies that are looking to create a product or service that gives users an even more enhanced and improved experience through an association with another brand will seek out what is called functional co-branding. One of the best co-branding examples here is the Bugatti Veyron FBG Hermès supercar, created in 2008 through a brand partnership between supercar manufacturer Bugatti and luxury fashion house Hermès. The name of the exclusive model nods to the main Hermès store on Paris’ Rue du Faubourg Saint-Honoré, and the product blends iconic Hermès styling with Bugatti’s world-class engineering. Apart, Bugatti and Hermès create incredible products but together, on this occasion, through co-branding, the end result was even more extraordinary.

Showing its continued investment in co-branding, Bugatti has just this year released a new co-branded product with the luxury watchmaker and jeweller Jacob & Co – a truly remarkable watch that resembles a miniature, working mechanical model of the W16 engine in the Bugatti Chiron. This creation has required both companies to combine their niche design and engineering expertise, resulting in something that has never been done before.

Brands that are seeking to share the same image as another brand are instead looking to create a symbolic co-branding operation. Here, let us look at a partnership between Adidas and Stella McCartney as one of the most identifiable co-branding examples. In 2004 the sportswear giant and fashion designer joined forces to create a new range of athletic clothing and accessories. Both brands were looking to benefit from the image of the other, with Stella McCartney taking this opportunity to flex her expertise for sportswear design, and Adidas enjoying the chic, luxury and feminine touch that working with this prestigious fashion designer brought to their brand.

Why Is Co-Branding So Successful in the Luxury Industry?

In the ultra-competitive luxury environment, brands are continuously looking for new ways to grow in the marketplace whilst reducing expenditure on areas such as product launches.  They are also looking at strategies to minimise the risk of failure. Co-branding answers positively to all these challenges and more often than not, offers a win-win situation through a positive and cooperative partnership.

Co-branding raises awareness of both brands through marketing, communication and often increased media coverage thanks to the brands doing something different; all extremely important in today’s highly competitive consumer world.

Particularly relevant also to brand partnerships within the luxury industry is that an alliance with a slightly more mainstream brand can deliver awareness and a new segment of fans to an otherwise exclusive luxury brand. This can include developing the brand’s following into new physical territories around the world.

One of the key co-branding examples to highlight this point is the fashion collection launched by Parisian fashion house Maison Margiela and H&M, which exploded Maison Margiela’s niche following to create fans worldwide, benefitting from H&M’s international presence in over 5,000 stores across the world. H&M also partnered with Versace, the products of which fans allegedly queued overnight to get their hands on. Other notable co-branding examples of recent years were a highly exclusive vodka by Absolut and Swarovski, where only 1,000 units were released in elegant bottles that become highly desirable for collectors, and a one-off mobile phone by LG and Prada, which was the first mobile phone with a touch screen and sold around one million copies.

All three are perfect examples of where luxury brands have built positive brand perceptions, ultimately leading to enhanced sales, through association with a more familiar brand favoured by a wider range of consumers. In these cases, co-branding has helped mass-market customers access the luxury goods domain, making these luxury items temporarily more obtainable and inspiring them to crave more goods from the luxury brand in the future. At the same time, the mainstream brand benefits from being associated with an exclusive label, making their products in turn seem more aspirational.

Key to co-branding success is the reaction of consumers, who tend to approve of brand partnerships on the whole. Customers appreciate the meeting of creative minds and are often more open to new blended ideas than they would perhaps be by new products launched by more traditional strategies.

How to Succeed in Co-Branding

In a co-branding partnership, the product that you create must be three things –  unique; exclusive; and coherent, meaning that the partnership makes sense at the time for each brand. Luxury brands must be extremely careful to think about the consequences of such a collaboration, remembering to ask themselves what their clients will be getting out of such a partnership.

And if the co-branding collaboration isn’t very coherent but instinct tells you it is the right choice, make sure the end product is so exquisite that customers will be clamouring to buy it anyway. A good co-branding example here is the collaboration between Jeremy Scott and Longchamp, an unlikely marriage between eccentricity and sophistication which is so original that customers forgave the potential mismatch.

What Are the Pros (And Cons) of Co-Branding?

As previously touched upon, co-branding can increase awareness of a brand as well as significantly boosting the target audience of a product, introducing luxury brands to new markets and even new countries. It can also help mass-market brands to grow their range of products and branch into new luxury industries.

However, choosing the right brand to associate with is crucial. If the quality of the final product created is not as high as each brand’s usual products, companies risk disappointing and even alienating customers. This was arguably the case when US bargain retailer Target partnered with luxury department store Neiman Marcus to create a line which commentators criticised for high prices, mediocre quality, and uninteresting designs. Here, the visions between the two very different stores simply didn’t align. This is in stark contrast to Target’s 2011 co-branding partnership with designer Missoni, which built much excitement for both brands and saw long queues and website crashes from fans determined to purchase the products, making a comeback in 2019 thanks to popular demand.

If you would like to talk through co-branding opportunities or any other marketing strategies, why not contact the team of digital marketing experts at Relevance.