Maximizing Profits with Cooperative Marketing Strategy - Essay Sample

Cooperative marketing strategy is an effective and efficient marketing strategy that businesses can employ to minimize marketing costs while increasing their marketing productivity. The strategy involves two or more companies agreeing to combine their marketing efforts to a product that features both companies. By agreeing to combine their efforts, the load of marketing is significantly reduced since it is distributed among all parties involved in the agreement.

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One of the most notable benefits of cooperative marketing is on economies of scale (West, 2008, p.1, para. 5). It is significantly cheaper for two companies to market a product together than for an individual company to market the product. Additionally, it is cheaper for two companies to create and manufacture a product than it is for an individual company to manufacture the product. Cooperative marketing also can increase market penetration, especially in a highly competitive market (Hitt et al., 2016, p.268, para. 20). For instance, the cooperative marketing adopted by Nike and Apple in the creation of the Nike plus iPod sport kit has significantly helped to increase the market penetration of the sport. Sports enthusiasts are attracted to a product that captures the speed and length of their running through the iPod and keeps track of all the running information through the Nike+ software.

While cooperative marketing is generally advantageous, it has some disadvantages which businesses must be aware of before agreeing to it. One of the disadvantages of cooperative marketing is mistrust leading to a lack of information sharing between companies. Information is a critical element in the success of any marketing strategy, and thus, withholding information by any party involved in the cooperative marketing agreement might render the strategy unsuccessful. Lack of commitment by members is also a challenge that is often faced in cooperative marketing. Cooperative marketing requires a high level of loyalty and commitment, both financially and non-financially, from the companies involved. Lack of commitment or disloyalty from any member implies that it is likely to be unsuccessful (Jongwe et al., 2020, p.18, para. 4).

Cooperative marketing strategy is a crucial strategy that can help companies to reduce marketing costs and increase bargaining power when successfully implemented. However, the strategy can be disadvantageous, especially in cases where individual company interests change, leading to a lack of commitment and disloyalty.

References

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and Cases: Competitiveness and globalization. Cengage Learning. Retrieved from https://bookshelf.vitalsource.com/#/books/9781305217188/cfi/6/26!/4/28/16/4/2@0.00:0

Jongwe, A. I., Moroz, P. W., Gordon, M., & Anderson, R. B. (2020). Strategic Alliances in Firm-Centric and Collective Contexts: Implications for Indigenous Entrepreneurship. Economies. Retrieved from https://www.mdpi.com/2227-7099/8/2/31

West, T. (2008). Cooperative Marketing: What does it take? Is it for you?. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.190.2553&rep=rep1&type=pdf