Evaluating the durability of brand alliances using Bayesian methods

Abstract

This study examines the duration of brand alliances (or co-brands), a brand strategy in which two brands are offered as one joint product. Previous research has suggested these alliances are short-lived, but little empirical evidence exists to explore what may drive the longevity of such alliances. The study uses actual market data for 524 brand alliances in 83 product categories of consumer packaged goods during a 13-year period. Controlling for market share, several factors that might influence brand alliance duration are examined: type of alliance, ownership by the same parent company, and the number of relationships. Using a Bayesian hazard model to estimate duration, the results show a brand alliance lasts longer if it is an ingredient brand alliance (rather than licensed) and both brands are owned by the same parent company. Additionally, having more partnerships helps a brand alliance last longer, but too many alliances have a negative effect on staying in the marketplace. The findings suggest that brand managers looking to enter into a brand alliance can anticipate how long the product might last based on these partnership factors.