When two or more companies unrelated come together to take benefit of an emerging marketing opportunity is?

A joint venture is a common way of combining the resources and expertise of two otherwise unrelated companies. There are many benefits to this type of partnership, but it is not without risks - arrangements of this sort can be highly complex.

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Advantages of joint venture
Disadvantages of joint venture
General Knowledge
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Example of Horizontal Marketing
Horizontal Marketing Methodologies
Advantages of Horizontal Marketing
When two or more companies unrelated come together to take benefit of an emerging marketing opportunity?
What are the 3 types of vertical marketing systems?
What is channel conflict in marketing management?
What is vertical marketing system example?

Advantages of joint venture

One of the most important joint venture advantages is that it can help your business grow faster, increase productivity and generate greater profits. Other benefits of joint ventures include:

access to new markets and distribution networks
increased capacity
sharing of risks and costs (ie liability) with a partner
access to new knowledge and expertise, including specialised staff
access to greater resources, for example, technology and finance

Joint ventures often enable growth without having to borrow funds or look for outside investors. You may be able to:

use your joint venture partner's customer database to market your product
offer your partner's services and products to your existing customers
join forces in purchasing, research and development

Another benefit of a joint venture is its flexibility. For example, a joint venture can have a limited lifespan and only cover part of what you do, thus limiting the commitment for both parties and the business' exposure.

Joint ventures are especially popular with businesses operating in different countries, eg within the transport and travel industries. Read about the different types of joint venture.

Disadvantages of joint venture

Joint ventures can pose significant risks relating to liabilities and the potential for conflicts and disputes between partners. Problems are likely to arise if:

the objectives of the venture are unclear
the communication between partners is not great
the partners expect different things from the joint venture
the level of expertise and investment isn't equally matched
the work and resources aren't distributed equally
the different cultures and management styles pose barriers to co-operation
the leadership and support is not there in the early stages
the venture's contractual limitations pose a risk to a partner's core business operations

Partnering with another business can be complex. It takes time and effort to build the right business relationship and, even then, it can be difficult to completely avoid all the issues.

Success depends on good communication, a carefully planned joint venture relationship and a clear joint venture agreement.

Question

A Holistic marketing

B Horizontal marketing system

C Hub and spoke system

D Location pricing

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Answer & Explanation
Answer: Horizontal marketing system

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Definition: A Horizontal Marketing System is a distribution channel arrangement between two or more organizations on the same level (but unrelated market) to join and get the benefits of each other’s expertise and economies of scale.

This strategy helps save money, time, and effort and earns them profit, and increases brand awareness.

Horizontal marketing is more common in small to medium-sized industries that lack funding and resources. So, they partner with others to compensate for their shortcomings. These days, the horizontal marketing system is gaining a lot of momentum due to fierce competition and new entrants’ desire to capture market share.

Example of Horizontal Marketing

A famous example of this strategy is the partnership between Apple and Starbucks.

Apple exclusively allowed Starbucks’ Wi-Fi users to download songs from the iTunes store when they launched iTunes. Apple sold over one million songs through this partnership within the first six days of the launch, and Starbucks was a major contributor.

The collaboration can be between two manufacturers to optimize resources and gain advanced skills, between wholesalers to cover larger areas at a cheaper cost, and between retailers to benefit from economies of scale.

Another example of a horizontal marketing system is the merger between Facebook and Instagram. This merger gave Instagram and Facebook a wider audience to market and sell their services.

Horizontal Marketing Methodologies

Organizations can have different methodologies to realize the horizontal marketing benefits.

They can join and develop a new product and sell to a wider audience.
They can cross-promote each other’s products.
They can help each other to improve their projects.
They can use each other’s distribution network to deliver goods or services.

Advantages of Horizontal Marketing

Greater market share
Benefits of economies of scale
Cost reduction in operations
Brand recognition
More sales opportunities

Summary

Horizontal marketing systems are common these days. Here, two or more companies join to take advantage of market opportunities. Organizations can collaborate or merge together, and combine resources to form a big entity and grow.

When two or more companies unrelated come together to take benefit of an emerging marketing opportunity?

In other words, Horizontal marketing system is the merger of two unrelated companies who have come together to exploit the market opportunities.

What are the 3 types of vertical marketing systems?

Three vertical marketing systems include corporate, contractual, and administered.

What is channel conflict in marketing management?

Channel conflict is a situation in which channel partners have to compete against one another or a vendor's internal sales department. Channel partners, such as value-added resellers and IT services providers, comprise a vendor's indirect sales arm.

What is vertical marketing system example?

Contractual Vertical Marketing System Organizations sign contractors with distributors to sell their products and remain competitive in a cut-through industry. An example of a contractual vertical marketing system is working with a franchise. In order to open a franchise store, a license must be purchased.