marketing alliances for extra turnover
DESCRIPTION
Why and how to use marketing alliances or other kind of partnerships for extra turnover. How to jointly win an assignment.TRANSCRIPT
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Marketing alliances for extra turnover
Explaining how you can find
partners and set up a deal structure
ALFRED GRIFFIOEN
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Marketing alliances are an effective strategy to boost turnover and to win large projects
In the last decade, one development has been dominant in how consumers and companies do business. It is the ever-growing availability of information, facilitated by the Internet. Consumers and company purchasers and government institutions all have increasingly better knowledge of the market and can easily compare products from several companies.
To compete effectively in this market, companies either need to offer unique products (so there is hardly any competition) or to become the most relevant supplier for their clients by offering a complete range of products and services as one solution. Forming an alliance with a complementary partner is a fast and low-risk way to achieve this.
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Examples of marketing alliances can be found both in business and consumer markets
Business-to-business markets Business-to-consumer markets
Printing products and services
Mobile phones
Business applications
Consumer electronics
Mobile platformSeamless air transportation
LNG terminal Search engine
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Key to a marketing alliance is to increase your relevancy for your customers
Why would a customer choose you if you only offer part of his solution? If you can offer a complete solution, several products to choose from or if you can service a returning customer with another need as well, you will have an advantage over your competitors. Partnering can help you offer a complete range of solutions.
Every person has a number of generic needs: security, friendship, relaxation, efficiency and success. Depending on the context or situation you are in, these generic needs convert into actual needs.
Customer relevancy is achieved by combining the right products and services so that you can best service both the actual needs and the underlying generic needs. By combining more „matching‟ products and services in your offer, your turnover and profit will grow.
Genericneeds
Context /Situation
Actualcustomer
needs
Fulfillment ofyour brand promise
Customerrelevance
Portfoliomanagement
Distribution andcommunications
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Your success is determined by three chances: of finding a partner, of winning the deal, and of making the deal profitable
When you see a project in the market and it makes sense to bid with a partner, depend on three aspects.
It takes two to tango, and if you have found the perfect partner for a project in the market, it may turn out that the love is one-sided. Your partner may even be cheating on you and leave you with nothing.
Some partners offer a better chance of winning the deal than others. Differences can exist in the relationship with the client, in technology, and even in experience with selling a combined offer.
Last but not least: the potential to make a profit can differ per partner. What are their project management capabilities? Do they have experience with working with a partner? And how tough will you have to negotiate for your share of the profit?
x x
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The chance of getting a specific partner does not only depend on you…
Obviously there are multiple players in the market. Just as you will evaluate your potential partners, they will evaluate you against the others.
The two things that you can influence in this process are:
• your own attractiveness, for example by investing in innovative solutions
• your contacts in the market, to enhance your visibility for others and to get more information.
As soon as you have identified your „perfect‟ partner you must aim for exclusivity. But often everyone waits to play his cards up to the last possible moment.
You
partner
partner
partner
partner(out of sight
for you)
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Once you‟ve found a partner, the type of agreement can best be based on each party‟s own contribution and liabilities
There are multiple ways to formally arrange your partnership, ranging from almost a normal contract to almost a complete merger. The main distinction is between contractual arrangements and share transactions. The optimal type of contract will depend on what each partner brings to the alliance and on the liabilities that the partners are willing to bear.
Minorityshare
Traditionalcontract
JointVenture
Dissolvea company
• Transactional customer / supplier relations
• Joint R&D, marketing, distribution
• One-sided• Exchange of shares
• 50% - 50%• Other proportions
• Merger• Takeover
Partnerships
• Licensing, franchising• Long-term outsourcing
Unilateralagreement
Bilateralagreement
Contractualagreements
Sharetransactions
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Chances of winning the project depends on having a breakthrough value proposition
The business case for starting a marketing alliance is primarily based on the synergy between the partners and their product or services portfolio. When competing for a project or a large order, the combined offer must score better than that of the competitors – measured against the evaluation criteria of the client.
