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This article is written by Amarnath Simha, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here he discusses “Top Marketing Agreements That A Market Development Research Must Know”.

Introduction

Market Development means the expansion of the total market for a product or company by (1) entering new segments of the market, (2) converting nonusers into users, and/or (3) increasing usage per user (http://www.businessdictionary.com/definition/market-development.html).  However, some define to be only including the strategies for developing the existing market rather than looking for a new product (https://economictimes.indiatimes.com/definition/market-development). Market Development comprehends within it many aspects including the reduction of the cost of the product, price reduction, qualitative market research like focus groups, survey advertising etc.,.  The focus of this article is on those strategies which are more concerned with developing new customers for the existing products or brands.

Market Development Research

The Market Development is said to be a two-step process where the first step is shortlisting market segments which are worth pursuing and the next step would be the promotional strategy to enter those market segments whereby the companies enlist both audio and visual media for achieving the same (https://economictimes.indiatimes.com/definition/market-development). 

Market Development research can be done by internal marketing department or b an independent contractor or agency.  

In the course of Market Development, the research team identifies the venues/channels through which the products of the company can be marketed to new segments.  There are no limits for this kind of marketing as a person can see an opportunity to market the products at each place, each event etc.,

Once a venue/channel was identified, it is a decision of every business entity as to whether carry out those plans/strategies internally through its employees or employ independent agencies/contractors.  It is only in case of independent agencies/contractors that all the marketing agreements are required. In case of internal marketing campaign of the campaign, marketing agreements related to only some strategies are required, for e.g., brand ambassador, influencer etc., once the basic understanding was reached between parties, the legal agreements would naturally follow.  Over time, these legal agreements become standardised when they were sufficiently utilised for those particular venues/channels. Since research is always about identifying or creating new venues/channels, the legal agreements regarding the same would also have to keep updating/changing. However, since research team also builds/bases on the existing knowledge, it is inevitable that they must know about the legal agreements with respect to the existing venues/channels of marketing i.e., the marketing agreements.  Some of those marketing agreements are referred to hereunder.

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Top Marketing Agreements which the Market Development Research Must Know

Some of the marketing agreements which the Market Development Research must know of are as follows: 

