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Complementary Brands
By: Kerry Pipes |  0 Shares    15,752 Reads

It's not difficult to see the opportunities offered by co-branding. Teaming related
concepts together in one central location can certainly offer benefits in many situations.
But even if you don't co-brand in the same location, there's a related twist some
franchisees have used effectively by turning to complementary brands. Portland,
Oregon multi-unit operator Steve Foltz knows all about the technique.

Foltz got into the franchising business almost by accident following college in the mid-
1980s. He was working as an assistant manager at a restaurant while job searching
when he realized the restaurant business might offer a future of its own. A friend of his
was in franchising and looking for a partner. Within a year the new partners had opened
three Cinnabon's in the Portland area.

The growth has continued and today the company, called The Cinnamon Bums, Inc.,
operates 17 Jamba Juices, 3 Cinnabons, and 1 Seattle's Best Coffee. Additionally, the
company also runs a Rainier Roaster and a Good Dog Bad Dog under operating
agreements and has even created its own concept called Tenemos Tacos. Most of the
locations are in the Portland area and, as Foltz sees it, they are all complementary
brands - juice, coffee, and pastries.

"Franchising has been a great tool for us," says Foltz. Multi-concept franchising has
been an even better tool, he says. "We've been able to take the resources of all three
brands, things like conventions, training, marketing, and combine them to create a best
of all worlds approach that helps us run all the concepts effectively," he says.

The company takes advantage of the built-in economies of scale. Like when they leased
space at two area malls side-by-side so that two different units could share back room
space - reducing the amount of costly per-square-foot leasing necessary. One location
is a Cinnabon tagged with a Jamba Juice, while the other is a Cinnabon alongside the
Seattle's Best Coffee.

Foltz says the company has also created its own unique financial spreadsheet that
cleanly combines all stores' ordering, tracking, accounting, and payroll issues. He says
two employees handle all of the company's financial business and accounting.

The franchise brands - Cinnabon, Jamba Juice, and Seattle's Best Coffee - are
conveniently complementary to be sure, but there's more. "The Cinnabons work better
in the mall where there's a lot of traffic, fresh faces, and it's really busy from November
to December," he says. But three of the Jamba Juice stores are in strip centers and one
is a standalone location. These, he says, provide a steady income during the warmer
months of March through August. It's a strategy of leveraged brands, location, and
income.

Foltz projects the company to generate $13.5 million in revenue during 2010. Now that's
a complementary number.
Monday, April 2, 2012

Nike & Apple: The Example of Complementary Branding

The third form of co-branding is complementary branding. It is
the marketing of two brands together to encourage co-consumption
or co-purchases (Clow and Baack 2010, 64), such as Starbucks
coffee sold in 7-11 or other stores or Sennheiser headphone sold
in Apple store.

As mentioned, the selection of co-branding partner is essential.

Both Nike and Apple are mature in their own field. Nike targeting
people who loves sport especially running, at the same time they
enjoy music and also wants to track their physical condition
during the exercise. According to this, Nike developed a series
of products called Nike+. At the same time, Apple developed a
tracking chip that can perfectly fit Nike's running shoes
(Temporal 2011). The only thing that people need to do is insert
the chip into Nike+ running shoes and turn on their iPod nano or
iPhone's relevant function during the exercise. It provides users
with instant information on time, distance, speed, and calorific
burn rates. The chip can even track your physical condition
through the song you are listening. The data will be transfered
from the chip in the shoes to runner's iPod nano or iPhone. Now
people can easily find Apple's Nike+ chip in Nike's retail
outlets and Nike is also selling iPod nano in some of its retail
store (Temporal 2011). Furthermore, Apple is also offering a Nike
sport music section on its iTunes music store, featuring lists of
songs chosen by well-known athletes. 

Adidas is working with Polar Electro. This partnership is similar

with the co-operation between Nike and Apple. However, it is not
as famous as Nike. Running, especially long-distance running will
be so boring without music to some runners so Adidas and Polar
Electro lost a numbers of potential customers. Adidas is hard to
compete with Nike in this area and one of the reason is that
Polar Electro's main field is only focus on physical condition
tracking. Even Polar Electro is also a mature company but to most
of the non-professional runners, Nike+ product may be their
prefer choice because most of people do exercises just for
relaxing. Apple always doing well in customer experience and Nike
is also caring so much about customers' experience so we can see
Nike has different series of high-tech product and all of its
products are focusing on people's feeling. The similar pursue
lead to this win-win situation.

All in all, it looks a brilliant idea and a win-win situation for

both companies and this is the value of strong, well-thought
through co-branding partnerships. Partner selection is one of the
important element in a partnership (Thakare 2009). If the
relationship fails to do well in the marketplace, both brands
suffer. In order to reduce risk of failure, co-branding should be
undertaken only with well-known brand (Clow and Baack 2011, 65).
Make sure that the target audiences of your partners have similar
types of profile, demographic and psychographic and also consider
whether the brand value of your partner is similar to those of
your brand, otherwise there will be significant strategy problems
and working together may well be problematic (Thakare 2009).