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Is there a shortcut for building brands, expanding distribution networks and attracting the ever-increasing numbers of young consumers? This has always been the question for companies eager to make the most of every yuan spent. If such shortcuts do exist, carefully crafted partnerships with other companies could be one of them.

Branding is considered a pivotal task for any company. And changing consumers' perceptions, especially building high-end brands, is never an easy task. Some companies resort to extensive advertising campaigns. Some rely on the glamor of celebrities. But sometimes partnership with other high-profile brands is the most effective method.

Consumers tend to choose a series of products to reflect their social status. A few years ago, some Chinese consumers defined luxury as drinking Remy Martin Louis XIII, using a Zippo lighter, holding a Louis Vuitton handbag and wearing a Prada suit. Such psychology provides a shortcut for lesser-known brands to enhance their recognition, if they can associate their own brands with the world famous ones.

Asus and Acer branding

Some computer makers from Taiwan have been quite successful in doing so. Just a few years ago, Japanese and US brands used to dominate the high-end laptop market, although a great proportion of their products were made by Taiwan-based original equipment manufacturers such as Asustek Computer Inc and Acer Inc. Meanwhile, consumers tended to recognize the Asus and Acer nametags as low-end brands, despite their technology and research and development capabilities.

To upgrade the image of their brands, both Taiwan computer makers adopted the same strategy striking up partnerships with the world's leading racing carmakers, Asustek with Lamborghini and Acer with Ferrari. By doing so, Acer was able to put the Ferrari logos on its laptops in 2004 and conveyed the message that its laptops are the equivalent of Ferrari cars in terms of advanced technology and sleek design. Thanks to the fame of Lamborghini and Ferrari, those two Taiwan laptop brands gradually won the recognition of high-end users.

Successful partnerships can also help expand distribution networks. Nowadays, a few leading companies usually dominate the distribution network in an industry, and thus create entrance barriers for latecomers. However, if those latecomers can employ the existing distribution networks of partners, they can bypass the barrier and find a way into the market.

Coca-Cola and Nestle

The partnership between Coca-Cola and Nestle is a good example. In 2005, the two companies achieved a partnership agreement, which allowed Nestle to sell its Nescafe product through the world's largest beverage makers' vending machines and sales outlets. The partnership then helped to increase Nescafe's market share as well as sales revenue in just a few months.

Moreover, for companies trying to win the recognition of teenage consumers, partnering with Internet companies, especially online game operators, has already proved to be an effective solution. These days, online games often prove to be more powerful than TV commercials for young consumers who spend hours every day in the virtual world.

In April 2005, Coca-Cola sealed a partnership with Chinese online gaming company The9 and the two companies agreed to cooperate on marketing and distribution campaigns. Coca-Cola then started a two-month promotion campaign. And consumers in more than 50 cities won 40 million prizes such as laptops and online gaming time by purchasing Coca-Cola products.

Coca-Cola and The9 spent more than 100 million yuan on the marketing campaign, but officials from Coca-Cola later said the partnership not only enhanced its brand recognition, but also brought double-digit sales growth.

Thus, we can see partnerships can be useful marketing tools. But companies should pay attention to the following before they seek partners.

A careful evaluation of potential partners should be done in terms of distribution network, customer base, brand awareness and recognition. The best candidates should have a substantial market share, a large user population, and high consumer recognition.

Sometimes the best partners come from a different industry, but the two companies may share the same target group of consumers.

The partnership arrangement should be feasible and strictly adhered to.

The article was first published in Marketing, a Chinese publication

(China Daily 04/19/2007 page15)

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