IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v32y2013i6p939-959.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.2013.0806
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mksc.2013.0806?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    2. Bernd Helmig & Jan-Alexander Huber & Peter S. H. Leeflang, 2008. "Co-branding: The Stae of the Art," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(4), pages 359-377, October.
    3. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    4. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    5. Yadav, Manjit S, 1994. "How Buyers Evaluate Product Bundles: A Model of Anchoring and Adjustment," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 21(2), pages 342-353, September.
    6. Park, C Whan & Milberg, Sandra & Lawson, Robert, 1991. "Evaluation of Brand Extensions: The Role of Product Feature Similarity and Brand Concept Consistency," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 18(2), pages 185-193, September.
    7. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    8. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
    9. Vella, Francis & Verbeek, Marno, 1999. "Estimating and Interpreting Models with Endogenous Treatment Effects," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 473-478, October.
    10. R. Venkatesh & Vijay Mahajan, 1997. "Products with Branded Components: An Approach for Premium Pricing and Partner Selection," Marketing Science, INFORMS, vol. 16(2), pages 146-165.
    11. Chaney, Paul K & Devinney, Timothy M & Winer, Russell S, 1991. "The Impact of New Product Introductions on the Market Value of Firms," The Journal of Business, University of Chicago Press, vol. 64(4), pages 573-610, October.
    12. Kartik Kalaignanam & Venkatesh Shankar & Rajan Varadarajan, 2007. "Asymmetric New Product Development Alliances: Win-Win or Win-Lose Partnerships?," Management Science, INFORMS, vol. 53(3), pages 357-374, March.
    13. Ashish Sood & Gerard J. Tellis, 2009. "Do Innovations Really Pay Off? Total Stock Market Returns to Innovation," Marketing Science, INFORMS, vol. 28(3), pages 442-456, 05-06.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Lee, Michael T. & Raschke, Robyn L. & Krishen, Anjala S., 2022. "Signaling green! firm ESG signals in an interconnected environment that promote brand valuation," Journal of Business Research, Elsevier, vol. 138(C), pages 1-11.
    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. 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.
    11. 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.
    12. 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.
    13. Daniel Blaseg & Christian Schulze & Bernd Skiera, 2020. "Consumer Protection on Kickstarter," Marketing Science, INFORMS, vol. 39(1), pages 211-233, January.
    14. 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.
    15. 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.
    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. 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.
    18. 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).
    19. 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.
    20. 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.
    21. Hengameh Fakhravar & Hesamoddin Tahami, 2022. "International Co-Branding and Firms Finance Performance," Papers 2202.07128, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Adina Bărbulescu Robinson & Kapil R. Tuli & Ajay K. Kohli, 2015. "Does Brand Licensing Increase a Licensor's Shareholder Value?," Management Science, INFORMS, vol. 61(6), pages 1436-1455, June.
    3. Ashish Sood & Gerard J. Tellis, 2009. "Do Innovations Really Pay Off? Total Stock Market Returns to Innovation," Marketing Science, INFORMS, vol. 28(3), pages 442-456, 05-06.
    4. Saim Kashmiri & Vijay Mahajan, 2014. "A Rose by Any Other Name: Are Family Firms Named After Their Founding Families Rewarded More for Their New Product Introductions?," Journal of Business Ethics, Springer, vol. 124(1), pages 81-99, September.
    5. Nicolau, Juan Luis & Sharma, Abhinav, 2022. "A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event stu," Annals of Tourism Research, Elsevier, vol. 95(C).
    6. Christine Moorman & Simone Wies & Natalie Mizik & Fredrika J. Spencer, 2012. "Firm Innovation and the Ratchet Effect Among Consumer Packaged Goods Firms," Marketing Science, INFORMS, vol. 31(6), pages 934-951, November.
    7. Angelos J. Doukas & Jie (Michael) Guo & Herbert Y. T. Lam & Sarah (Hong) Xiao, 2016. "Media Endorsements of New Product Announcements: A New Marketing Strategy," European Financial Management, European Financial Management Association, vol. 22(3), pages 394-426, June.
    8. Michael A. Wiles & Shailendra P. Jain & Saurabh Mishra & Charles Lindsey, 2010. "Stock Market Response to Regulatory Reports of Deceptive Advertising: The Moderating Effect of Omission Bias and Firm Reputation," Marketing Science, INFORMS, vol. 29(5), pages 828-845, 09-10.
    9. Anna Sadovnikova & Ashish Pujari, 2017. "The effect of green partnerships on firm value," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 251-267, March.
    10. Nukhet Harmancioglu & David A. Griffith & Tuba Yılmaz, 2019. "Short- and long-term market returns of international codevelopment alliances of new products," Journal of the Academy of Marketing Science, Springer, vol. 47(5), pages 939-959, September.
    11. Pasirayi, Simbarashe & Fennell, Patrick B., 2021. "The effect of subscription-based direct-to-consumer channel additions on firm value," Journal of Business Research, Elsevier, vol. 123(C), pages 355-366.
    12. Bahmani, Navid & Bhatnagar, Amit & Gauri, Dinesh, 2023. "Firms’ responses to a black swan macro-crisis: Should they be socially responsible or fiscally conservative?," Journal of Business Research, Elsevier, vol. 161(C).
    13. Venkatesh Shankar & Pablo Azar & Matthew Fuller, 2008. "—: A Multicategory Brand Equity Model and Its Application at Allstate," Marketing Science, INFORMS, vol. 27(4), pages 567-584, 07-08.
    14. Mehdi Nezami & Kapil R. Tuli & Shantanu Dutta, 2022. "Shareholder wealth implications of software firms’ transition to cloud computing: a marketing perspective," Journal of the Academy of Marketing Science, Springer, vol. 50(3), pages 538-562, May.
    15. Olga Hawn & Aaron K. Chatterji & Will Mitchell, 2018. "Do investors actually value sustainability? New evidence from investor reactions to the Dow Jones Sustainability Index (DJSI)," Strategic Management Journal, Wiley Blackwell, vol. 39(4), pages 949-976, April.
    16. Monica Martinez-Blasco & Vanessa Serrano & Francesc Prior & Jordi Cuadros, 2023. "Analysis of an event study using the Fama–French five-factor model: teaching approaches including spreadsheets and the R programming language," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-34, December.
    17. Klöckner, Maximilian & Schmidt, Christoph G. & Wagner, Stephan M. & Swink, Morgan, 2023. "Firms’ responses to the COVID-19 pandemic," Journal of Business Research, Elsevier, vol. 158(C).
    18. Krishnamurthy, Srinivasan & Spindt, Paul & Subramaniam, Venkat & Woidtke, Tracie, 2005. "Does investor identity matter in equity issues? Evidence from private placements," Journal of Financial Intermediation, Elsevier, vol. 14(2), pages 210-238, April.
    19. Maximilian Klöckner & Christoph G. Schmidt & Stephan M. Wagner, 2022. "When Blockchain Creates Shareholder Value: Empirical Evidence from International Firm Announcements," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 46-64, January.
    20. Pham, Mia Hang, 2020. "In law we trust: Lawyer CEOs and stock liquidity," Journal of Financial Markets, Elsevier, vol. 50(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:32:y:2013:i:6:p:939-959. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.