Co-Branding Benefits

Cost Sharing

The relationship forged by Reebok and CrossFit is one in which cost sharing represents one of the greatest benefits. Shared costs include production, distribution, technology, and operations since the companies can now leverage each other’s resources to reduce overhead.

Advertising is another area where companies like Reebok and CrossFit experience significant savings; they are able to split costs with combined marketing strategies of co-branded products. In fact, when the co-branding strategy was first introduced during the 1980s, its initial objectives included offsetting rising advertising costs for launching new products. In addition to pooling resources for advertising and marketing, the companies also pooled their knowledge and reputation to produce new, higher quality products and services that could reach a wider range of consumers (4).

Increased Brand Recognition and Market Segment

Increased brand recognition comes with increased market segment. For example, since ESPN began airing CrossFit Games, Reebok has been able to reach CrossFitters, people who watch the games, and aspirational CrossFit consumers. Aspirational CrossFitters are people who may not participate in the sport but want to associate with it. People who watch the games/sport are now exposed to the Reebok brand since CrossFitters wear it, and these consumers may want to buy the product due to their positive affiliation with CrossFit.

Simultaneously, CrossFit has expanded into Reebok markets, specifically their CrossFit apparel and products sold online and at Reebok locations. For example, there is a CrossFit training program located at Reebok headquarters to train CrossFit coaches, and Reebok employees who participate in the program.

Customer Loyalty

Consumers seek to have “cognitive consistency” in that they want their beliefs and attitudes to be in harmony (5). If two companies share similar values and behaviors, as Reebok and CrossFit do, consumers will find it easy to be loyal to both. The “halo of affection” refers to the same affection and admiration bestowed on one brand or product to be extended to its complementary brand or product, thereby yielding greater customer trust and loyalty.

Increased Revenue

When done correctly, co-branding can generate incremental sales and raise product awareness. There is potential for increased revenue since both companies are being exposed to new markets. Co-branding expands the reach toward new customers with new products and this can result in increasing the brand value of both companies. Along with increased brand recognition and advertising efficiency, royalty income also increases.