The globalization of world market poses new challenges for business. Given an increasing level of competition, many firms tend to expand their products or services in the shortest time and at the lowest cost. Alliance marketing comes to the aid. It allows business partners to plan together and implement various initiatives, significantly reducing additional charges.
Definition Alliance Marketing
It often happens when one company is strong in technological experience, whereas the second one is able to offer capital, marketing strategy or a reliable reputation. It is then that there is a desire and a need to unite. Under the alliance marketing, as a rule, involve joining to the overall strategy of the actions of two or more companies. This is a kind of partnership, based on an understanding of the mutual benefit of each element of the network. Such agreements could be concluded between allies or even strong competitors.
Such cooperation is beneficial, at least in the following directions:
- demand generation;
- creation of high-quality content;
- profitable marketing plan;
- increasing competitiveness;
- rational distribution of risks;
- access to new knowledge or resources.
For example, many business projects need expertise. Previously, firms tried to independently maintain necessary skills within the staff. But with an increasingly technological and administrative complexity, some corporations have decided to retain for themselves only core competencies, while the rest to delegate to reliable partners.
The practice of risk exchange often accompanies the field of research, because the costs are high, and the products themselves quickly become obsolete. And only collaboration allows you to compare the price, quality, and speed of development. Companies could also share transport or distribution networks, saving money on delivering goods.
8 Types of Alliance Marketing
- Advertising is a way to get through to a wide audience of consumers by video clips, colorful posters with memorable slogans, e-mailing and other tools. Among other effective practices are called advertising campaigns aimed at introducing new products through media resources or a direct connection with the client. It is worth remembering that the degree of brand recognition rises with the use of bright graphics, holograms or songs. If the advertising slogan contains a call to action, usually such a move leads to increased interactivity between the producer and its consumer.
- Distributor agreements imply an exit of an exclusive product/service to international markets without attracting additional investments. For its successful implementation, it will not be superfluous to acquire a wide network of partners from different geographic regions, as well as to prescribe clear rules for licensing in order to avoid potential conflicts. Foreign partners could advise company representatives about product modification in accordance with local regulations or market preferences. They may also help with issues such as translating documentation, moving from metric to imperial measures, converting capacity requirements and adhering to packing rules. Strategic alliances are extremely useful in a situation where market conditions or government policies make barriers to entry.
- The promotion strategy is a practice, aiming to raise awareness or interest in branded products. The main task is to create demand for increasing sales. For example, according to the agreement between the company and a local travel agency, in its ads, the latter could use the company's symbols. Another type of alliance strategies is press releases necessary to attract media attention or social networks.
- Licensing is an effective way to get a demanded product at the start of sales. The rental brand gives a quick and predictable result, allowing you to flexibly react to any changes in the market situation.
- The product development is understood as the process of bringing a new item or service to clients, including its presentation, design and marketing campaign. The company that created a new technology first, can claim the establishment of standards in the relevant industry. Alliances increase chances of perceiving the latter as a pattern for inheritance. For this reason, many high-tech firms cannot afford not to participate in any union, consortium or other joint efforts.
- Companies using similar technical standards and procedures are inclined to conclude so-called “technological alliances.” Such a maneuver stimulates the distribution of goods.
- Franchising is an agreement whereby one of the parties transfers another one the right to use a particular business for a fixed fee. This procedure allows you to “copy” a successful practice of the firm, which has a rich experience and good reputation.
- Outsourcing is a delegation of a number of marketing functions based on an agreement. We are not talking about one-off contract works, but about attracting freelancers with the transfer of clearly defined types of work for a long time.
Key Principles of Alliance Marketing Strategy
Truly thought-out alliance marketing will help create a broad customer base. In addition, it is more flexible and adapts to changing conditions more quickly than a unified corporation. In such an alliance, the company fully retains its own autonomy and gets excellent opportunities to expand its potential.
Where to start when choosing such approach? First of all, make a list of your contacts, including social networks, for the presence of the right people or businesses. Experts advise co-operating with those who work in a different industry because in this case, your alliance marketing partners will only exchange information, while you will have the production of unique content. It is also necessary to take into account the activity of a person on Facebook and his/her regularity of publishing articles or comments on blogs. Thus, you are convinced that you are dealing with a strong and useful ally is able to scale your resources.
There are many successful alliance marketing examples. So, Starbucks at the beginning of its development cooperated with bookstores, as well as with United Airlines, where on flights passengers were offered coffee with the company logo. Since 2006, the firm has entered into an alliance with the NAACP, in order to demonstrate its commitment to the concept of social justice. In 1938, computer giant Hewlett Packard formed an alliance with the notorious Disney in the context of developing a sound design for its products. But the pharmaceutical concern Eli Lilly advanced the most. The latter is an owner of more than one hundred marketing alliances. So, the company cooperates with the Belgian Galapagos, the Canadian group BioMS, the Japanese Kyowa Hakko in terms of developing new methods for the treatment of cancer and other diseases.
Thus, alliance marketing is a format of partnership in which companies, while striving for a higher goal, are ready to share information, resources and assume some of the potential risks. The motive for familiarizing with such an association is usually significant saving of money and optimization of their investment, say, in innovations or researches. I.e., companies, relying on the proven experience of each other, do not waste time and resources on the development of what has already been achieved by another player. Practice shows that alliance marketing strategies are one of the most cost-effective methods of presenting its products on a global scale, but the formation of cartels that directly violate all laws of fair competition should be avoided.