Published on November 19, 2009
Alliance experts Marketing alliances for extra turnover Explaining how you can find partners and set up a deal structure ALFRED GRIFFIOENwww.allianceexperts.com
Alliance experts 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.www.allianceexperts.com
Alliance experts Examples of marketing alliances can be found both in business and consumer markets Business-to-business markets Business-to-consumer markets Printing products Mobile phones and services Business Consumer applications electronics Seamless air Mobile platform transportation LNG terminal Search enginewww.allianceexperts.com
Alliance experts 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. Portfolio Generic management needs Actual Fulfillment of Customer customer your brand promise relevance needs Distribution and Context / communications Situation 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.www.allianceexperts.com
Alliance experts 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. x x 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?www.allianceexperts.com
Alliance experts 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 partner against the others. The two things that you can influence in this process are: partner You • 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. partner As soon as you have identified your „perfect‟ partner you must aim for exclusivity. But often everyone waits to partner (out of sight play his cards up to the last possible for you) moment.www.allianceexperts.com
Alliance experts 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. Traditional • Transactional customer contract / supplier relations Contractual Unilateral • Licensing, franchising agreements agreement • Long-term outsourcing Bilateral • Joint R&D, marketing, agreement distribution Partnerships Minority • One-sided share • Exchange of shares Share Joint • 50% - 50% transactions Venture • Other proportions Dissolve • Merger a company • Takeoverwww.allianceexperts.com
Alliance experts 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. Scope that the partner The right partner in most cases Scope that can be can reach with some effort has a scope that does not reached with some effort Scope overlap your own scope to Scope right avoid competitive behaviour Eigen partner own bedrijf within the alliance. On the company other hand it might be difficult Scope to work with a partner from a partner completely different branch: too close Scope that the partner partners may have no can reach with some effort experience with the interface Scope between each other‟s products. partner too far The right partner understands away your business but does not compete with it.www.allianceexperts.com
Alliance experts Arrive at the best possible bid with teamwork and a tight timeframe Making a good offer is a complex A tight timeframe with some slack is process, especially if you want to important, as it wouldn‟t be the first combine skills from two distinct time that one of the parties backs out companies. Knowledge exchange just before submitting the offer. works best through face-to-face To agree on exclusivity is one, but you contact, so try to make sure that can‟t force the other party to sign the the people involved meet offer. So make sure you have time for a backup plan. frequently or work in the same office building. Find It is also important at partner management level to meet regularly during the process of Exclusivity? No Find composing the bid. How is the other Prepare partner progress, does the original scope offer foreseen for both parties still fit, what margins are acceptable? Go? No Backup plan Submitwww.allianceexperts.com
Alliance experts 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 Basic attitude towards trust High Integrity Are you reputable? Blind trust Smart trust Intent Whats your agenda? Capabilities Are you relevant? No trust Distrust Results Whats your track record? Low Low High Level of proof and analysiswww.allianceexperts.com
Alliance experts 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. When working with a company that has competing activities as well, First consult Does the information other managers Do not share help a competitor? communication with the partner must Yes before sharing the information be structured carefully. By information collaborating with their American competitors, Japanese car makers were able to gain a large market Freely share Share the information share in the US. No information if it helps the collaboration The diagram shows in a simple way how to treat information on basis of Yes No the value for the competitor and Is information publicly available? whether the information is publicly available.www.allianceexperts.com
Alliance experts 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 Learning from the Learning about partner partner partnerships Measuring the process Measuring on the Evaluating results to establish the alliance achievement of results Estimating risks Improving the risk Mitigating risks evaluationwww.allianceexperts.com
Alliance experts 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 Success that success as measured in profits, ratio 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 % 6 Number of alliances - Hiring a specialist + 45 % - Training in the subject + 76 %www.allianceexperts.com
Alliance experts 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 firstname.lastname@example.org
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