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Cross-Category Marketing

Wednesday, February 14, 2024

Cross-Category Marketing

Cross-category marketing – also known as cross-industry marketing or co-branding – is a strategic collaboration between brands in different product categories to promote each other to new audiences.

It involves identifying complementary brand partners outside one's core industry and creatively teaming up to increase exposure, drive discovery, and generate sales growth.

This innovative marketing approach is based on the premise that strategic alliances with relevant, non-competing brands can help tap into new markets and segments.

A clothing brand pairing up with a technology company, for instance. A restaurant promoting a particular alcohol brand, a hotel featuring a certain skincare line in their rooms, and so on – these are all examples of cross-category marketing in action.

Why Should You Do Cross-Category Marketing?

There are several key reasons why you might consider pursuing this form of marketing. In 2019 Chipotle, for whatever reason, wanted to expand beyond the food industry into lifestyle branding and merchandise, and they achieved this by partnering with a cosmetics brand by the name of e.l.f.

It was an incredibly novel collaboration that birthed a collection featuring make-up paraphernalia and bags designed in the themes of salsa, guacamole, queso, and burritos. The packaging itself resembled Chipotle’s food packaging. This uniqueness generated a buzz that introduced Chipotle to a wave of new audiences outside its core fast-food demographic.

For e.l.f., teaming up with the popular Chipotle brand gave them access to new customers and increased social media impressions. According to e.l.f., themselves, the social media posts they did with Chipotle were their highest performing at the time.

Overall, this quirky crossover between both brands resulted in highly shareable content, exceeding marketing goals across the board. This real-life example demonstrates how two very different brands can work together to reach new audiences.

By partnering with brands and businesses outside your industry, you can get exposure to new demographics and audiences that you wouldn’t have reached otherwise through your usual marketing strategies. These potential customers may not be actively searching for your brand but a collaboration with a brand they know might fuel discovery and trial, allowing you to test new markets with minimal risks.

And, if done right, cross-category partnerships may also boost and enhance your reputation and credibility.

How Cross-Category Marketing Works

Cross-category marketing relationships manifest in diverse ways but generally involve some form of joint promotion between the brand partners to spotlight each other to their distinct customer bases. This could include in-store displays, product bundling, co-branded contests and sweepstakes, social media campaigns, influencer partnerships, loyalty programs, and more.

The key is finding imaginative ways to introduce brands to highly targeted audiences that you may not normally reach through your usual marketing efforts.

A makeup brand could have an entirely different demographic profile and media mix compared to a handbag retailer, for instance. But together they can potentially attract new customers spanning multiple consumer segments.

For the strategy to really pay off, however, the partnering brands need to have some meaningful alignments and compatibility beyond just wanting to grow reach.

Important Considerations for Successful Cross-Category Marketing

Selecting the right brand partners is imperative in cross-category marketing. Not all brand combinations make sense or benefit both parties equally. One of the most important considerations when selecting a brand partner for cross-category marketing is ensuring your target consumer bases have strong demographic appeal and overlap.

Important Considerations for Successful Cross-Category Marketing

Demographic Appeal

The whole goal is to tap into each other's distinct but complementary audience segments.

So you want to look for a brand whose ideal customer profile aligns closely with your own in terms of age, gender, income level, lifestyle traits, and other attributes. There should be a significant crossover and openings to expose each brand to the other's loyal shoppers.

For example, an outdoor apparel company may partner with a fitness technology company since its consumers tend to be active, health-conscious outdoor enthusiasts. Or a wine brand may collaborate with a luxury hospitality company, knowing high-end travelers are likely wine purchasers.

Having a clear demographic appeal sets up the partnership for success in exposing each company to new high-value audiences. The larger the overlap, the greater potential reach can be achieved.

Brand Values

It is also crucial that businesses share comparable ethos, personalities, and overall brand images. Even when selling completely different products, the essence and associations of the two brands should align and feel cohesive to consumers. This will make it feel more authentic, rather than just a confusing mesh of brands and products.

It helps significantly if the two brands' products exist within comparable price tiers and value segments. A huge differential in price points risks alienating your customer base or positioning your business in an uncoordinated light.

Imagine a budget-friendly grocery store collaborating with a dollar store chain. It makes sense.

Having price compatibility will reinforce why your customers are attracted to the business and ensure that your collaboration will align with their expectations. It makes the proposition logical and frictionless across both audiences.

Widely Known

When you’re considering potential partners for co-marketing campaigns, it is wise to look for businesses that are already widely known in their category and have strong existing equity.

You’ll find that partnering with such an established, recognizable brand allows you to leverage your customer base and reputation.

These customers already understand and trust that brand, thus making them more open to associated partnerships.

Clear Objectives

Once you’ve chosen a suitable brand to partner with, it is critical that both you and your partner brand agree on the desired goals, key performance indicators, and responsibilities right from the jump. This will prevent misunderstandings down the line.

For example, a hotel brand partnering with a skincare company needs to define how the campaign will drive room bookings, and sampling of amenities.

With clearly defined objectives guiding the execution from the start, both businesses can optimize their role to achieve the shared goals.

Cross-Functional Buy-In

Given the expansive scope of most cross-category marketing campaigns, it is essential that internal management across key departments is aligned on the strategic initiative before launching the partnership. This ensures the organization is positioned to support the unique needs of the collaboration across functions.

If key departments are misaligned or oppose the partnership, it jeopardizes effective execution.

Cross-functional buy-in at the start prevents disjointed rollout and helps optimize budget, operations, and teamwork to achieve the marketing goals.

Distinct Value Exchange

The principle of distinct value exchange underscores the necessity for promotions to provide transparent and balanced advantages for all participating businesses. Each brand should not only contribute meaningfully to the promotion but also reap distinct and equitable benefits tailored to their specific objectives.

