Arts Marketing: Apple/Nike Co-Branding - Essay Example

Arts marketing: Apple/Nike co-branding s Submitted by s: Introduction Co-branding is typically a marketing partnership that is established between two different brands of either goods or services while encompassing various varying form of branding partnerships like sponsorships (Kotler and Pfoertsch, 2010, p. 23). This form of arrangement usually links the brand with one or more companies that deal with particular goods or services making it a useful arrangement for numerous businesses that seek to escalate their sales as well as cash flow. Various different businesses including retailers, motor vehicle manufacturers and electronic manufacturers among others employ this strategy with studies indicating that it is an efficient approach towards increasing the loyalty of customers. In co-branding, one commodity is associated with a different brand name or in some cases links a commodity with a different person who is not the main creator. A typical agreement to co-brand entails two or more companies deciding to cooperate in order to associate various logos, their color schemes or the aspects that identify their brands to a particular product that contracted purposefully for the purpose of the agreement (Blackett and Boad, 1999, p. 18). The main reason for this is to bring together the strongpoints of the two brands so that the premium customers can increase and be more willing to part with their money, to ensure the product remains resistant to any form of copying from other manufacturers or to bring together the various properties associated with the brands into one product. Over the years, co-branding has taken place in various industries and markets including the feature package associated with Harley Davidson on Ford Trucks as well as Nike pairing with Michael Jordan to come up with a special product line that included the Air Jordans which became famous all over the world (Hatch and Schultz, 2008, p. 110). Co-branding between Nike and Apple Nike made shoes for running that had the ability to provide the user with instantaneous information concerning the time, distance and speed as well as well as the number of calories they were burning as they ran (Turban and Volonino, 2008, p. 228). In order to achieve this, Apple provided tiny iPods along with a new wireless system referred to as Nike + iPod, which will receive data from a sensor built into the insole of the innovative shoes. This creative development catapulted the concept of “Smart Shoes” that was developed by Adidas, Nikes rival, that developed a product with a chip device able to adjust the foot cushioning in order to match the needs of the person wearing the shoe. When the collaborative product between Nike and Apple was launched, the CEO of Nike stated that the company had realized that making a smart shoe was enough and this necessitated the launch of various performance clothing that could hold the iPod without the wires being visible. Since every successful co-branding is informed by consumer insight, the two companies considered themselves as sharing the same type of consumers and thus saw the brands could work together successfully. As a result of the co-branding, both Nike and Apple stores were to sell the new product containing the technology, additionally, Nike would also stock the iPod Nano while Apple would set aside a Nike Sport music section on iTunes that would feature the songs that had been preferred by famous athletes. In entirety, this co-branding was considered an exceptional idea and a win-win situation for the two companies right from the beginning and this demonstrated how valuable a strong and thought out co-branding could be (Duncan and Moriarty, 1997, p. 132). Reason why each party agreed to the venture Apple and Nike are among the most recognizable brands in the globe and even both companies reaped the benefits of their co-branding venture to develop a product for the consumers who value athletics, Nike has more potential of reaping the greater benefit through collaborating with the iPod (Calhoun, 2012, p. 98; . (Zickermann, 2013, p. 75) Nike gained more from the co-branding as the shoe market, especially the one that deal with athletes, had stiff competition and most of the people who buy shoes from Nike were also likely to buy the iPod. The co-branding between Nike and Apple can be considered among the agreements that are successful and both companies reap the benefits, as it provided Nike with the opportunity to be related to the strong Apple brand and this meshed well in regard to demographics. Individuals who run spend increasingly more time listening to music compared to the past and this has an extension effect for Apple regarding the iPod platform to become more than just a portable player but create a strong brand identity. This in effect creates a situation where the two companies attain tremendous gains from their venture. Prior to their co-branding, Nike had been attempting to penetrate the MP3 player market for a number of years and the company had been able to sell a line of MP3 players that had been co-branded with Philips (Doede, 2013, p. 251). Just a month before the co-branding venture with Apple, Nike had publicized it had developed an MP3 player in collaboration with Philips with a built in four gigabyte hard drive as well as GPS sensor. Regardless of the strong associated between Nike and various sports, Apple has been in control of the portable players market with various iPods including the shuffle and the Nano (Illing and Peitz, 2006, p. 127). These portable players continue to dominate the flash-based music player market that is typically preferred by athletes because of their devices that are small and durable. For instance, during the 2006 Winter Olympics that were held in Turin, most of the athletes from all over the world could be spotted with iPods regardless of the sporting discipline they were taking part in. Even though the co-branding venture with Apple raised Nike’s profile in the MP3 player market, it did not actually lead to the termination of the relationship that Nike had developed with Philips. The relationship between Nike and Philips was a brand-licensing agreement, which had served a niche, but since music was an important aspect of the exercise experience, Nike expanded its reach through capitalization on the greater market share that was controlled by Apple. Even though the co-branding venture with Nike was a new ground for Apple, portable computers that could assist athletes monitor their data were hardly new. In effect, it is a market that had