Learning from Luxury: The Strategic Power of Smart Brand Collaborations

Not all collaborations have the same value or impact. Some collaborations provide a good boost to the brand or even sales; others carry risk and can even be more harmful than beneficial. Too many collaborations are either inconsequential or, at best, provide small short-term returns. There is a widespread assumption that there is power in collaboration. But the real power is not in the process of collaboration itself. If the right people, companies and brands work together for the right reasons, the result will be greater than the sum of its parts. Collaboration and co-branding is something that many luxury brands are very good at - and therefore many businesses can learn useful lessons from them.

 

Two Main Types of Collaborations

Leaving aside influencer, star or celebrity collaborations and focusing strictly on the corporate side, co-branding or brand collaborations can be divided into two main categories:

 

  • The brands are merged to create a single new product, endorsement or design
  • The brands are together on an intangible level without merging new physical products

 

An example of the first category of brand collaboration is the collaboration between Gucci and Riva to launch Aquariva by Gucci. Frida Giannini, Gucci's creative director at the time, incorporated the brand's motifs into the interior and exterior design of the yacht. Who benefited more from the collaboration? This type of collaboration is more beneficial for Gucci because Riva has a longer history than Gucci and caters to a higher segment.[1] Both carry the codes of Italian design and la dolce vita. They also have different areas of expertise, so they are not competitors. In any case, since both brands are Italian, their cultural codes are compatible and their brand messages are complementary. All in all, this co-branding move was a win-win situation.

 

“Sometimes there is no better way to advertise a legendary brand than by showing it with another legendary brand.” - Robert Klara

 

In the second category of co-branding, Patek Philippe's advertising with the Orient Express is a good example. The Orient Express is the iconic and luxurious long-distance train that has inspired many writers, poets and philosophers, including Ernest Hemingway, Paul Valéry and Agatha Christie. In one of Patek Philippe's print advertisements, father and son walk alongside the carriages after getting off (or just before getting on) the train. The design of the watch or the interior of the train does not change, but the link between the two brands is established in the consumer's mind. This luxury train, with its historical significance, has added communicative value to the identity of the Patek Philippe brand. As Robert Klara wrote in his article about this ad “sometimes there is no better way to advertise a legendary brand than by showing it with another legendary brand.”[2]

 

Smart sponsorships can also fall into the second category. Think of all the brands involved in Formula 1. As another example, remember the magical moment when skydiver Felix Baumgartner jumped from 24 miles above the earth's surface, breaking three world records that day? GoPro and Red Bull were there together. This type of co-branding is about communicating associative messages to the luxury consumer's mind. This is the second category of co-branding and, contrary to popular belief, it can be even more effective than the first.

 

Benefits of Uniting Powers

When used strategically, co-branding has benefits that are often underestimated. Some of the competitive advantages a brand can gain include:

 

  • Enhanced Market Reach: Co-branding allows brands to access each other’s customer bases, significantly expanding their market reach and visibility.
  • Increased Credibility and Trust: Partnering with a reputable brand can enhance credibility and trustworthiness in the eyes of consumers, benefiting both brands involved.
  • Differentiation and Competitive Edge: Co-branding can help create unique products or services that differentiate brands from their competitors, providing a competitive edge in the market.
  • Shared Resources and Expertise: Collaborating with another brand enables sharing of resources, knowledge, and expertise, which can lead to more innovative products and services.
  • Cost Efficiency: Joint marketing efforts and shared promotional costs can lead to more efficient use of marketing budgets, reducing overall expenses for both brands.

 

A new brand can gain legitimacy and reach a new market by collaborating with an old brand. For example, Parmigiani, a new Swiss luxury watch brand, managed to collaborate with Bugatti, an old and very luxurious brand. Today, surprisingly, even Prince Charles, an aficionado of heritage brands, wears a Parmigiani.

A non-luxury brand can gain prestige by collaborating with a luxury brand. Swatch with Omega, Nike Air Force with Louis Vuitton or H&M with Balmain are very successful examples of this. Collaboration divides the task and multiplies the success.

