Since the late 1800s, joint ventures have been a common practice for businesses. The railroad industry was the first to make use of this strategy to expand its reach and profits. By the middle of the 20th century, the manufacturing industry was dominated by joint ventures. Today they are wide spread and used in almost all types of business. To successfully develop a joint venture marketing relationship it’s important to identify your target market and the goals for your joint venture.
Before starting negotiations and well before you sign the agreement contract, you need to ask yourself; “who is my target market”. To make a joint venture successful, both partners should have similar target markets but not exactly the same, as you’ll want each company to be able to expand the reach and profits of their business.
According to a July 25th 2011 press release, the Dow Chemical Co. and the Saudi Arabian Oil Co. announced their plans to proceed with plans to build a $ 20 million chemical complex. The new venture, Sadara Chemical Co. now promises to be the largest chemical facility ever built to date. Separately these two companies reach millions and earn significant profits but together they substantially expand their resources and increase efficiency making them even more profitable.
Reaching the Audience
With your target market identified, take some time to get to know each other. Do not assume you know your potential customer. Assumptions will only lead to misplaced advertising, promotions and pricing that may not reach your target market. By asking consumers simple questions, you can find out useful and important information. Have your customers fill out short surveys with demographic data and offer a coupon or discount for completing the survey.
The ultimate goal of any joint venture is to generate more revenue without having to spend more money on advertising, research and product development. Other goals for your JV might be, expanding your target market to include consumers who were previously unaware of your products or services or maybe you envision taking your business globally for cheaper manufacturing and development by combining resources with your JV partner to form a new business.
Omega Navigation Enterprises Inc., an international provider of marine transportation developed a partnership with Topely Corporation to form a joint venture company named Megacore Shipping. The two companies bring what they do best to the relationship, while helping each other in ways that traditionally cost them more money than their areas of expertise. Sharing resources and industry knowledge through a joint venture is one way even small businesses can boost their bottom line with the right marketing partnership.
Profits and Cost
At the bottom line of any business venture, big or small is revenue. Companies join forces to improve their bottom line without taking a big bite out of their profits. A joint venture offers the ability to make more and spend less for everyone involved, whether they are large and well-established corporations or small businesses just starting out. If executed properly, both companies will increase their revenue more so than they ever could on their own.
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