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Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products

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  • Zixia Cao

    (West Texas A&M University, Canyon, Texas 79016)

  • Alina Sorescu

    (Texas A&M University, College Station, Texas 77843)

Abstract

We examine whether cobranding---the practice of using two established brand names on the same product---increases the market value of parent firms. Using data from the consumer packaged goods industry, we document that the average stock market reaction to the announcement of cobranded new products is approximately +1.0%. We hypothesize that this reaction is significantly higher than it would have been if these same products were single branded, and we find evidence consistent with this hypothesis. We also examine the determinants of this stock market reaction. We find that the consistency between the two brand images, the innovativeness of the product, and the exclusivity of the cobranding relationship significantly increase the market reaction to cobranding announcements. Our findings provide important managerial guidelines for enhancing firm value through cobranding partnerships.

Suggested Citation

  • Zixia Cao & Alina Sorescu, 2013. "Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products," Marketing Science, INFORMS, vol. 32(6), pages 939-959, November.
    • Handle: RePEc:inm:ormksc:v:32:y:2013:i:6:p:939-959
    DOI: 10.1287/mksc.2013.0806
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    2. Hengameh Fakhravar & Hesamoddin Tahami, 2022. "International Co-Branding and Firms Finance Performance," Papers 2202.07128, arXiv.org.
    3. Diandian Ma & Benfu Lv & Ying Liu & Shuqin Liu & Xiuting Li, 2023. "Brand Premium and Carbon Information Disclosure Strategy: Evidence from China Listed Companies," Sustainability, MDPI, vol. 15(6), pages 1-21, March.
    4. Yan, Ruiliang & Cao, Zixia, 2017. "Is brand alliance always beneficial to firms?," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 193-200.
    5. Mitchell Lovett & Renana Peres & Ron Shachar, 2014. "A Data Set of Brands and Their Characteristics," Marketing Science, INFORMS, vol. 33(4), pages 609-617, July.
    6. Nguyen, Hang T. & Ross, William T. & Pancras, Joseph & Phan, Hieu V., 2020. "Market-based drivers of cobranding success," Journal of Business Research, Elsevier, vol. 115(C), pages 122-138.
    7. Arpita Agnihotri & Saurabh Bhattacharya, 2019. "ESOPs AND NEW PRODUCT LAUNCH: CONDITIONAL EFFECTS OF FINANCIAL SLACK AND OWNERSHIP CONCENTRATION," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-21, April.
    8. Kirca, Ahmet H. & Randhawa, Praneet & Talay, M. Berk & Akdeniz, M. Billur, 2020. "The interactive effects of product and brand portfolio strategies on brand performance: Longitudinal evidence from the U.S. automotive industry," International Journal of Research in Marketing, Elsevier, vol. 37(2), pages 421-439.
    9. Koschmann, Anthony & Bowman, Douglas, 2018. "Evaluating marketplace synergies of ingredient brand alliances," International Journal of Research in Marketing, Elsevier, vol. 35(4), pages 575-590.
    10. Larisa Kovalenko & Alina Sorescu & Mark B. Houston, 2022. "What brand do I use for my new product? The impact of new product branding decisions on firm value," Journal of the Academy of Marketing Science, Springer, vol. 50(2), pages 338-365, March.
    11. Vanitha Swaminathan & Sayan Gupta & Kevin Lane Keller & Donald Lehmann, 2022. "Brand actions and financial consequences: a review of key findings and directions for future research," Journal of the Academy of Marketing Science, Springer, vol. 50(4), pages 639-664, July.
    12. Alina Sorescu & Nooshin L. Warren & Larisa Ertekin, 2017. "Event study methodology in the marketing literature: an overview," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 186-207, March.
    13. Han, Jie & Wang, Desheng & Yang, Zhihao, 2023. "Acting like an interpersonal relationship: Cobrand anthropomorphism increases product evaluation and purchase intention," Journal of Business Research, Elsevier, vol. 167(C).
    14. Nguyen, Hang T. & Feng, Hui, 2021. "Antecedents and financial impacts of building brand love," International Journal of Research in Marketing, Elsevier, vol. 38(3), pages 572-592.
    15. Daniel Blaseg & Christian Schulze & Bernd Skiera, 2020. "Consumer Protection on Kickstarter," Marketing Science, INFORMS, vol. 39(1), pages 211-233, January.
    16. Suzuki, Satoko & Kanno, Saori, 2022. "The role of brand coolness in the masstige co-branding of luxury and mass brands," Journal of Business Research, Elsevier, vol. 149(C), pages 240-249.
    17. Healey, John & Mintz, Ofer, 2021. "What if your owners also own other firms in your industry? The relationship between institutional common ownership, marketing, and firm performance," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 838-856.
    18. Dutordoir, Marie & Verbeeten, Frank H.M. & De Beijer, Dominique, 2015. "Stock price reactions to brand value announcements: Magnitude and moderators," International Journal of Research in Marketing, Elsevier, vol. 32(1), pages 34-47.
    19. Goyal Vinay, 2019. "Brand Image and its Determinants: A Stochastic Frontier Approach Analysis," Review of Marketing Science, De Gruyter, vol. 17(1), pages 1-22, June.
    20. Chia-Lin Lee, 2014. "Is Co-Branding a Double-Edged Sword for Brand Partners?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 19-34.
    21. Skiera, Bernd & Bayer, Emanuel & Schöler, Lisa, 2017. "What should be the dependent variable in marketing-related event studies?," International Journal of Research in Marketing, Elsevier, vol. 34(3), pages 641-659.

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