Alliance Marketing

Explore the Strategy of Alliance Marketing

alliance marketing

You walk into a florist shop to purchase a floral arrangement for a wedding. While there, you see an advertisement showcasing a great deal on wedding cakes from a nearby bakery.

Meanwhile, someone visiting that bakery discovers they can get a great deal on a floral arrangement from the florist. Since each business is not competing with each other, they have found it to their advantage to promote one another, referring customers back and forth to increase sales.

Alliance marketing occurs when two or more companies cooperate to jointly promote and sell a product, service, or even a concept. It can take place on any scale—including internationally—as long as it provides a benefit to all the stakeholders involved.

Who employs alliance marketing?

Why Use Alliance Marketing?

  • gain access to a non-competitive businesses’ customers
  • pool knowledge and expertise
  • combined resources and efforts reduce inefficiencies (expenses)
  • turn competitors into partners
  • reach new markets (particularly internationally)

Alliance marketing can be employed by virtually any business when it can find partners interested in mutually beneficial cooperation. Fundamentally, it involves pooling resources—whether those resources are knowledge/expertise, distribution infrastructure, brand recognition/reputation, or simply money—to achieve a result that would be more costly to obtain independently. Examples include:

  • Alliances of non-competitive businesses. This would include the baker/florist example above; or a tow service, auto-repair shop, and car-rental business teaming up to offer end-to-end service to the same customer.
  • Destination alliances, where hotels, restaurants, and tourist businesses pool resources to market their location to prospective travelers.
  • Technology alliances often are formed to promote a new device or concept. In this case, firms that might potentially compete in offering new technology face greater competition from other firms representing the existing, established alternative technology. An alliance allows these companies to create a greater market presence to displace the old technology—and ensures that they get to establish the standards for production of the new technology.
  • Alliances to expand into new markets are particularly useful, since independent expansion requires a huge investment of resources and the development of new distribution channels. This is especially useful for tapping into overseas markets; a firm in one country can offer a product through another firm already established in another country, thus tapping into the new market immediately.

    This principle also works for domestic expansion. Starbucks, for example, allied with Pepsi in order to distribute its ready-to-drink beverages to gas stations, groceries, and convenience stores. Starbucks accessed Pepsi’s established distribution network without having to build their own; in return, Pepsi got revenue from new products (such as bottled frappuccinos) that didn’t directly compete with their own beverages.

For what kinds of customers is alliance marketing effective?

New customers are frequently attracted to businesses employing alliance marketing strategies. Companies usually trade loyal customers, increasing business for both members of the alliance.

An allies’ loyal customers become integrated into the new customer base, as they’ll more readily heed referrals to that company's products and services. By leveraging an ally's brands, reputation, distribution, and offerings, companies market to customer groups that were previously beyond their reach.

How is an alliance marketing campaign developed?

Effective alliance marketing involves coordinating the strengths of different companies in order to meet a market demand. This requires significant pre-planning, as well as an ongoing effort to maintain the new business relationship.

Crucial Elements of Alliance Marketing

  • Select the right partners
  • Establish joint marketing commitments up front
  • Educate “internal customers”—sell the alliance to the rest of your company
  • Plan long-term programs and aim for long-term results

At first, the marketing team identifies the business opportunity that could potentially be met through an alliance. Next, they research prospective allies, taking into account the likelihood of a return on investing in such a relationship. What can these companies provide? Do they have with alliances with other companies, and how have they fared? Are they stable? Do they have a compatible management style?

When considering an international alliance, additional research must be conducted on the other country’s economy. Are currency exchange rates likely to change? What is their projected rate of inflation? How are interest rates in that country projected to change? What are that country’s laws regarding intellectual property rights? (See also International Marketing)

Once a partner (or multiple partners) for an alliance is found, each stakeholder must establish plans and expectations up front. Whether or not the alliance involves creating a new business entity (as in a joint venture), both businesses need a clear understanding about what each partner is expected to do, and how management decisions will be made in cooperative efforts. Spelling out commitments and expectations increases the amount of mutually beneficial exchange that can take place between partners.

