How can you partner with another firm, or create a joint venture, that is beneficial to both companies and helps you generate more sales and profits? The principle behind joint ventures is to provide you and your business with quick, cost-effective access to large pools of potential customers. Similarly, any joint venture partner you agree to do business with has the same interests – growing their customer base. Take the example of McDonald’s. They have some brilliant joint venture partnerships and promotions. For example, the toys in Happy Meals have many times been a set of movie characters or related products. There is a common audience or target market for both, usually young children and their parents. When the child sees the toy in the Happy Meal, the response usually is, “Mom, Dad, can we go see this movie, please?” Or, when the child goes to the movie and realizes that McDonald’s Happy Meals have the toy, the response will be something like, “Mom, Dad can we go to McDonald’s, please? And, by the way, I have to collect all 6 of these character toys from the movie we just saw.” That is pretty smart marketing and a joint venture that brings new customers to both McDonald’s and the movie theatres.
To develop an effective joint venture partnership for your business, there are several questions you can think about and answer.
One simple way to think about potential joint venture partners is to consider all the businesses that you and your business deal with. For example, you have a business automobile and you have to buy products and services to maintain your automobile in good driving condition. Is there a way you can develop a joint venture with the tyre shop or auto electrician that works on your car. Let’s say you have a car wash and auto detailing business. If you develop a joint venture with these other two businesses, each of you stand to gain new customers from the other. The three businesses do not today have all the same customers. And, the target market and customer potential is nearly the same for all three.
Or, think about the businesses that you use to manage and run your business operations. For example, you work with an accountant, a printer, and a business broker. You may also have a law firm that handles all your legal needs and paperwork. Let’s say you own a business that provides messenger and package delivery services in the city. These other three businesses have clients that need your services and you have clients that need their services. Developing a joint venture with any one or all of these companies will build your business and bring in new customers much more quickly than many other marketing methods.
There are also ways you can use joint ventures to develop profit centers with the suppliers and vendors you use. For example, if you have a web design firm that does all of you internet and website work, some of your customers may need those services as much as you do. The web design firm, in turn, may have clients and customers that need the services you provide. And, a similar situation could exist for any of several businesses that you buy services from. As you think about the best possible joint ventures, keep in mind that the objective is to find businesses that have a similar clientele or customer base but ones that you don’t directly compete with. As part of the joint venture, you will need to approach the marketing and offer development just like you would for your own business. The same principles apply. By being part of a joint venture, though, the potential customer pool is much bigger and each participating business stands to benefit.
Let’s consider some examples of joint ventures that have been successful and some that have not been very successful to illustrate some of these principles. For example, there are now hospitals that have developed successful joint ventures with groups of doctors. The hospitals refer patients to participating doctors for either primary care or specialty care. Doctors in turn refer their patients that need hospitalization or surgery to the joint venture facility. The joint venture was initially set up to provide access to new target customers for both the hospital and the doctors.
Another example from earlier this year … Lowe’s formed a joint venture with Woolworths Ltd to form home-improvement stores. Woolworths has a large customer base and Lowe’s has a targeted niche of home-improvement products and services. By combining operations, these two companies both stand to gain by entering the $24 billion (A) market for home improvement products. To deepen the joint venture, these first two companies also have a takeover bid placed for Danks Holdings Ltd, Australia’s second largest hardware distributor. So, three large companies have combined their resources and access to target customers so that each can have new customers from the larger pool of potential buyers.