Joint ventures involve two or more entities working together towards a common goal, such as promotional activities or launching a new product. Benefits include cost savings, wider product offerings, and access to a larger customer base through shared marketing efforts. Joint ventures can also introduce customers to new experiences and businesses.
A joint venture is an initiative in which two or more distinct entities work together to achieve a common goal. Promotional activities are one of the most common initiatives, but others might include the launch of a new product, such as a bandage pre-coated with an antiseptic, or joint sponsorship of a special event, such as a local trade show. The benefits of a joint venture include reduced costs, a wider range of offerings and access to a larger existing customer base.
One of the major benefits of a joint venture is the cost savings, for both the consumer and the participating businesses. An example of a joint venture would be a restaurant and theater or event facility offering a dinner and entertainment package. In this situation, people who buy the package will pay one price to one entity and receive a sum of money to spend at the restaurant or the opportunity to order from a fixed price menu with tickets to the game or event. The price paid for this package usually represents a small discount on what the buyer would have paid if they had purchased the meal and tickets separately.
In this example, both the restaurant and theater will also save on marketing costs. The two entities will share the costs of placing advertisements in newspapers, online or on the radio, as well as printed flyers, posters or other similar materials. This savings is part of what allows them to offer a discount to the customer.
Another major benefit of a joint venture is the ability to offer a wider range of products than one company has to offer. It generally works best when the products are compatible, such as with dinner and a show. Other compatible joint ventures might include a hotel and car rental or a hair and nail package. In a grocery store, the customer might be offered a discount for buying bread from one business and lunch meat from another. This ability to offer two different, but compatible products at a discount doubles the chances of a shopper being interested.
Tapping into another company’s existing customer base is an added benefit of a joint venture. Companies often share electronic and printed mailing lists during a joint venture, which can grow each company’s list in the future. The feat will also likely be advertised on both participants’ social media sites.
Customers who frequent one activity may also be required to try the other for the first time. In the dinner and show example, a customer who eats regularly at the participating restaurant might see an advertisement and decide to go see a show that she might never have seen. A theater patron, on the other hand, might decide to try a restaurant she has never been to. If they like him, he might come back in the future. Of all the benefits of a joint venture, the ability to reach a larger customer base may be the most valuable over time.
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