A collaboration that is mutually advantageous will enhance the overall effectiveness of the cross-category marketing strategy, capitalizing on the synergies between offerings and maximizing marketing initiatives.

Defined Timeline

Lastly, collaborations should be strategically designed to accomplish set goals within a specified duration.

Whether it’s to launch a joint campaign, introduce cross-category products, or implement shared promotional strategies – you must have a defined timeline to ensure that your partnership remains focused, efficient, and goal-oriented.

Thoughtful planning and open communication between the brand partners are imperative when structuring and executing cross-category marketing.

Risks and Downsides to Consider

While cross-category co-branding comes with many advantages, there are also notable risks brands should be aware of.

Risks and Downsides to Consider

Brand Dilution

One such risk occurs when collaborative efforts blur the distinct attributes that consumers associate with each individual brand. This phenomenon is called brand dilution, and it happens when you lose sight of your own goals and values.

It’s important for partnerships to contribute a cohesive narrative without eroding the unique characteristics that define both brands. If not carefully executed, a collaboration may lead to confusion among consumers, diluting established identities that both businesses have worked to build. To avoid this you need to strike a delicate balance – make sure you’re enhancing each other, rather than diminishing.

Negative Associations

When brands from diverse product or service categories collaborate, the risk of reputational damage is always present. Collaborating with another brand means automatically intertwining their reputation with your own; any controversy one side might have will reflect on the other.

Negative associations can significantly impact consumer perceptions, trust, and loyalty – and may even result in long-term reputational damage for both businesses.

It is imperative for you to conduct your due diligence on potential partners to avoid affiliations with controversies and issues that could tarnish your business.

Audience Mismatch

An audience mismatch happens when brands collaborate but find that their customer bases do not overlap or convert as expected. Imagine trying to market a collaboration between a dollar store and Gucci – brands whose target audiences are complete polar opposites.

Just like that, you’ll find any marketing efforts to be meaningless if there is a significant mismatch in the audience. Strategic planning, research, and a deep understanding of the target audience for each collaborator are crucial to mitigate this risk.

Resource Drain

While the benefits of collaborating with complementary brands are compelling, you still need to be cautious of over-extending resources on cross-category marketing initiatives. If you don’t plan your budgets and deadlines upfront, supporting the initiative may start to drain your capital from other areas.

You should make every effort to assess and optimize the resource investment front-end – take firm hold of the reigns and maintain a strong leadership over your collaboration.

Hidden Motives

For a cross-category collaboration to come across as authentic, both brands need to demonstrate a customer-centric value that they can provide through partnership. A lot of business owners nowadays tend to forget that they need to treat their customers like people, and it shows when the incentives driving their partnerships are forced and self-serving, instead of a natural fit.

Consumers aren’t stupid, and when a collaboration feels more about driving transactions rather than providing an actual unique value, people will dismiss these efforts as inauthentic. Your alliance with any brand should be rooted in genuine shared interests rather than any hidden motives. Transparency and common purpose must be priorities for any collaboration to pay off.

The risks underline why extensive upfront vetting of potential partners, clear guidelines, and ongoing governance are essential. Brands also need to be ready to gracefully dissolve a partnership if problems emerge.

Notable Examples of Successful Cross-Category Marketing

Notable Examples of Successful Cross-Category Marketing

When thoughtfully orchestrated, cross-category marketing can be a game changer. I’ll list down some prominent, modern examples in no particular order:

  • ​​Starbucks + Spotify - The coffee chain offered 3 free months of Spotify Premium to Starbucks Rewards members to boost engagement.
  • Marriott + Netflix - The hotel integrated Netflix into its TV platforms and partnered on co-branded travel content.
  • Apple + Nike - Collaboration on Nike+ shoes and an app that connects to Apple devices to track runs.
  • Taco Bell + Forever 21 - Fast food brand featured its food truck at Forever 21's flagship store opening.
  • ​Uber + Spotify - Users in some markets can listen to and control Spotify from within the Uber app.
  • ​Sephora + Disney - Beauty retailer showcased Disney-themed beauty products in its stores.
  • ​Zappos + Juicy Couture - Online shoe store bundled Juicy Couture tracksuits with select shoe purchases.
  • ​McDonald's + Crayola - Provided Crayola crayon bags in Happy Meals to appeal to kids.

These examples illustrate the diverse possibilities of fusing distinct brands through imaginative partnerships tailored to each brand's strengths and customers.

Last Remarks

Cross-category marketing opens doors to exciting new partnerships and growth opportunities outside your core business. But ultimately, the key to success lies in careful strategy and execution. By selecting the right brand allies, creatively co-promoting in authentic ways, and closely tracking performance - you can unlock the full power of this marketing approach.

Keep the big picture in mind. Find partners that allow you to expand your reach into new segments that value your brand promise. Structure win-win initiatives that make intuitive sense to consumers. And maintain open communication and nimble adjustments to optimize the alliance over time.

​Done right, cross-category marketing provides invaluable exposure. But it hinges on a shared vision between brands, seamless coordination, and promoting unified rather than disjointed experiences.

So focus on alliances where you can integrate your strengths into new consumer lifestyles. Think beyond logo slapping to truly complementary collaborations. With strategic foresight and follow-through, cross-category partnerships can take your marketing, and business, to exciting new places.

The opportunity is there. Select the right team, play to your advantage, and execute - and you can build something greater than the sum of its parts. Cross-category marketing is all about recognizing that 1+1 can equal 3.

I’ve partnered with plenty of people and brands over the years, so if you’d like to read more of my personal insights about collaborations and partnerships, I highly recommend you register for our NO B.S. Newsletter.

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