Businesses can use co-branding as a leveraging strategy over their competition. Kevin Keller, author of Strategic Branding Management, maintains that brand equity is fundamentally determined by the brand knowledge created in consumers’ minds by the supporting marketing program.
Here’s an example of this approach. Seeing our last child graduate from high school and progress to college, my wife and I are able to drive something other than a minivan. Currently, I drive an Infiniti I30t to work on my commute. Although it has over 100,000 miles, the vehicle runs like a luxury sports car. Infiniti is a luxury division of the Japanese automaker Nissan. Nissan’s marketing strategy is to provide premium status to its vehicles with luxury content and high performance. What is interesting is this Infiniti brand is not promoted within Japan. Given this reality, brand equity is critical.
Nissan is building from this premise. In fact, its business strategy is to target the luxury segment in the United States that would not fit with Nissan’s mainstream brand. In fact, the Japanese government imposed voluntary export restraints for the United States markets so that it is more profitable to export cars abroad. Therefore, Nissan is building its sub branding through the premium Infiniti brand.
What Nissan is attempting to do with Nissan Premium Factory brand is very risky. The company is attempting to transfer its success in its luxury brand of Infiniti to the Japanese culture with ‘Nissan Premium Factory.’ However, other carmakers are not attempting to duplicate Nissan’s luxury brand move in Japan. What works in one culture may fail in another. Ralph Hanson, business writer, notes that rival Toyota is struggling to promote its Lexus luxury brand in Japan. Keller further states it is important to employ a mix of different communication options, each playing a specific role in building or maintaining brand equity. Fortunately, Nissan has no plan of extending this new brand to outside of the country. Having the right brand strategy is vital, especially across cultures.
It’s quite interesting how one person can be attracted to one brand while it is a turnoff to another individual. Keller further argues that consumers may form a mental association from a particular brand to another entity or all associations by making a connection between the brand and another entity. Lisa Wood, brand management researcher, explains that there is a differential effect of brand knowledge on consumer response to the marketing of a brand. Perhaps foreign brands have a mental connection with dependability and quality. Finally, co-branding involves a synergy that must be strategically developed.