In addition to external marketing, it’s also important to conduct “internal marketing.” (See also Internal Marketing) Employees of both partners must be on board with the program, understanding both what they’re providing and what value they’re receiving from this partnership.

Most effective alliance strategies operate around long-term goals. Significant investment in another company takes time to develop, since short-term payoffs typically do not justify the costs and risks of such an investment. Nevertheless, stakeholders in an alliance must expect their partners to perform; if one firm fails to uphold its commitments, it should be removed from the alliance in favor of a more active and effective partner.

What career titles work with alliance marketing strategies?

Alliance Marketing Managers

Alliance Marketing Managers may work for a company entering a business alliance, or for an outside third party contracted specifically to promote or develop an alliance marketing strategy.

What do they do?

  • research companies and select potential partners; pitch prospective partners for alliances
  • establish goals for partners in an alliance, and metrics for evaluating progress toward those goals
  • handle communication between partners, and/or between partners and their customers
  • launch the alliance through special events, promotions, and communications
  • manage programs and work groups created by the alliance
  • evaluate the effectiveness of the alliance, and recommend adjustments and new recruitments

Education and Skills

Most marketing managers have at least a bachelor’s degree, often in marketing, advertising, or business management. Managers will also have substantial successful experience in marketing, advertising, special promotions, distribution, and/or public relations within their industry.

Market Research Analysts

Market Research Analysts gather data about a market segment, identifying what’s needed to reach new customers and markets.

What do they do?

  • use a variety of methods to gather data on customers’ preferences, needs, and buying habits, including interviews, questionnaires, focus groups, and literature reviews
  • gather data about competitors, market conditions, and industry trends
  • analyze data, employing statistical methods and software
  • distill and communicate findings to their organization, using charts, graphs, and other means
  • forecast future trends, needs, and opportunities based upon collected data
  • regularly evaluate and update data-collection methods

Education and Skills

Market research analysts need at least a bachelor’s degree in market research, or in a related field such as statistics or computer science. Many research jobs also require a master’s degree, particularly for leadership positions or for positions that engage in more technical research.

Business Analysts

Business Analysts review, analyze, and recommend changes to business strategy and implementation.

What do they do?

  • identify business needs, and translate those needs to quantitative measures and goals
  • provide analysis of communications channels and produce data-supported recommendations
  • study business plan proposals and develop metrics for monitoring their success
  • track ongoing programs to make sure goals are being met

Education and Skills

Business analysts need at least a bachelor’s degree in business management, marketing, finance, or a related field; as well as knowledge of various computer software for developing a business and tracking business data. Experience should include at least three years of marketing and/or operations, including some project management/team leadership success.

How can a marketing school help you in this field?

Effective alliance marketing requires a broad and well-developed knowledge base and skill set. A marketing degree program will enable graduates to not only perform producer-to-consumer marketing, but also business-to-business marketing. (See also B2B Marketing)

Alliance marketing involves developing a particular understanding of prospective business partners, as well as the ability to communicate with both that company and target consumer segments. You’ll learn and hone a variety of presentation skills in your degree program, including the ability to tailor presentations to different audiences—a fundamental element of alliance marketing. Courses in organizational communication will also enable you to understand how information moves differently in an organization than among individuals and social groups, enabling you to more effectively coordinate decisions and activities between business partners.

Marketing programs also teach you how to acquire data that will help you understand both your customers’ and your competitors’ decisions, as well as evaluate the strengths and weaknesses of your own and others’ businesses. You’ll be trained in the methods of research, data collection, and statistical analysis, so you can properly develop a picture of a given market’s needs, preferences, and habits. Completing an internship while in school also will give you invaluable experience, as well as future job contacts.

Additional courses will acquaint you with the processes involved in both developing and distributing new products. Such knowledge will be invaluable when managing an alliance marketing strategy, as those responsibilities might well be shared between companies. (See also Product Marketing Manager)

To learn more about what a marketing school can do for you, request information from schools with degrees in marketing, and begin researching your prospective partners for the future.

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