considerably increased in recent years since athletes prefer and go for the smarter data tracking devices like watches, heart rate monitors as well as pedometers among others (Smith and Stewart, 2015, p. 117). Various products like heart rate monitors developed by Polar have for a long time allowed athletes to develop training regimens and consequently upload the data onto a computer in order to monitor the results. Additionally, Garmin’s Forerunner, which is a portable GPS that can be attached to the wrist, allows athletes to monitor their heart rates, time as well as distance among other aspects such as changes in altitude and various weather patterns. Instantaneous GPS location tracking has also made it possible for some devices to allow the users to race against virtual competitors and numerous sites exist where athletes can upload data from their devices to compare with other data from other athletes. However, before the deal with Nike, users of Mac computers had been left out as the software that allowed the portable athletic devices connect to computers or to the internet was only Windows. Therefore, apart from bringing together the two powerful brands in the market, the Nike + iPod kit provided the users of Mac computers with a solid footing in an area that had been previous difficult to navigate. Impact of co-branding on how the Nike and Apple are viewed Usually, the key motivation for worldwide brands developing strategic cooperation or alliances for co-branding rests on the prospects it provides for the combination of worldwide brands (Davis, 2010, p. 81). The motivation linked to the practice of global branding is characteristic of tactical collaborations between famous international brands that enjoy international recognition. The innovative co-branding between Nike and Apple is based on the supply of a product, the Nike + iPod Kit that is extremely differentiated and unique. This end product brings together Nike footwear and the iPod created by Apple, and from the research and development effort of the companies, two types of technologies emerged. The technologies that emerged included the sensors that were supposed to be inbuilt into the footwear and the iPod receiver that is supposed to enable communication between the two technologies. The tactical competition alliance may be seen as an example of complementary competence co-branding, as the two international brands complement each other in the development of a joint product that can link music to physical exercise (Picot, Reichwald and Wigand, 2008, p. 238). This union is founded on connection of products with the main capabilities of both companies taking part in the alliance. Additionally, Apple avails its experience and know-how as a global supplier and manufacturer of electronic devices while Nike avails the needed technology and ergonomic design of footwear. This has allowed the creation of a personal trainer that is characterized by innovative characteristics along with production founded on intensive integration of skills and technology. The main aim of the cooperative co-branding alliance between the two companies was to achieve a balanced combination, which would satisfy the integrative negotiation logic of the interests at hand and provide a collective advantage that would result in a win-win relationship (Kapferer, 2012, p.145). The basis for negotiations stresses on mutual confidence and trustworthiness in order to encourage creativity, innovation and sharing of dynamic opinions. As a result, a more long-lasting connection is achieved between the two companies and more stability is conferred on the solution, which is negotiated based on the interdependence of the negotiating parties. The two brands attain benefits from the co-branding alliance, but based on hypothetical payoffs, the resulting gains are not shared correspondingly (Kunitzky, 2011, p. 37). Upon signing the co-branding agreement, Apple recorded higher variations in its percentage points compared to Nike and this implies that the strategic collaboration between these two companies is founded on the relationship of the WinMin-WinMax form as the two brands gain benefits even though they are not equal. Nonetheless, through entering the co-branding alliance, the companies began a jointly beneficial association that enabled them to achieve the favorable outcomes demonstrated by the payoffs that demonstrate attainment of unequal increase in regard to individual brand values. Conclusion In summary, the Nike + iPod Kit should be acknowledged to be among the companies’ most remarkable achievements in terms of co-branding as it was characterized by an almost smooth fusion of footwear, hardware and software that instantaneously appealed to any runner who preferred Nike products as well as some who did not (Hitt, Ireland and Hoskisson, 2013, p. 391). The aggregate development efforts linked to these components can be considered as outstanding and have expanded the capabilities of the Nano in innovative ways while providing a computer interface that allows athletes to monitor their performance through devices offered at appealing prices. Unfortunately, there are three main issues that will need to be considered with the first being the fact that if the internal battery dies, the user will need to purchase another kit. This is an unpopular development inclination for Apple that may only be justifiable in this case because of the long life of the battery as well as the moderate price of the Kit. Additionally, the Kit requires the users to purchase a pair of Nike + footwear or for the already existing shoes to be adapted. The third issue is that the compatibility of the Kit is limited to the iPod Nano, which is a restriction that seems to have no justification apart from making the manufacture of the clothes compatible with iPods a much easier endeavor. These limitations reduce some of the luster that was associated with an otherwise surprisingly innovative iPod expansion that entailed sports, wireless technology and clothing all the same time. Even though the Kit is relatively easy to use, there is an inconceivable degree of cover considering the changes it has brought to the iPod Nano, as well as Apple’s software and other newer accessories. Bibliography Blackett, T. and Boad, B. 1999, Co-branding, Houndmills, Basingstoke, Macmillan Business, Hampshire. Calhoun, S. 2012, Exploring U2, Scarecrow Press, Lanham, Md. Davis, J. 2010, Competitive success, John Wiley, Chichester, West Sussex, U.K. Doede, K. (2013, Management, Taylor and Francis, Hoboken. 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