 

 

Academic brands are further strengthened by engaging in co-branding. Stanford University boosted its image when it was revealed that the CIA had collaborated with its research institute. Similarly, non-luxury brands gain credibility by collaborating with prestigious universities. As Frølund, Murray and Riedel write: “Following corporate giants like General Electric, Siemens, Rolls-Royce, and IBM, which have collaborated with universities for years, a variety of younger companies including Amazon, Facebook, Google, and Uber are using universities as a key part of their early-stage innovation and new ventures strategy.”[3]

 

Dos and Don’ts of Co-Branding

There are examples of two equally super-luxury brands working together. There are also good examples of luxury brands collaborating with non-luxury niche brands. Finally, there are good examples of non-luxury brands co-branding with non-luxury brands, such as IKEA with Lego.

 

“Collaboration allows us to know more than we are capable of knowing by ourselves.”  - Paul Solarz

 

Of course, there are plenty of bad examples. If two brands have conflicting stories, values and messages, it's better to say no to co-branding. Some of the worst cases in history include Target and Neiman Marcus, or Shell and Lego. Commenting on the source of damage caused from the Neiman Marcus-Target case, Melanie Trepanier, a brand manager, said “High fashion is about being edgy and standing out from the crowd, which is misaligned with the trend seeking mass market shoppers.”[4]  

It's true that brands collaborate to target new markets and expand their customer base, but even if it's a new customer group, it still needs to be a relevant target to avoid losing some of the existing customer base. Collaboration in itself isn't the point. It is about working with the right commercial brands. It has to be a win-win situation. Here is a simple checklist to get it right:

 

A Checklist for Successful Collaborations

Collaborations and co-branding efforts can be powerful strategies for brands to enhance their market presence, credibility, and innovation. However, not all collaborations yield positive results. The key to successful co-branding lies in strategic alignment, mutual benefits, and careful execution. By learning from successful luxury brand collaborations, companies can maximize the benefits and minimize the risks associated with co-branding initiatives.

  • Strategic Alignment. Ensure the partner brand’s values, mission, and market positioning align with yours. A good way to check for this is to assess the cultural and operational compatibility between both brands.
  • Mutual Benefits. Identify clear and mutual benefits for both parties involved. Think about how you will ensure the collaboration will enhance both brands’ market reach and credibility.
  • Complementary Expertise. Choose a partner with complementary strengths and expertise. And avoid partnering with direct competitors to prevent conflicts of interest.
  • Customer Base Synergy. Evaluate the potential for cross-pollination of customer bases. Ensure the target audience of the partner brand aligns with your own customer profiles; be as specific as possible.
  • Brand Prestige and Perception. Partner with brands that have a strong and reputable market presence. Consider the long-term impact on your brand’s prestige and perception.
  • Innovation Leverage. Look for opportunities to create unique and innovative products or services. Leverage each brand’s strengths to develop offerings that stand out in the market.
  • Cost and Resource Efficiency. Plan for shared marketing costs and resources. Evaluate the potential cost savings and efficiency gains from the collaboration.
  • Risk Management. Conduct thorough due diligence to assess any potential risks. Have contingency plans in place to manage possible challenges or conflicts.
  • Clear Communication and Roles. Establish clear communication channels and roles for both parties. Ensure transparency and regular updates throughout the collaboration process.
  • Performance Metrics and Evaluation. Define success metrics and performance. Regularly evaluate the partnership’s outcomes against these metrics and make necessary adjustments.

Harnessing the power of strategic collaborations can transform your brand, creating opportunities for innovation and unparalleled growth. However, it also poses significant risks if not carefully managed. As Henry Ford once said, "Coming together is a beginning, staying together is progress, and working together is success."

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Sources

[1] Husein-zadeh, Tofig. “Lüks Marka İşbirliklerinin Dinamikleri.” Harvard Business Review Türkiye, hbrturkiye.com/blog/luks-marka-isbirliklerinin-dinamikleri.

[2] UpperEastRob. “Orient Express Makes Quick Stop in New Patek Philippe Ad.” – Adweek, Adweek, 11 July 2013, www.adweek.com/brand-marketing/orient-express-makes-quick-stop-new-patek-philippe-ad-150960/

[3] Lars Frølund, Fiona Murray. “Developing Successful Strategic Partnerships with Universities.” MIT Sloan Management Review, 6 Dec. 2017, sloanreview.mit.edu/article/developing-successful-strategic-partnerships-with-universities/. 

[4] Kosin, Mark. “Brand Partnerships That Failed Miserably (And A Few That Worked).” Urbo, Urbo, 5 July 2018, www.urbo.com/content/brand-partnerships-that-failed-miserably-and-a-few-that-worked/

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