Eigenbedrijf
Scopepartner too far away
Scopepartner
too close
Scoperight
partnerScopeown
company
Scope that can bereached with some effort
Scope that the partnercan reach with some effort
Scope that the partnercan reach with some effort
The right partner in most cases has a scope that does not overlap your own scope to avoid competitive behaviour within the alliance. On the other hand it might be difficult to work with a partner from a completely different branch: partners may have no experience with the interface between each other‟s products. The right partner understands your business but does not compete with it.
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No
No
Arrive at the best possible bid with teamwork and a tight timeframe
Making a good offer is a complex process, especially if you want to combine skills from two distinct companies. Knowledge exchange works best through face-to-face contact, so try to make sure that the people involved meet frequently or work in the same office building.
It is also important at management level to meet regularly during the process of composing the bid. How is the progress, does the original scope foreseen for both parties still fit, what margins are acceptable?
A tight timeframe with some slack is important, as it wouldn‟t be the first time that one of the parties backs out just before submitting the offer.To agree on exclusivity is one, but you can‟t force the other party to sign the offer. So make sure you have time for a backup plan.
Findpartner
Prepareoffer
Exclusivity?
Go?
Submit
Findother
partner
Backupplan
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Chances of profiting from your collaboration also depends on „soft‟ factors
After successfully submitting your joint offer or having won a project, the next challenge arises: running your collaboration in such a way that profit is maximised. This requires teamwork between employees from both sides, and teamwork primarily depends on trust, not on procedures. Therefore it is important to spend time on introducing all staff involved to each other and to discuss the expected behaviour.
4 cores of credibility Types of trust
Integrity Are you reputable?
Intent What's your agenda?
Capabilities Are you relevant?
Results What's your track record?
Blind trust Smart trust
DistrustNo trust
Low
High
High
Low
Level of proof and analysisB
asic
att
itu
de t
ow
ard
s t
rust
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Setting up a partnership also requires informing your organisation
An alliance only works if the majority of those involved see it as a benefit for both the company and themselves. This requires explaining that the collaboration aims to enlarge the workload and not to transfer work to another company.
Do
es th
e in
fo
rm
atio
n
help
a co
mp
etito
r?
Is information publicly available?
Yes
NoYes
No
Freely share
information
Share the
information
if it helps the
collaboration
First consult
other managers
before sharing
information
Do not share
the information
When working with a company that has competing activities as well, communication with the partner must be structured carefully. By collaborating with their American competitors, Japanese car makers were able to gain a large market share in the US.
The diagram shows in a simple way how to treat information on basis of the value for the competitor and whether the information is publicly available.
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Working in partnerships is a process of continuous learning
As practically any partnership is unique, you will encounter new problems and have new experiences. Partnerships are by no means „standard business‟. Once you recognise that and see your partnerships as a learning process, you will gain more from it.
Formation, operation and evaluation are three stages with different learning points. A good controller will define measures to monitor the results of this learning process. This will eventually lead to better results and less risks.
Formation Operation Evaluation
Learning about the
partner
Measuring the process
to establish the alliance
Estimating risks
Learning from the
partner
Measuring on the
achievement of
results
Mitigating risks
Learning about
partnerships
Evaluating results
Improving the risk
evaluation
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Evaluation, advice and training are the best means of enhancing your chances on success
Research by Draulans, De Man and Volbeda into 49 companies shows that success as measured in profits, achieving targets and the quality of the relationship increases with experience
The learning effect tends to level off from the 6th alliance
More success can be achieved through:- Structured evaluation + 38 %- Hiring a specialist + 45 %- Training in the subject + 76 %
6Number of alliances
Successratio
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Alliance experts offers support in getting started and getting better with alliances
Alfred Griffioen (1972) has a background as strategic marketing manager and business development manager. After a period as manager at a strategy consultancy he is now partner at Alliance experts, advising on strategic partnerships.
He is the author of the book “Het Senseo-effect”, which is a practical guide to alliances. In 2009 he wrote “De Strategieversnelling”, which links the formation of alliances to competitive strategy. In 2011 he published his third book, “Creating Profit Through Alliances”, which can be downloaded for free on www.allianceexperts.com/creatingprofit.
Alfred Griffioen is available for lectures and workshops. He can be contacted on +31 6 24 77 68 65 or through [email protected].