50 CHAPTER 2 BRANDINGA recent study indicates that whether consumers prefer a local brand such as Mecca Cola
(France) or Fei-Chang (China) above a global brand such as Pepsi or Coca-Cola depends on
whether they are global- or local-minded. Th e tendency towards a global or local mindset is
related to people’s desire to be diff erent (local) versus similar to others (global). Consequently,
companies benefi t from positioning their products in a way compatible with the mindset of
their target group.^35
Companies can also opt for dual branding strategies. Th ree categories of dual strategies can
be distinguished. In endorsement branding two brand names of the same company are used,
one of them serving as a quality label or endorsement.^36 In fact, this strategy can be situated
somewhere between an extension and a multi-brand strategy, and combines the advantages
of both, although the disadvantages of the two combined strategies should be taken into
account. An example is Kellogg’s (Cornfl akes, Rice Krispies, Coco Pops, etc.).
With ingredient branding , a brand of a basic ingredient of the product is mentioned next to
the actual product’s brand name. Examples are Intel, Nutrasweet, Woolmark, Goretex and
Tetrapak. Th e advantages are that both brands can benefi t from the synergy eff ects of combin-
ing the two strong brands. Furthermore, communications costs can be shared. A prerequisite
for ingredient branding is that the ingredient has to be essential, diff erentiating and of consis-
tently high quality.^37
Finally, in co-branding , two or more brands are simultaneously presented on one product.
Co-branding can range from advertising multiple brands in one ad (e.g. featuring Shell and
Ferrari together) to co-developing a product (e.g. Philips and Inbev who came up with the
Perfect Draft , or Braun and Oral B launching an electric toothbrush). Forming an alliance
may be driven, for example, by the desire to leverage positive brand equity of the partner
brand (e.g. LG working together with Prada to launch an exquisitely designed phone), to
share or decrease advertising or development costs (e.g. Coca-Cola and Heinz Plant Bottle TM
partnership in which Coca-Cola is partly reimbursed for its development costs of the Plant
Bottle whereas Heinz can use the bottle without having any development costs) or to gain
access to new markets or distribution channels (e.g. the Belgian women’s magazine Libelle
which asked the apparel retailer E5 to launch jointly a women’s collection, giving Libelle
access to the fashion market and to the outlets of E5). Obviously, the combination should
result in a perfect perceptual fi t, from a product or image point of view.^38To differentiate itself from the competition, HTC decided to put the spotlight on the audio features of its smart
phones. To this end, HTC invested $300 million in Beats TM Electronics LLC, the company that redefined the audio
market with its iconic Beats by Dr.Dre TM audio experience. This resulted in the superb Beats earbuds being packed
with HTC’s Android smart phones. Unfortunately, this branding alliance did not give HTC the expected advantages.
Consumers simply do not buy a smart phone for its premium earphones. Further, including the premium accessory
forced HTC to raise prices while competitors offered similar smart phones at lower prices. Therefore, despite the
major investment in Beats, HTC decided that the iconic Beats Audio earbuds for several of its models will no longer
be included in the box. However, the partnership may take a step forward with the acquisition of Mog, a music
subscription service that has a catalogue of over 14 million tracks that subscribers can listen to on a computer and
Android devices. This would allow HTC and Beats to challenge the likes of iTunes and Spotify and to stick to a
premium audio differentiation in comparison with competitive smart phones.^39BUSINESS INSIGHT
HTC with a Beats experienceM02_PELS3221_05_SE_C02.indd 50M02_PELS3221_05_SE_C02.indd 50 6/5/13 2:59 PM6/5/13 2:59 PM