Co-promotion

Co-promotion is a marketing practice that allows two or more companies to combine their sales force in order to promote a product under the same brand name and price with a single marketing strategy. It is considered as one of the two major forms of joint marketing (Kalb 1988). Co-marketing is the other form and these terms are often confused. It is made through an agreement (the co-promotion agreement) which requires a lot of collaboration between the sales and marketing organisations of both companies. One of the partners usually has a licence to exploit the product and the other partner is the originator or licensor. It helps the less developed areas of a company to be covered by the partner company's strengths and therefore to expand the share of voice in the marketplace for a product. Through co-promotion, a collaborative strategy, the consumer attraction is increased. It is a way co-exploiting products.

Many collaborative marketing strategies are often confused. The elements that differentiate co-promotion from other marketing practices are the followings:

Co-promotion is also known for offering high potential payment, it is the most attractive agreement type for both in and out-licensers compared to other agreements such as co-marketing.Co-promotion agreements also tend to be much more flexible because partners can decide what type of payments they prefer. For example, partners can choose either profit sharing without royalty payments or higher royalties on sales.

Companies seeking a partner identify their areas of strengths and weaknesses and agree to share promotional efforts. The owner of the product usually manufactures it and uses the other company's trademark. The profit on the sales resulting from shared promotional effort is divided according to the amount of effort made by the partners.

Co-promotion agreements symbolise attractive options for the less developed companies that wants to control its product’s target but these types of deal structures are much more complex than a company taking full responsibility for development and commercialisation. As a consequence, these collaboration agreements require comprehensive planning, detailed agreements and must consider a number of critical factors such as:

Sharing the product revenues and the expenses by building cost models. Covering financial factors should be done such as allocation of promotional costs and expenses, number and quality of detailing, responsibility for sales force training, and monitoring and auditing of promotion expenses.

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