Cross-marketing is the process of bringing two or more organizations with similar target markets together to work on marketing. Companies collaborate on a marketing strategy by becoming partners. Let’s look at the various sorts of cross-marketing.

The first type. This type refers to tactical cross-marketing where organizations are focused on short-term cooperation, such as a one-time coordinated action with the goal of boosting product sales.

The second type. This sort of cross-marketing is referred regarded as strategic cross-marketing when organizations are focused on long-term partnerships, i.e. long-term cooperation.

The third type. Additionally, cross-cultural marketing, which involves the collaboration of companies from other countries, is a sort of cross-marketing.

There are six stages to implementing a cross-marketing campaign:

– goal setting;

– partners search;

– defining the terms and conditions of the campaign;

– development of a joint marketing plan;

– execution of the campaign;

– evaluation of results.

Thus, you must first create goals, which may vary depending on the stage of the business or product’s life cycle, as well as determine the expected outcomes, before you can begin looking for partners. When the issue of finding partners is handled, it’s time to create a budget, analyze expenditures, and then create a marketing plan and launch a combined campaign. The results are examined at the analysis stage, and if it is a long-term collaboration, the program can be adjusted.

Furthermore, the partners must determine and decide on the form of the activities, i.e. marketing tools, the most important of which are as follows.

Collaboration in marketing can take several forms, for example, partners can host joint events, participate in various competitions, and so on. Cross-promotions, for example, are a format in which clients can obtain various bonuses or prizes, as well as discounts on the purchase of the product from the partner’s business. Bonus systems, in which customers receive points for purchases that they can then use to pay for, are an example of such a long-term cooperation. Holding joint events, for example, can be a one-time event, implying a short-term collaboration. The manufacturing of collaborative packaging for complementary items by partners is known as co-packing. Cross-competitions are a structure that helps businesses to promote client loyalty while also attracting new ones. Co-branding is a framework in which companies form a relationship to co-produce items.

The main benefits of cross-marketing for businesses are:

– reducing promotion and advertising costs;

– establishing long-term partnerships;

– achieving faster results;

– increasing customer loyalty.

In today’s extremely competitive world, forming a mutually beneficial partnership with a marketing partner entails more than just cheaper expenses; cross-marketing allows you to reach a larger target group, which strengthens your position in the marketplace.

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What is the target market? The target market is a potential market that consists of homogeneous groups of consumers who have the same reaction to the product (service) offered and a set of marketing incentives, i.e. it is the market to which the company targets its activities. It is possible to determine the target market with the help of market segmentation. Market segmentation is a division of the market into homogeneous segments (areas) on various attributes. Thus, the market segment is a defined set of consumers with similar preferences. The main purpose of market segmentation is to determine the group of consumers whose demand the company can meet better than others, both in the short and long term.

Correct definition of the target market has the following advantages:

– by clearly establishing its niche, the company can gain share in a competitive market;

– increase sales of products (services) which are already available in the market, but do not meet expectations because of the lack of a target marketing strategy;

– differentiate the brand from competitors and create brand loyalty;

– to create a stable consumer audience;

– optimize costs for promotion by reducing the cost of non-core marketing operations.

For better understanding of the process of market segmentation we will present its main stages in table 1.

Table 1 – The main stages of the market segmentation process

The market segmentation process begins with the selection of segmentation criteria (e.g. geography, demographics, attitude towards the product, etc.). The market segment is determined on the basis of the principles shown in Figure 1.

Figure 1 – Criteria for Determining the Market Segment

The most important process is the division of the market into segments, because the more accurate the analysis, the more market niches can be identified, and the more likely the formation of a strong and sustainable market position.

The market segment description includes answers to such questions as:

– number of players present in the segment, brands;

– main quality requirements and functional characteristics;

– sustainable consumption habits;

– consumer behavior when choosing, buying or using the product;

– price sensitivity;

– price limits;

– product satisfaction;

– the most prominent representatives of the segment and their description.

When choosing a target market it is very important not to make a mistake, so it is necessary to collect more detailed and accurate information, because the results of the analysis, as well as further decisions depend on it. The size of the segment can be determined based on the calculation of the market capacity. Once the target segments are chosen, it is necessary to develop goals for each of them, a strategy and a marketing plan. As for market segmentation strategies – they can be as follows:

– concentrated strategy, i.e. one product or a series of almost identical products are focused on one segment, such a strategy requires the creation of a strong brand;

– assortment strategy – offering consumers different products to choose from within a single segment, but in this case there is a risk that stronger players enter the market;

– differentiated strategy – the company focuses on several segments and offers different products to consumers, this strategy allows to reduce risks and increase sales.

Don’t stop there, people change and change their preferences, new products, new brands appear, so you need to be constantly informed about your customers and the market situation. Success to you in defining your target market!

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1. Do your homework. Try to find out some more specific information on the target’s owner’s plans and on their current situation. Sometimes it’s quite hard to get real data, but at least talk to their clients about the quality of their service or products offered.

2. Be extremely careful and gentle and polite. You’re speaking about the business and the dreams of their whole lives. So no conqueror type talk or mocking or feeling superior. And it’s not just about words — it’s about the real attitude when everything matters: your look, your smile, your voice.

3. Avoid words like “acquiring” and “buying”. Talk about “mutual possibilities”, “merger”, “continuing the tradition”, or “collaboration”. Especially on the early stages.

4. Try to go with a formal email at the start. A formal letter is also possible sometimes but nowadays an email should suffice. This way you can avoid a casual or an angry conversational “No”. Follow up with a call or a meeting in 2-3 weeks.

