Published by MBA Skool Team, Last Updated: January 22, 2018
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. The products can either be complementary or might have different seasonal cycles.
To explain in simpler terms, if you and your neighbour sell different products from a common premise it will be called as cooperative marketing. The arrangements in cooperative marketing are usually free from any legal bindings and are informal.
• Economies of Scale: Through collaborative efforts from the involved parties economies of scale 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.
• Exposure: Cooperative marketing offers added exposure to the involved companies as well. Companies can advertise together and can attain more penetration in the market 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.
• Financial: 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.
• 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.
• Applicability on target audience: The cooperative marketing strategy created may be applicable to only a part of the target audience of the whole business.
• 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.
For example; selling Coca Cola with a burger of McDonald’s at a lower price than the total amount is an example of cooperative marketing strategy.
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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