Advertising-example

Cooperative Advertising The final form of trade-oriented promotion we examine is cooperative advertising, where the cost of advertising is shared by more than one party. There are three types of cooperative advertising. Although the first two are not trade-oriented promotion, we should recognize their objectives and purpose.

Horizontal cooperative advertising is advertising sponsored in common by a group of retailers or other organizations providing products or services to the market. For example, automobile dealers who are located near one another in an auto park or along the same street often allocate some of their ad budgets to a cooperative advertising fund. Ads are run promoting the location of the dealerships and encouraging car buyers to take advantage of their close proximity when shopping for a new automobile.

Ingredient-sponsored cooperative advertising is supported by raw materials manufacturers; its objective is to help establish end products that include the company's materials and/or ingredients. Companies that often use this type of advertising include Du Pont, which promotes the use of its materials such as Teflon, Thinsulate, and Kevlar in a variety of consumer and industrial products, and NutraSweet, whose artificial sweetener is an ingredient in many food products and beverages. Perhaps the best-known, and most successful, example of this type of cooperative advertising is the "Intel Inside" program, sponsored by Intel Corporation, which is discussed in IMC Perspective 16-5.

The most common form of cooperative advertising is the trade-oriented form, vertical cooperative advertising, in which a manufacturer pays for a portion of the advertising a retailer runs to promote the manufacturer's product and its availability in the retailer's place of business. Manufacturers generally share the cost of advertising run by the retailer on a percentage basis (usually 50/50) up to a certain limit.

The amount of cooperative advertising the manufacturer pays for is usually based on a percentage of dollar purchases. If a retailer purchases $100,000 of product from a manufacturer, it may receive 3 percent, or $3,000, in cooperative advertising money. Large retail chains often combine their co-op budgets across all of their stores, which gives them a larger sum to work with and more media options.

Cooperative advertising can take on several forms. Retailers may advertise a manufacturer's product in, say, a newspaper ad featuring a number of different products, and the individual manufacturers reimburse the retailer for their portion of the ad. Or the ad may be prepared by the manufacturer and placed in the local media by the retailer. Exhibit 16-29 shows a cooperative ad format for New Balance athletic shoes that retailers in various market areas can use by simply inserting their store name and location.

Once a cooperative ad is run, the retailer requests reimbursement from the manufacturer for its percentage of the media costs. Manufacturers usually have specific

Exhibit 16-29 This New Balance ad is an example of vertical cooperative advertising

Exhibit 16-29 This New Balance ad is an example of vertical cooperative advertising

Continue reading here: Intel Inside The Coop Program That Changed the Computer Industry

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