Living in the world full of various products, we see product partnership every day and everywhere. Product partnership usually refers to a mutually beneficial arrangement between two companies that do not directly compete with each other. Such partnership can be an effective way to enhance market leadership, create product differentiation, and reach a triple-win result for the partnered companies and, most importantly, their customers. Here are some successful cases for product partnership:
1. Reinvent the brand and create market synergy: the partnership between GoPro & Red Bull is a success in many ways. At first glance, the two companies seem to be completely unrelated with no product overlap: GoPro is simply producing portable cameras and Red Bull is selling energy drinks, so why would the two cross path? If we look at two companies’ slogans (“Be a hero” and “Red Bull gives you wings”), both brands represent an adventurous, action-packed lifestyle that promotes a fearless and live-life-to-the-fullest attitude. This commonality of the two brands have led to many co-sponsored campaigns involved with various extreme sport videos that went viral, including the infamous space jump video which has since become an iconic promo video and PR event for the two brands.
2. Focus on customer experience and create added value: American Express has many textbook examples by creating partnership with various brands. They partnered with Foursquare to offer money back to Foursquare users when they connect their Amex card to their account. Similarly, Amex has also partnered with Uber on multiple occasions to offer Uber users free ride credit if they use their Amex card as the payment method. Additionally, Amex also offers a line of British Airways credit cards where customers can earn reward miles simply by using their credit cards. Such partnership provides great benefits for the customers while significantly increasing the brand awareness for American Express and its partners.
3. Creating a pleasant user experience that is difficult for the competitors to duplicate: the partnership between Uber and Spotify is a genius move. Basically, after customers request an Uber ride, they are prompted to connect with Spotify which allows them to select the songs being play during their rides. Such collaboration allows the two companies to tap into each other’s customer base and create a unique customer experience that differentiate the two brands from their respective competitors. It makes customers more likely to choose them over others knowing that they can enjoy listening to their favourite songs while getting a nice ride.
4. When companies reach a certain size, it may be difficult to create new products to solve customer pain points given the bureaucracy, hierarchy, and the conservative nature of a big organization. Therefore, big companies will consider partnering with or even acquiring smaller companies to come up with new solutions for their customers. There are many examples where an enterprise chose to acquire a smaller company instead of building a product from scratch in order to expand its capability. Even within asset management, an industry that is historically viewed as more traditional and conservative, we have started to see this trend. BlackRock, for example, acquired a robo-adviser in order to attract younger and more tech-savvy investors. Another more recent example is the partnership between Betterment, the largest robo-adviser in the world and two top asset managers, Goldman Sachs and BlackRock to offer new investment portfolios to its investors.
Of course, partnership doesn’t always work or get executed perfectly. The failed partnership between Starbucks and Square is a lesson to be learned. Careful market research and cost-benefit analysis are especially necessary in this case given that two companies are at stake and they may have different end goals. For example, for smaller and newer company, partnering with a more well-known and established company can help increase their brand recognition and credibility among target customers and eventually increase both companies’ competitiveness in the market. This article did a great job explaining the politics in partnership given the size and influential power of the two companies forming the partnership so everyone can set the right expectations. When used right, partnership becomes a powerful tool to open new doors to reach more customer segments that the company may not be able to reach by its own.