Cooperative Marketing - Definition, Importance & Example
Published in Marketing and Strategy Terms by MBA Skool Team
What is Cooperative Marketing?
Cooperative marketing can be defined as an agreement between two companies to promote or sell each other’s product while selling their own in order to complement each other's service and provide mutual benefits. it is a result of join efforts done by 2 or more companies in order to bundle the products or services together for a common target audience.
The products can either be complementary, supplementary or might have different seasonal cycles.
Importance of Cooperative Marketing
Since the time marketing has existed, many players have worked together to create a value which benefits both parties. Cooperative marketing ensures that joint efforts produce a synergy which creates better products and environment thereby adding more value to the customer. The customer always get more value through cooperative marketing. The customer would get related product or services which will fulfill more than what is expected.
Two companies joining hands to promote each other by bundling products and services together lead to better exposure and returns in the long run.
1. Through collaborative efforts from the involved parties, better returns can be achieved. For example; if you are buying supplies, bulk orders can be placed and thus cost can be reduced for the whole order.
2. Companies can advertise together and can attain more market penetration and reach with the help of each other’s marketing network. The common advertising can be done through direct mails, print media or it may be online.
3. The cost of both the parties is also reduced at many points. It can be done by either giving common advertisements or by attaining higher bargaining power to negotiate a price to a retailer.
1. Lack of commitment from members: Members in the agreement may become less concerned or less committed during the course of time and it may affect the other party’s business adversely.
2. Applicability on target audience: The cooperative marketing strategy created may be applicable to only a part of the target audience of the whole business.
3. Information sharing: Some businesses have operated individually for years and when they enter into an agreement for cooperative marketing it gets difficult for them to trust the partners with crucial information and it may hamper the marketing of the products.
Example of Cooperative Marketing
Selling Coca Cola with a burger of McDonald’s at a lower price than the total amount is an example of cooperative marketing strategy. Similarly, getting a Gym membership for 2 months with buying of Sports shoes can also be labelled as cooperative marketing as the free gym offer helps sell the shoes and gym gets a lot of customers who come for free initially but can become permanent members if they like the service.
There are many other examples like opening of famous multiplex in a new housing complex. This cooperative strategy helps sell more apartments and the multiplex brand gets more sustainable customers for future which also helps the brand image.
Hence, this concludes the definition of Cooperative Marketing along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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