A joint venture is when two or more companies with the aim of working together align themselves in order to execute their business strategy aimed at the same target audience. It is well suited for a company just starting out or those seeking to expand their businesses. The need for a joint venture can arise at any stage in the life of the company. The question is who do you establish a business relationship with and is there need to establish a contractual understanding? JV marketing has numerous advantages, a few of which we will examine today.
Building or expanding your customer base
New businesses with a relatively small customer base can benefit from a joint venture with an already established company. A larger and more established company can be a good adviser in efficiently building up the sales and eventually becoming established in the field. Recognizing that customers are the key to a company’s profits and eventual growth, a smart strategic alliance through JV marketing is a step in the right direction.
Loyalty to the brand name
Building a community around your brand name requires consumer confidence in your brand. It may not happen overnight but with time eventually the name becomes established. An endorsement by an already known and established partner often works like magic very well. Establishing a simple website on the internet and having the partnership of a known company will take your company to greater heights.
Great strategies but limited finances
A small establishment may have great business strategies and ideas which have the potential of bearing great profits but for now their potential exists only on paper. Sharing resources can lead to the expansion and growth of each business, thus increasing the revenue both partners can enjoy thanks to a larger customer base and valued business endorsements.
Introducing a new product with minimum risk
Introducing a new product line is a risk taking venture yet advantageous if well received in the market. The customer base in the partnership offers a great starting point to test the product. A new product is a high risk on a small company as they risk losing the few customers they already have.
Joint venture marketing means sharing of both profits and losses in their joint efforts. The cost of marketing reduces for each business as the cost is shared between the members. The members benefit from wide coverage in the local and international scenes expanding the brand visibility.
Technology is changing by the minute these days as companies such as Google and Facebook try to outdo each other. However, sharing ideas and bringing different specialists into the process benefits each of the companies in joint venture. Every company have their strong abilities and weak areas, but when their efforts are integrated they create a stronger foundation.
Joint venture marketing is a popular growth strategy adopted by many companies, both small and large. Many businesses occasionally stretch out their antennae seeking potential partners with similar goals but non-competing products. This minimizes the risks and maximizes the returns.
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