What is Piggyback Marketing?

Piggybacking:

Piggyback marketing is an innovation in international distribution that has received much attention in recent years. This is an arrangement whereby one manufacturer obtains distribution of products through another distribution channels. Both parties can benefit: The active distribution partner makes fuller use of its distribution system capacity and thereby increases the revenues generated by the system.

The manufacturer using the piggyback arrangement does so at a cost that is much lower than that required for any direct arrangement. Successful piggyback marketing requires that the combined product lines be complementary. They must appeal to the same customer, and they must not be competitive with each other.

If these requirements are met, the piggyback arrangement can be a very effective way of fully utilizing an international channel system to the advantage of both parties. A case in point is the Kauai Cookie Company, whose owners observed Japanese tourists stocking up on cookies before returning home from Hawaii. Now the cookies are sold in a piggyback arrangement with travel agencies in Japan. The cookies can be purchased from a catalog after travelers have returned home, thus, reducing the amount of baggage.

In piggybacking, one manufacturer uses its overseas distribution to sell another company’s product along with its own. The firm actually doing the exporting, i.e., carriers is usually the larger firm with established export facilities and foreign distribution.

The new non-competitive product may round out a gap in its product line or it may mean greater economies of scale, and profits come from piggybacking. By piggybacking, companies can please foreign distributors by giving them a more complete line of products. Also, it can mean extra customer convenience by offering related products.

Finally, firms with seasonal sales may piggyback to keep their export operation working at full capacity throughout the year. For the exporting firm, piggybacking is a sale of know how and services rather than a sale of products. The company using an export company to carry its products to foreign markets, i.e., the wider offers established exports and distribution facilities and shared expenses, benefits similar to those offered by Export Management Companies.