Page 87 - 100 Great Marketing Ideas (100 Great Ideas)

and perhaps risking entering a price war if Skoda engineers could
recapture their former days of glory, VW decided to cooperate.

Investment by VW in Skoda was not just financial. VW took over
Skoda in 1991 and redesigned the plant, re-educated the engineers,
and cooperated with them in developing new vehicles. Unlike
many West German companies, who simply bought out Eastern
competitors and closed them down, VW went the cooperative route,
allowing Skoda to build its own brand and ultimately to take over all
aspects of car marketing, from design through to showrooms. Most
other Eastern European car manufacturers have sunk without trace,
while Skoda has been able to take advantage of Eastern Europe’s
low overheads and salaries and VW’s technical assistance to flatten
the opposition.

Skoda operates independently of VW, but is a means of increasing
VW’s customer base and shutting out possible competitors
from low-cost countries. As an investment, that has to be better
than competing.

In practice

• The cooperation must have benefits for both parties—make sure

you’re bringing something to the party.

• It should not attract the attention of monopolies regulators—you

can’t collude to carve up markets!

• Competitive synergies need to be apparent so that you don’t

simply cannibalize each other’s existing markets. You should be
cooperating in order to compete better against other firms.

• You don’t need to buy out the competitor. You can often cooperate

effectively in other ways.

78 • 100 GREAT MARKETING IDEAS