5. Play long term. Your vis-a-vis needs that time to think it over (especially if their business a nice and stable one). Some negotiations take a year or more. So be patient. And polite.

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Here I would like to draw your attention to one of the varieties of such processes, which often remains without due attention. It is the participation as a buyer of a small and medium-sized business. Usually, when it comes to M&A, we mean deals in which large companies are involved. This type of activity is widely reported by news agencies, attracts the attention of shareholders, etc. However, buying companies can be a key element of a small and medium business growth strategy. Of course, a small bakery is unlikely to buy a huge corporation; rather, a large corporation will buy a promising startup. However, small and medium-sized businesses may well absorb an equally-sized company.

Owners’ Myopia

So why don’t business owners of small and medium-sized businesses see M&A deals as an important part of their growth strategy?

1. Many CEOs are unaware that there is an M&A growth strategy at all. They continue to grow at a standard rate through sales. Moreover, some managers believe that the strategy of growth through sales and hard work is correct, while other techniques are a trick. The circle of such leaders often includes novice businessmen. They have just started their business, the company has made the first profit and, being in the “flight”, they enjoy. At the same time, they do not consider it necessary to buy someone’s business. They do not understand why they should do it, if everything is going just fine!
2. Even if the business owners are aware of the M&A growth strategy, they also know about the banking services that supports such types of transactions which they consider unreasonably expensive. The owner doesn’t want to invest in a company that he has to pay a lot for. He decides to just invest this money in his business.

Reasons to Reconsider

Nevertheless, of the conventional wisdoms described above, there are several benefits to a business venturing into the takeover and merger activity.

Marketing advantages

Choosing to grow through sales you can face a number of difficult to overcome difficulties. Experienced leaders know this. The process of attracting new customers has a saturation point, after which the efforts of the marketing team can resemble Sisyphean labor. In this case, buying a business with a ready-made customer base is a simple and logical move forward. If the merger process is fine-tuned, then the business will get new customers who are already loyal. For example, those who are familiar with service standards and who have long been regular customers. Thus, it is possible to significantly increase the customer base and at the same time not to waste time, effort, and money doing it in the usual traditional way.

Financial advantages

All companies make forecasts of their development. Even a small company, for example, a bakery, thinks about how many customers will come to them tomorrow, how many in a year. Naturally, business owners base their vision of how they will develop further on these assumptions. So buying another company is very beneficial in the sense that the leader can see the development of a competitor in a historical context and extract useful data from this to model his own company’s growth. Using historical rather than forecast data is always a more successful approach to formulating a company’s strategy.

Moreover, no less important financial aspect is the flexible role of the buyer in transactions. The business owner does not have to go to the bank for a loan. You can always negotiate the terms of the deal with the seller. For example, it is possible to agree on the procedure for repaying debt at a rate that is convenient for everyone, distributed over time. Furthermore, the seller may be involved in financing the new company or have some other financial role in the transaction.

Competition advantages

Buying a competitor will always lead to an increase in market share. If the owner of a cafe buys a nearby catering facility, then in this street he will own a larger share of the market. Even if he sells burgers and has now bought a café selling cheesecakes it means that he has mastered a new segment. It is also obvious that there always is one less competitor on this very street.

So don’t be scared by the great and powerful M&A industry. Just consider it as a real and viable option in your growth strategy.

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4C is the Cost, Customer needs, Convenience, Communication. Our opinion is that this concept does not replace the old one, but complements it. Let’s explain. Not only the price is important, but the costs. For example, keep in mind that the client estimates how much time purchase incur due to poor logistics. Not only the product is important, but also the needs of the client. The time has passed when a product was released only because this niche was not yet occupied. Now it is necessary to satisfy the needs of the client, to improve his quality of life. The focus has shifted from promotion to communication. Customers want dialogue. Market relations shifted from a vertical plane to a horizontal one. Anyone can now directly ask the brand questions. And the last one from P to C transformation is not only place matters, but convenience. Note that virtual space can also be convenient or not.

Any marketing strategy should serve to achieve business goals. The goals should be specific, achievable, measurable, have a clear time frame. The goals should be divided into main and secondary. The main goals should solve the main problem (for example, increase sales). Secondary goals should focus on working with the components of the main goal. This leads to the logical conclusion that the good main goal should be described by a formula with measurable components. Each component is task for a secondary goal.

Before marketing strategy creation, a competitive analysis should be done. Competitive analysis is aimed at realizing what your unique offer is. First you need to find out who your competitors are. Note that competitors can be from other product categories or even industries. For example, the main competitor of Coca-Cola is Pepsi. This seems like an obvious fact. However, with the increasing demand for healthy food, water has become the main competitor for both Coca-Cola and Pepsi. We are advised from all sides to drink more water. Marketers enrich it with mythical nanoparticles (which, by the way, are toxic in most cases), etc. As a result, Coca-Cola has released a drink without the classic sugar.

You should study what channels the competitor uses, what offers he has, how the customer goes through the competitive sales funnel. You should do the following types of analysis: competitor strengths and weaknesses and competitors’ traffic sources. The first analysis helps to understand your starting position in the market. The second analysis helps to classify competitors in terms of marketing maturity. For example, a large proportion of direct traffic means that competitor A has a strong brand. The fight for the market with the competitor will be serious.

And finally, realize what points of contact you have with clients. Points of contact are advertising, website, service center, feedback on marketplaces and etc. Points of contact need to be known. They are different in importance. There are positive and negative points of contact. Positive points are a subscription or repost in the client’s social network. Negative points are the points that made clients leave (for example, a captcha with fire guards). These points need to be managed. You should become aware of the problems and barriers at the point, leave the main points and remove unnecessary ones.

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