Cooperative Marketing Strategies for Small Business Growth

What Is Cooperative Marketing?

Cooperative marketing refers to any situation in which two or more companies work together to bring a product to market, especially when the brands of both firms are attached to the marketing effort. Another form of cooperative marketing involves setting up a system whereby firms within an industry jointly market their products to a common set of customers. A common example can be found with agricultural cooperatives, where producers pool resources to reach buyers more efficiently than any single producer could on its own.

Government Cooperative Purchasing Programs

One model of cooperative marketing operates at the governmental level, allowing vendors to gain better access to government customers. In such programs, government agencies opt in alongside vendors, and the agencies outline their needs so that vendors can review them. The vendors then have the opportunity to browse the needs of agencies nationwide and pursue the opportunities listed on the cooperative program's website. For a small firm like Global Gadgets Incorporated (GGI), such a program would provide access to a large number of potential customers. A cooperative marketing program covering housewares or furniture, for example, would allow GGI to match with potential buyers who have already identified a need for those products.

There are several important benefits associated with a cooperative marketing program. The first is that it should lower the costs associated with finding new customers. A program connecting IT or consumer goods companies with government agencies could theoretically provide access to hundreds of agencies at multiple levels of government. A company attempting to win sales at each of those agencies independently might spend tens of thousands of dollars in outreach. With a cooperative marketing program, a company can gain that access simply by completing a registration form and, in some cases, paying a small fee. The program therefore makes the firm's overall marketing more efficient.

Benefits of Cooperative Marketing

Another advantage is that the company can identify customer needs more easily. Because customers post their requirements directly on the program's website for bidding, a vendor no longer has to rely on maintaining an active individual relationship with each agency to learn what it needs. Under ordinary circumstances, customer needs might go unnoticed because an agency never reaches out directly to the vendor. The cooperative structure removes that barrier by making needs publicly visible to all participating vendors.

Beyond advertising, companies can engage in cooperative marketing in many ways. At trade shows, for instance, firms can split the cost of booth space or otherwise combine their expenses to reduce individual outlays. Another format is the creation of joint venture subsidiaries designed to target specific markets. This is common in industries where one company brings strong marketing capabilities and another brings manufacturing expertise; by combining these resources, the partners can enter markets that neither could have penetrated as efficiently alone. Splitting market entry costs is especially valuable when targeting smaller or niche markets that would not justify the full investment of a single company.