Some people believe that there is no compromise in business. However, even in the conditions of a highly competitive modern market, there are companies that are able to reach an agreement and help each other in order to receive mutual benefits. They agree to promote and even to sell each other’s products in an economically efficient way even in the atmosphere of the competition of the modern market.

Definition: Cooperative Marketing

It’s not challenging to comprehend the cooperative marketing concept, even though it may take numerous forms and present itself through various actions. This term signifies an agreement between two businesses, brands, or companies to unite their marketing forces and efforts in order to receive beneficial results in a more efficient way.

It is obvious that cooperative marketing is based on the mutual benefits for both of the businesses or brands. They decide to join forces to help each other rather than to market themselves on their own. And there are numerous reasons why some brands and businesses unite under a cooperative marketing strategy.

First off, cooperative marketing is an ideal option for businesses that are looking for a rather inexpensive form of promotion. This is because two businesses share not only the strategy but also the resources. They may hire one graphic designer or a marketing manager, for example, and split all of the expenses in half.

Another reason behind cooperative marketing is the ability to become more visible for the businesses by allowing other companies or brands to promote their products. This is especially effective and beneficial for smaller brands and businesses, which need their merchandise to be exposed more on the market.

Cooperative marketing also allows businesses to reach a larger targeted audience through other companies. This, consequently, leads to an increased number of customers (both potential and regular ones) and larger revenue.

Advantages and Disadvantages of Cooperative Marketing

Choosing a proper promotion strategy is a complicated task for any business, no matter how small or big it is. Just like any other form of promotion, each cooperative marketing strategy has its downsides and advantages. That’s why it might take you quite some time to figure out whether your business really needs such a tactic.

Let’s take a look at some of the most significant advantages this marketing strategy may offer:

  • The economies of scale may be changed. By coming into line with another business to buy from the same suppliers, you may place large orders and reduce the expenses and the prices of the supplies. This means, buying from suppliers as a group of businesses is cheaper than purchasing supplies individually. Therefore, by going with cooperating marketing, you and your business partners will have the ability to control the prices of the supplies.
  • The overall expenses may be reduced. This one is pretty logical: when you share a marketing strategy with another business, you split the expenses as well. As it was mentioned before, you might hire one designer or manager, pay for the same distribution channels, or share the cost of the advertisement materials. Whatever the case is, cooperative promotion truly is among the least expensive marketing methodologies available these days.
  • The level of brand exposure becomes higher. This is why cooperative promotion is extremely beneficial for smaller brands and businesses. By allowing other companies to spread the word about your merchandise and to sell it, you may make your product more visible on the market.

However, there’s also a reason why cooperative marketing is a rather underestimated (and underused) tactic these days. It has its disadvantages:

  • There might be lack of commitment from one of the parties. It is natural that each business owner worries about his or her brand and merchandise more than about someone else’s. Therefore, oftentimes some cooperative businesses and their representatives become less attentive to the strategy and less committed to the project, which might influence the final results.
  • Developing a promotion strategy that would be suitable for both businesses may be quite challenging, especially if those businesses don’t offer similar merchandise.
  • There might be trust issues and the unwillingness to share the information. When entering into an agreement, some businesses don’t feel comfortable sharing the knowledge they have obtained after years of operating.

Benefits of Cooperative Marketing

Despite the fact that this marketing type oftentimes gets overlooked by numerous brands and businesses, it still remains an inexpensive and yet effective tactic. Let’s recollect the most significant benefits it may offer:

  • bargaining opportunities and changing the economies of scale;
  • a less expensive strategy;
  • shared resources, data, and tools;
  • larger market to reach;
  • diverse prospects and larger audiences;
  • increased financial income;
  • continuous product flow and more sales.

Examples of Cooperative Marketing

Each strategy has examples any business or brand can learn from. Here are some examples of cooperative marketing that might help you understand this concept better:

  • airlines offering customers at the grocery stores to get the air miles for their next travel with each purchase;
  • Starbucks selling its products and opening its branches in the malls;
  • Coca-Cola that is being sold with McDonald’s burgers at a cheaper price than when it’s being sold separately;
  • a cake factory advertising that its frosting contains chocolate of another brand;
  • clothing and shoe stores cooperating and combining each other’s products to create looks and ensembles for the customers.

It is clear what cooperative marketing is capable of, regardless of your business size and current brand recognition. Being a rather underused tool, this type of marketing is among the most potent ones these days.