Co-brands—the jury is still out on their success

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: Two strong brands coming together and launching a powerful product offering to customers providing value-added services should be a sure-fire winner. Yet, is that the case when it comes to co-branded credit cards? As far as I am concerned, the jury is still out on that one, if I were to assess the whole segment.

Yes, there have been some successful cards. But, I believe, in most cases the co-brands have been launched just to fill a niche, and to avoid someone else from occupying that space, to get a first-mover advantage. And, to meet the objective that the partner(s) have set for themselves, with little thought being given to the real benefits accruing to customers or subsidising customer benefit to meet their personal end objectives. It seems more like a game played by marketers than products launched for customers.

As the name suggests, a co-branded card is a card (debit or credit) that ideally brings together the benefits and value-adds offered by two companies to the cardholders. Since co-branded cards offer cardholders value-benefits of two partners, co-branded credit cards are typically a powerful product, with specific benefits that appeal to those customers in need of those features. And would, therefore, be preferable to the normal credit cards. This is also an ideal loyalty-enhancing tool, designed to increase stickiness to the card.

The more popular partners for co-branded card issuers thus far have been petrol companies, telecom companies, retail store chains and airlines. The various types of co-branded cards are: two-way cards, tripartite cards, multi-brand cards, and affinity cards (cause-related cards or alumni cards).

The reason that customers opt for a co-branded card is obvious. They see two reputed brands on one platform, ready to offer them features and value-adds on their cards, aimed at increasing the power elements of their cards and fulfilling their requirements. At this point, their expectations from the product are also high and they are looking at gaining advantages that their vanilla card would not have been able to offer them.