Posted in Marketing & Strategy Articles, Total Reads: 927
, Published on 05 October 2014
If there are two sets of goods, which complement each other, i.e. appeal to the same target Customers, they can be sold together; Co-operative marketing is carried out for such goods. If there is a Good A and there is a Good B, both of them generate similar emotions in consumers, both of them are for same target customers – say kids of age group 5-12 yrs., and both of them have similar value addition, then marketing them together makes sense. Such type of marketing is known as Co-operative marketing. In Co-operative marketing, different companies with similar set of good, tie up with each other and market their goods together.
Image Courtesy: freedigitalphotos.net, Stuart Miles
Let us take a live example of Disney and Johnson & Johnson. Here in the given picture, we can see a product – Band Aid, by Johnson & Johnson, which features Disney’s “Cars”. Let us discuss on the reason and effects of co-operative marketing.
Why do companies involve in Co-operative Marketing?
Continuing with this example of Johnson and Johnson and Disney, the question is, although both the companies are huge, why are they resorting to Co-operative marketing? The reason is that co-operative marketing results in lower marketing cost and better market coverage hence improving the profitability. Let us examine value proposition for both the companies. Disney focuses on kids. They try to promote the fun element and attract kids to their cartoons as well as to DisneyLand. They capitalize on the ‘fun element’ along with their unique appeal to the kids via these products. On the other hand, Johnson & Johnson makes products which are designed specifically for the kids. This implies that the target audience for both the companies is similar. Moreover, the products of Johnson and Johnson and Disney do not overlap on each other. Hence, there is no scope of cannibalization.
What are the Effects of Co-operative marketing?
The effect is that when a Kid sees a product of Johnson & Johnson with a Disney cartoon on it, he feels the want to buy it, which is later converted into need. On the other hand, when he is using the Band Aid and whenever he sees it, he is reminded of Disney Cartoons. The band aid becomes a temporary platform for Disney to market itself. As a result – such combinations, where the products are not competing against each other, proves to be beneficial for all the involved stakeholders. (Disney and J&J - two in this case, can be more as well).
A similar example that can be cited is of the advertisement campaign run during the IPL cricket matches in India. We have already seen how IPL Promotes Pepsi and how Pepsi promotes cricket in its ad campaign. Similarly, an Airline carrier can make an ad campaign along with a debit card/ credit card company as both of them complement each other. (In buying of tickets)
It is important to note that the products should be complementing each other and not supplementing each other. In latter case, the advertisement campaign will lead to cannibalization of one of the product by another product.
This article has been authored by Hitarth Mehta from IIM Udaipur