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  • Writer's pictureToucan Insights Staff

Co-Branding Partnerships: The Adidas and Kanye West Case


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CO-Branding Partnerships: The Adidas and Kanye fiasco


Introduction



Co-branding is a method consisting of strategically partnering two companies in marketing and advertising so that each brand benefits from the success of the other.

Co-branding partnerships can be a successful strategy for expanding your clientele, raising brand awareness, and entering new markets. However, for a partnership to be successful, it must benefit all parties involved.

For example, when Betty Crocker partnered with Hershey's, both companies and audiences—who obviously love chocolate—needed to discover an added value. The co-branding partnership between Adidas and Kanye is a different story with a different end. Interested? Keep on reading, and we will explain it to you shortly.



1. Co-Branding Partnerships Explained


Co-branding partnerships have become a prevalent strategy in the world of marketing, allowing brands to combine their strengths and create powerful synergies.


In a co-branding partnership, two or more brands join forces to collaborate on a product, service, or marketing campaign, aiming to leverage their respective brand equity and reach.


These partnerships provide a unique opportunity for brands to tap into new markets, increase brand awareness, and enhance their overall value proposition.



Co-branding partnerships offer several benefits for the parties involved. Firstly, it allows brands to extend their reach and enter new markets that may have been difficult to penetrate individually.


By collaborating with a brand that has an established presence in a particular market or industry, companies can leverage their partner's expertise, distribution channels, and customer base to gain traction quickly.


Kanye's partnership brought a significant boost to Adidas' brand image and cultural relevance. Kanye is not only a highly acclaimed musician but also a prominent figure in fashion and pop culture.


By associating with Kanye, Adidas was able to tap into his massive fan base and appeal to a younger, trend-conscious demographic.


Moreover, co-branding partnerships enable brands to enhance their brand equity through association with a trusted and respected partner.


When two reputable brands come together, they can combine their unique attributes, values, and resources to create a more compelling offering for customers.


This association can help to build trust, credibility, and loyalty among consumers, ultimately strengthening the brand image and driving customer acquisition and retention.



Kanye's Yeezy line of sneakers became highly sought-after and created a sense of exclusivity and desirability around the Adidas brand.


This led to increased demand, limited edition releases, and heightened hype, which translated into higher sales and revenue for Adidas.


Additionally, co-branding partnerships can unlock opportunities for innovation and product diversification.


By pooling their resources, expertise, and R&D capabilities, brands can collaborate on the development of new products or services that meet the evolving needs and preferences of their target audience.


Kanye's influence on design and product innovation has been instrumental in pushing the boundaries of sneaker culture.


His distinct aesthetic and unique design approach have helped Adidas stand out in the crowded sneaker market, offering consumers something different and compelling.


However, successful co-branding partnerships require careful planning, alignment of brand values, and clear communication.

It is crucial for brands to ensure that the partnership is mutually beneficial and that both parties have a shared vision and goals.


Additionally, effective communication and coordination between the collaborating brands are vital to maintaining consistency and coherence in messaging and brand representation.




 
 



2. The Adidas and Kanye case

With Kanye West (now referred to as "Ye"), Adidas entered into a co-branding partnership agreement in 2016. Their sales increased significantly as a result, totaling billions of dollars thanks to the partnership.

However, everything changed in 2022 when Kanye tweeted, "Going death con 3 on JEWISH PEOPLE," inciting antisemitic hysteria.


This was in response to a previous incident where he caused a stir by donning a "white lives matter" shirt during the US Black Lives Matter marches.

It caused controversy and resulted in substantial adidas Yeezy line boycotts.



3. What did Adidas do?


Adidas decided to end their deal with Kanye and take the Yeezy line off the market in an effort to retain their public image.


However, this has caused a tremendous loss for the brand, which now anticipates a $738 million total loss in 2023, its first annual loss.


Adidas has started liquidating the sneakers it co-designed with Ye, the artist, before cutting relations with the popular personality.


Adidas claims that a "significant amount" of revenue generated from its remaining supply of "Yeezy" brand sneakers will be donated to associations fighting antisemitism, racism, and hate, such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change, which was established by George Floyd's brother.


The shoes, which have a price range of $70 to $260 per pair and went on sale in the US on Wednesday, are already available for purchase, but it is yet unknown whether Ye will make any money from them.


Before choosing what to do with the excess product, the corporation claims it engaged with "a diverse group" of employees, organizations, and customers.

Adidas claimed that in order to safeguard supply chain partners, it carried out contracted production orders even after the collaboration was dissolved.




 
 


4. Risks of Co-Branding Partnerships


While co-branding partnerships offer numerous benefits, it is essential for brands to be aware of the potential risks involved.

One significant risk is the potential for brand dilution or damage to brand equity, as demonstrated in the Adidas and Kanye debacle.

When two brands collaborate, they are essentially associating their reputation and image with each other. If one brand faces a public relations crisis, legal issues, or a decline in quality, it can have a negative impact on the other brand's perception and trustworthiness.

Therefore, thorough due diligence and careful selection of a co-branding partner are crucial to mitigating this risk.

Another risk in co-branding partnerships is the lack of control over the partner's actions. While brands may align initially, changes in strategy, management, or direction can occur over time.


If one brand deviates from the agreed-upon values or fails to maintain quality standards, it can harm the reputation of both brands involved.


It is essential to establish clear guidelines, communication channels, and monitoring mechanisms to ensure ongoing alignment and mitigate the risk of reputational damage.


Co-branding partnerships also carry the risk of brand cannibalization. If the co-branded products or services directly compete with each brand's existing offerings, it can lead to confusion among consumers and a potential loss of market share.


Brands must carefully consider the target audience, market positioning, and differentiation strategies to ensure that the co-branding partnership brings added value rather than cannibalizing existing sales.


Moreover, conflicts of interest can arise in co-branding partnerships. Brands may have different objectives, priorities, or marketing strategies, which can create tension and hinder collaboration.


Misalignment in areas such as pricing, distribution channels, or marketing communication can lead to conflicts that can negatively impact the partnership's success.


Thorough negotiation, clear contractual agreements, and ongoing communication are necessary to address and manage potential conflicts effectively.



Conclusion


Co-branding partnerships can be a successful strategy for expanding clientele, raising brand awareness, and entering new markets.


Brands that collaborate in co-branding partnerships can leverage their respective strengths and create powerful synergies.

These partnerships offer several benefits, including extending reach, enhancing brand equity through association, unlocking opportunities for innovation, and diversifying product offerings.

However, there are risks involved in co-branding partnerships that brands need to be aware of. Brand dilution, lack of control over partner actions, brand cannibalization, and conflicts of interest are among the potential risks.

Thorough due diligence, careful partner selection, clear guidelines, and effective communication are essential to mitigating these risks.

The Adidas and Kanye co-branding partnership serves as an example of the risks involved, as Kanye's controversial actions led to brand damage and significant losses for Adidas.

Overall, while co-branding partnerships have their rewards, brands must carefully navigate the potential risks to ensure a successful collaboration.



 



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