MULTIMARKETER MELANGE AN INCREASINGLY TASTY OPTION ON THE STORE SHELF

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Supermarket shelves are more like social clubs today, with big brand names doubling up on the aisle to lure consumers.

Witness such recent pairings in the co-branding trend as Pillsbury Co. and Nabisco's Oreo Bars baking mix and frosting; CPC International's Skippy peanut butter and Delicious Frookie Co.'s cookies; Kellogg Co. and ConAgra's Healthy Choice cereals; General Mills and Hershey Foods Corp.'s Reese's Peanut Butter Puffs cereal and General Mills' Betty Crocker and Mars Inc.'s M&M's Cookie Bars baking mix.

Because each partner has mastered a different step-be it marketing, brand equity, taste or specialized niche-the two combined often create twice the appeal.

Although many perceive it a recent trend, co-branding has been around at least since 1961, when Betty Crocker paired with Sunkist Growers to market a lemon chiffon cake.

But the past year has seen a resurgence of co-branded partnerships.

"The idea behind co-branding has never left General Mills," says Barry Weneger, the company's PR manager.

And that marketer has helped revive the partnership idea recently because, like other companies have found, co-branding enhances brand equity and allows the company to enter new categories with a limited investment.

General Mills has taken co-branding to a new level. In previous decades, co-branded products simply paired ingredients. Now they share brand image.

"Consumers trust branded products; they know exactly what they're getting with M&M's-both brand value and flavor," says Pam Becker, a spokeswoman at General Mills.

Pillsbury's co-branded Oreo Bars baking mix, No. 2 in its category for the 12 weeks ended March 19, according to Nielsen Marketing Research, also reaps the benefits of licensing a powerful name when marketing a new product.

"What could be better than the equities of the Dough Boy and Oreo cookies-that's instant brand recognition on the shelf," says Alan Riney, associate marketing manager of Pillsbury.

Delicious [brand] cookies have been licensed with seven different ingredient brands from various companies, including Skippy peanut butter, Knouse Foods' Musselman's apple sauce, Chiquita Brands (bananas) and Land O'Lakes.

Phil Roos, VP-marketing at Delicious, believes consumers are overwhelmed with product clutter and are looking for value in today's economy. Delicious was recently purchased by R.W. Frookies.

"Consumers seek refuge in brand names they've known and trusted for a long time; a name like Skippy or Chiquita is a proven oasis in a desert of unknown and unproven products," he says.

Co-branding benefits the marketing partners even more than it does consumers.

In addition to the tangible advantages of increased cash flow from licensing agreements, royalties and bulk ingredient purchases, more permanent benefits for the licensor include extending brand awareness and entering new product categories under the protection of already established giants.

"We want to get into the baking mix category and Pillsbury has the know-how and muscle to get baking products on the shelf," says Eileen Murphy, director of new ventures at Nabisco Biscuit Co.

General Mills and Hershey's are collaborating three equities-Big G cereals, Hershey's cocoa and Reese's Peanut Butter Cups-in the children's corn puff cereal, Reese's Peanut Butter Puffs.

"This partnership represents Hershey Foods' first major venture into the cereal category, and allows us to extend our best-selling brand, Reese's Peanut Butter Cups, into the cereal aisle," says Dorothy Pharmer, brands manager-food service & licensing of Hershey's grocery division.

Marketers can go as far as parlaying a new usage of their product based on its co-branded image. For example, by coupling with Delicious cookies, Musselman's is indirectly pushing the use of apple sauce as a healthy substitute for oil when baking.

"The licensee gets its name on millions of packages in a different area of the store where consumers will start making new connections," says Mr. Roos.

An ideal co-branding scenario would usher an automatic transferal of loyalty from one product to another.

"Licensing with Delicious reminds consumers to buy Skippy peanut butter for its good taste, high quality and its baking utility," says Barb Borik, North American division manager of strategic planning and new business ventures at Best Foods, a division of CPC International.

Although co-branding seems straightforward-team two big names to develop new products, gain market share, split costs and reap profits-industry insiders say that, like any relationship, it can be tricky.

If the companies appear too similar, consumers can become apprehensive and question the strength of each brand.

"There's no empirical evidence on this, but the more you can stretch an association between two companies and still have consumers see the connection, the more persuaded and loyal they will become," says Brian Sternthal, professor of marketing at Northwestern University's Kellogg School of Management.

"A consumer would be more loyal to a BMW lawnmower than a BMW motorcycle because there is more of a stretch in that extension; the same principle can be applied to co-branding."

Take such an effort between two brands at one company: General Mills' Yoplait yogurt and Trix cereal, for Trix yogurt. Initially it's a stretch for consumers to accept the union because one brand targets a sophisticated market and the other a juvenile one. However, their co-branding effort merges those two groups.

"It's a perfect marriage because kids like the idea of the Trix rabbit and fruity flavors and the parents identify it as Yoplait yogurt, which is healthy food," says Mr. Weneger.

Co-branding does have limitations: it requires detailed plans to coordinate marketing, promotional and advertising efforts; painstaking processes to legalize contracts and licenses; and creative brainstorming sessions to make ideas work.

"Giving away your brand name is a lot like giving away your child-you want to make sure everything is perfect," says Nabisco's Ms. Murphy.

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