Sponsorship options for branding

A manufacturer has four sponsorship options which are following:

1. A manufacturer's brand (or a national brand) is a brand formed and owned by the manufacturer of a product or service (i.e. Kellogg and IBM).
2. A private brand (or distributor, middleman or store brand) is a brand created and owned by a reseller of a service or product.
3. A licensed brand (a company sells its output under another brand name).
4. Co-branding take place when two companies go together and produce one product (General Mills and Hershey's compose Reese's' Peanut Butter Puffs cereal). Combined brands form broader customer appeal and superior brand equity.

It can allow a company to expand its existing brand into a category it may otherwise have difficulty entering alone. But at the same time there are sure disadvantages of combine branding as:

1.   Complicated legal contracts and licenses are involved.
2.   Coordination efforts are frequently difficult.
3.   Trust is necessary between partners. It is repeatedly hard to come by.

At one time manufacturer's brands were the most famous and profitable.   Nowadays, however, growing number of private brands are doing well.  Though difficult to establish and maintain, private brands may yield higher profit margins. "The battle of the brands" (the competition among manufacturer's and private brands) causes resellers to contain advantages, and they charge manufacturer's slotting fees (payments which demanded by retailers from producers before they shall accept new   products and discover "slots" for them on the shelves).  Since store brands are improving in quality, they are posing a stronger threat to the manufacturer's brands.  It is especially true in supermarkets.