Summary
Co-ops and consortiums are two ways for businesses to band together, share functions and achieve efficiencies. Both have their strong points, as well as potential pitfalls of which to be aware.
A co-op is usually defined as an agreement between two or more businesses providing funding for marketing and advertising or other mutually advantageous objectives. An example would be an objective to increase business to Maine. The cooperative agreement might be structured between an airline, resort and rental car company to jointly fund and advertise a package -- two or more components of a trip -- to Maine. Each could advertise only their respective brand, however, there are considerable efficiencies to be gained by advertising together. And consumers buying the Maine destination often look for a package. In such a scenario, each member of the co- op, if they went it alone, may plan to spend $100,000 in select newspaper ads. By combining their ad and funds, they now have $300,000 available for advertising in the newspapers. In essence, three times as many ads (or space) than if they went it alone. This is an oversimplification, but makes the point about efficiencies and how a co-op works.See the full content of this document
Extract
Co-Ops and Consortiums: Are They Right for You?
Second, a consortium is defined as a group (of companies or brands) formed to undertake an enterprise beyond the resources of any one member, for greater benefitsor efficiencies than available by oneself. For example, two or more firms decide to form a consor...
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