Friday, June 24, 2005

Co-branding

a concept we talked about a few years ago is now gaining traction. branding isolation was based on legacy concepts built around protecting franchises, which made sense. in select situations, it should be possible to derive synergies by marrying 2 or more brands together. so many concepts in the world are co-branded (milk & cookies, siskel & ebert, soldier & fortune), but this has not translated into marketing strategies...yet. looks like the trend is emerging.




John Deere Homes Add New Wrinkle
By EMERY P. DALESIO, AP Business WriterFri Jun 24, 2:39 AM ET
Developers building a slice of suburbia in the piney woods here have partnered with tractor-builder John Deere in an unusual marketing deal they both hope will lead to improved sales.
As part of the partnership, the John Deere name will be featured on the entrance sign for the subdivision with homes ranging from roughly $375,000 to $500,000. The purchase price includes a choice of landscape designs prepared and installed by Deere. Thousands of dollars worth of riding lawnmowers, leaf-blowers and other equipment will fill one of the three garage bays.
St. Lawrence Homes vice president Rick Ohmann says the John Deere link should amount to a stamp of approval for people who care about having a beautifully landscaped yard from the day they move in.
It was that promise, not the John Deere name, that attracted Joseph Crayton to sign a contract this month to build a 3,100 square foot house. The banker is moving from Bethesda, Md., to help start a new Durham-based bank.
"It wasn't my primary decision-driver, but it was great to have," Crayton, 37, said of the Deere name associated with his new home. "A lot of us are brand conscious."
Word of mouth helped sell nine of the first 11 lots in about 50 days, the company said. If the remaining 51 lots sell strongly, the homebuilder might develop similar projects in Wilmington, Charlotte and Cincinnati, Ohio.
John Deere officials look for the strategy to help broaden their products' appeal among people who may associate the name strictly with tractors and lawnmowers.
"The ultimate message is to have homeowners consider John Deere as the place they can turn for all of the things they need to take care of their yard. Right now, we might only be considered as a place to buy equipment," said Tosh Brinkerhoff with Deere & Co.'s consumer equipment division in nearby Cary. "We feel like this community is a way that we can showcase our abilities."
The pairing is among the latest examples of co-branding, a trend that's moving consumer markets worldwide.
It's why Coca-Cola Co. puts NutraSweet's name on its soda cans and Pizza Hut Express restaurants are in Holiday Inn motels, said Sheri Bridges, a marketing professor at Wake Forest University.
"They're borrowing from one another's associations and values and consumer interest. It's supposed to be mutually beneficial," Bridges said. "The basic idea is the companies are trying to boost interest, boost credibility and ultimately boost the bottom line."
Other corporate co-brands:
• adidas producing sneakers with rubber soles bearing the Goodyear name
• Volkswagen's Beetle and BMW creating an in-car adapter to accept iPod music players by Apple Computer Inc.
• Delta Air Lines tapping clothing designer Kate Spade for the cabin interiors and flight attendant uniforms for its new airline, Song
• Austria's D. Swarovski & Co. delivering crystal-encrusted cell phone covers to use on phones made by South Korea's VK Corp.
"In general, these things work pretty well when there's some positive associations of the two brands," Duke University marketing professor Carl Mela said.
When homebuyers consider living in a new subdivision, often little besides location and price sets them apart. But Mela said the subdivision marrying Deere and St. Lawrence may be different.
"It suggests to me that when I move into this neighborhood there might be a very positive aesthetic to the yards," Mela said. "John Deere is getting an endorsement that their brand of lawn equipment is desirable and used by people who want to maintain a positive appearance of their yard."
It fits into Deere's broader efforts to expand outside the slow-growing $20 billion landscaping equipment market into the much faster-growing, higher-margin $100 billion landscaping market, said Richard Wise, a senior partner at the brand and marketing consulting firm Lippincott Mercer.
Deere's Cary-based division posted operating profits of $246 million in 2004, up 8 percent from the previous year, on sales of $3.7 billion.
Deere & Co., based in Moline, Ill., moved aggressively into landscaping by buying the two biggest companies in the landscaping and irrigation industries in 2001, combining their 200 locations and changing their name to John Deere Landscapes, Wise said. John Deere also has put its brand name on a line of high-profit products such as grass seed.
Deere now has nearly 300 wholesale landscaping locations. Last month, Deere bought United Green Mark Inc., which distributes plants, landscaping materials and irrigation equipment in California and four other states.
Lending the Deere name to a subdivision, Wise said, "would seem to be a logical extension of that approach — and kind of an interesting and innovative one."
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