Thursday, December 20, 2018

Six Perils of Partnership

Partnerships among brands are seldom a pairing of equals: they are most often parasitic.   Large, successful, and established brands seldom seek out partnerships with small, unknown upstarts – and when they do, it tends to be a tactical maneuver that is ultimately recognized as a strategic mistake. While partnering with a start-up can enable rapid development of products or expansion into new markets, there are a number of perils to the stronger brand.

The first peril is the denigration of the stronger brand.   It is inevitable that when an established brand is applied to new products or markets, its identity becomes split and diffused: the brand is compromised by partnering, and the short-term profit of the partnership is seldom worth the damage done to its perception by its established customer base.   The more incongruous the image of the weaker brand, the more damage will be done to the stronger one.

The second peril is loss of control over brand identity.  The weaker brand usually has a completely different culture and agenda, and seeks to feed on the equity of the stronger brand without maintaining or contributing to it.  Because the partnership, from the perspective of the weaker partner, constitutes growth, the brand equity of the stronger partner is of little consequence to the weaker partner – it will invariably seek to sacrifice the esteem of the stronger partner for its own benefit. 

A third peril is the damage done to quality control, as the weaker partner is weaker because it does not have the capability of maintaining the level of quality of the stronger one. Again, the compromise of partnership constitutes a step down for the stronger partner and a step up for the weaker, such that the quality of both the product and experience of the stronger partner is not preserved when it is handled by the weaker partner.

A fourth peril is risk to the supply chain, particularly distribution control over the retail outlets at which the joint product will be sold and the touch points of customer contact where the weaker partner’s operations are concerned.   There is a significant difference in the way that a company manages its own brand experience and the way in which a retailer manages the brand experience of the products it stocks – and the same difference exists when the weaker partner is in custody of the stronger partner’s brand.

A fifth peril is fragmentation and discord in the representation of the stronger brand. Consider that brand equity is not built by accident, but by careful management of the brand and its related experiences.    Where the weaker partner represents the stronger partner’s brand, less care is taken in the maintenance of the brand identity.  Because the weaker partner has made no investment and holds no stake in the establishment and growth of the brand prior to the partnership, it feels no commitment to represent the stronger brand appropriately.   This conflict will not only diminish the equity of the brand, but dilute its very identity.

A sixth peril is the risk to customer experience.   A strong brand is defined by its experience, more so than the qualities of the good or service it provides.  A weak brand tends to be defined by more practical matters more directly related to the quality of its product, as its brand is not strong.  It if were capable of building a strong brand, even of understanding what is required to build a strong brand, chances are its brand would not be weak.

There are likely other factors that jeopardize the value of the stronger brand, and certainly many more practical concerns that represent more functional detriments to the stronger partner in terms of tactical and operational factors.

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