Co-Branding: The New Age Business Combo

The store-within-a-store is not a novel concept. The tailor next to the dry cleaner, for example, is a combination that's been around since the beginning of business time.

Now combining business forces has a new look -- and a new name. It's called co-branding, and the idea is going like hotcakes. Like hotcakes with a side of motor oil. Among franchises, where the concept is most popular, co-branding means selling combined products and/or services at the same place of business. The combinations may sometimes seem unlikely, but any way you slice it, co-branding seems to work:

1. Co-Branding for One-Stop Convenience

This type of co-branding can produce some stomach-churning combos. Fast food and fuel, currently the most popular oddball mix, proves it can be convenience alone that makes the idea work.

For example, it's lunchtime and you also need gas. Why settle for Nabs and a Coke from the service station machine? Why go to McDonald's for your fast-food feast and then hit the road again for gas? Instead, while munching on your double-decker Italian at a Subway, your car windows are being washed. One stop -- and two items are off your list.

When the combined franchises are both nationally-recognized big names, each one benefits from the business attracted by the other. And in cases where one member of the combo is better-known, the bigger name draws traffic to the other. There are also real financial advantages when two or more businesses co-brand. They will shoulder equally expenses such as rent, telephone lines, and most utilities.

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2. Co-Branding for Synergy

Adding synergy to convenience makes a hard-to-beat selling technique. Business accounting services with a next-door-copy center, an office-supply store with a packing/shipping outfit, the bookshop that houses a coffee bar -- when different franchises are placed within one location, each can concentrate on its own special products or services. From the franchisor's point of view, co-branding increases efficiency and customer satisfaction.

These two-for-one operations bank on the attraction of allied products or services. The key here is to predict customer need -- and in the case of the bookshop coffee bar -- mood. Having fulfilled his/her original shopping purpose, what might the customer be drawn to next? This leads us to the next type of co-branding ...

3. Co-Branding for Impulse Purchase

The best example here is the national fast-food vendor, Arby's. This company also owns T.J. Cinnamons (breads and muffins) and P.T. Noodles (pasta). How better to introduce the new food-kids on the block than to put them side-by-side with good old established roast beef? After lunch, you might as well stock up for a linguine dinner, or go ahead and get your breakfast buns as long as they're right there.

From the point of view of the companies involved, this doubling-up (or even tripling up) means more than just increased sales. It makes good business sense all the way around. The space isn't all that's shared -- a wise financial move in itself -- but also payroll expenses and, in some cases, the workers themselves. After the breakfast rush, the crew can go next door and help set up for lunch. If one business melds better with the summer season and another with winter, employees can be concentrated to follow customer traffic.

So what's not to like about co-branding? So far, so good. For franchisors everywhere, it looks like a win-win combination.

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