Piggyback marketing is a method which occurs, when one producer(the carrier), through the use of its foreign distribution channels, contributes to selling products of another company(the rider). This method is also called as mother henning. It can bring great benefits to the company, if it is properly made. Piggyback marketing is not a new phenomenon at all, it's been known for years.
Piggyback marketing occurs when a domestic company that sells in other countries agrees to distribute the products of another domestic company. A company that allows you to combine its products, gets access to market data. Thanks to this technique, products are sold all over the world in an easier way. The exporter maintains autonomy in the scope of shaping such elements as price, brand, advertisement, etc. At the moment when the foreign buyer is looking for a wide range of products that the domestic seller does not offer, piggybacking has the greatest chance.
Generally in piggybacking the partner is larger entity, which is also more internalized. Their range does not compete with each other, and often is complementary. What is more important elements of piggyback marketing are low-cost market-entry strategy and it maximizes promotion in the right markets.
A trading company is a company that buys product from manufacturer which are located all over the world and target them to customers in many countries. This some kind of broker, intermediary is usually large business which handles high sales number but with small profit rate.
This marketing is understood as a brand that uses the popularity of another brand and its distribution channels to promote its own products. Piggyback marketing is usually temporary and is a variant of the distribution strategy, not a marketing strategy.
Who uses piggyback marketing
Reasons to use piggyback marketing:
- The local company wants to enter foreign markets, but there is no money or expertise required to do it yourself.
- A small company does not have enough money to carry out the necessary promotion of its products.
- A multinational company is looking for opportunities to expand into potential foreign markets, but has no knowledge about the new target group, in which case it can benefit from the help of local players.
General rules in piggyback marketing
Basic assumptions in piggyback marketing:
- The most important step is to understand the target market.
- An important aspect is the creation of a list of complementary companies.
- Create a list of ways to generate revenue through collaboration.
- It is helpful to be creative.
- It is important to find the right partner.
- Always keep your target audience in mind.
Advantages and Disadventages
- "Riders can export conveniently without having to establish their own systems."
- They can observe the carrier and benefit from its experience. Thanks to observation and science, they can take over export transactions in the future.
- Piggyback marketing can be an easy and safe way for your company.
- This technique can be attractive thanks to the fact that the company can easily and quickly get a product.
- It also gives the possibility of cheap access to the product. No need to invest in research, development or testing. Thanks to this, it has the ability to easily expand the range.
- A smaller company agreeing to such a contract loses control over the marketing of its own product.
- Due to the unsuitable involvement of the carrier, you may lose the opportunity to sell.
- Piggybacking may be attractive for the carrier, but there may be problems with maintaining the quality and warranty.
- Continuity of supplies may be a problem. When the foreign market carrier develops, the question arises whether the producer will increase production capacity. This should be included in the contract.
In conclusion, piggyback marketing provides the company with an easy and safe way to start in the export of marketing activities. It is a good idea for small producers, or for those who do not have sufficient funds for foreign marketing.
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Author: Magdalena Wójcik