  1. Sales and Marketing Agreement: This is a basic agreement in which the marketer agrees to market the product through his own efforts either for a fixed fee or a commission.  This is usually commission-based with incentives for higher performances. This is a standard marketing agreement by giving responsibility to one person/agency in a particular geographical area. 
  2. Third party marketing agreement: This is just a variation of the basic sales and marketing agreement but applicable in the fields of some services like start-ups, hedge funds, investment companies etc., wherein advertising directly to a potential customer is prohibited by federal regulations.  The third party’s role is to raise assets. Some of its services include the development of marketing materials, guidance about new products, investor’s database development, public relations etc., The sales service include cold calling, attending industry conferences, managing a sales team and organizing conference calls and on-site visits (https://www.upcounsel.com/third-party-marketing-agreement).
  3. Advertising Agreements: Advertising agreements of any sorts can also be called as marketing agreements.
  4. Brand Promotion/Development Agreement: Usually independent agencies are hired under this agreement for promoting the brand of the company itself.  Brand promotion has been defined to be the way to inform, remind, persuade convincingly and influence the consumers to drive their decision towards purchasing the product or service under a brand.  Brand promotion activities include organizing contests, promotion on social media, products giveaways, points of sale promotion i.e., placed at the checkout counter so that they are bought on impulse by the customers as they wait to check out, customer referral incentive programs, causes and charity, promotional gifts, customer appreciation,etc(https://www.tutorialspoint.com/brand_management/brand_management_promotion.htm). Agreements with these agencies for the above services is also marketing agreements.
  5. Online Brand Promotion Agreement/Digital Marketing Agreement: Since the entire way of life has changed within the past 15-20 years with internet and phones becoming the major source of information, activities, influence, the companies have accordingly increasingly resorted to digital marketing.  Though some people seek to differentiate digital marketing from online marketing on the basis that digital marketing includes digital media on the television, mobile phones (SMS and MMS), call back and on-hold ring tones (https://en.wikipedia.org/wiki/Digital_marketing), the online marketing is also said to be including digital advertising (https://en.wikipedia.org/wiki/Online_advertising).  Digital marketing is the marketing of products or services using digital technologies on the Internet, including through mobile phones Apps, using display advertising, and any other digital mediums.  Digital marketing channels are systems based on the internet that can create, accelerate, and transmit product value from producer to the terminal consumer by digital networks.  Digital marketing methods such as search engine optimization (SEO), search engine marketing (SEM), content marketinginfluencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketingsocial media optimizatione-mail direct marketingDisplay advertisinge–books, and optical disks and games have become commonplace.  They make take many hues like creating videos of the brands/products on social media platforms like Youtube to be pushed as an advertisement by them or creating company’s business accounts on LinkedIn or Facebook etc.,   Agreements with third parties for promoting the brands/products of the company through these methods are also marketing agreements.
  6. Brand Ambassador/Celebrity Branding Agreements: Brand Ambassador is usually associated with a company wherein the company seeks to project the Brand Ambassador as the face of the company for boosting the positive image of the company.  However celebrity branding is different in the sense the celebrities are used to promote the brand and are not projected as the face of the company. They appear at brand launches and at corporate events of the company (https://www.tutorialspoint.com/brand_management/brand_management_promotion.htm). Agreements with these Ambassadors or Celebrities are also marketing agreements.  
  7. Co-branding Agreements: It is a strategic marketing or advertising partnership between two non-compete brands whereby the non-competing brands agree to work together and cooperate to promote or sell a product or service.  Some of the examples for such initiatives are partnership between cab aggregator Ola and mobile manufacturer OnePlus, Uber partnering with London Dairy to offer ice cream, Uber partnering Airtel, Paytm offering Uber free rides and food coupons, Ola and Myntra partnership, among others (https://www.thehindu.com/business/Industry/New-age-firms-use-co-branding-to-reach-customers/article13973320.ece).  These co-branding agreements are also marketing agreements.
  8. Event Merchandise Agreement:  is one of the brand development agreements.  The marketers take advantage of events held annually like marathons, all sports competitions like world cups, book festivals,  etc., to associate their brands with the events and thereby make their brand promotion. Sometimes it is in the form of the products that are actually sold at these events.  Even if the sales are less in percentage, the brand value would be developed and ultimately contribute to the company’s turnover. The agreements entered into with the event organisers are also marketing agreements.

The list of marketing agreements can never end.  As long as an opportunity is seen in any place and any person, a marketing strategy is developed and consequently the marketing agreement begins to be associated with it.

Some of the Clauses that are to be included in these Agreements

Each of the agreement requires its own clauses which are different from the other agreements.  Apart from the scope of work, remuneration, term etc., of the contract, many other factors are also required to be considered in these agreements.  These factors are variable. Some of them are,

Confidentiality Terms: Some of the digital marketing campaigns might be on confidential terms because companies do not want to be known to public that they are engaging the services of outsiders in marketing their products.  On the other hand, with respect to remuneration aspects of brand ambassador and celebrities, the same may be sought to be kept confidential by both parties. The confidentiality clause may include the conditions of the work in many instances.

Intellectual Property Rights: Usually they belong to the company but the company may also be restricted from using the material in campaigns after the term of the contract or with the help of other service providers or license the same to other companies for their marketing.

Indemnification Clauses: These may be incorporated to overcome the cases of stolen intellectual property, or the brand ambassadors losing their credibility due to unwanted activities which were represented to be not occurring in the first place.  The indemnification would also need to cover in case any of the other laws are violated by the service providers. These would also lead to consequential termination, liquidated damages and dispute resolution clauses.

Security Arrangements:  Apart from a brand ambassador or celebrity’s personal security, the companies may also be obligated to provide adequate security in cases of appearance at events of the companies.

The number of clauses when dealt with become infinite as they are dealing with the requirements and understanding of the parties at hand.  

Conclusion

These are just the possibilities which the Market Development Research has to be aware of to be either utilized as stepping stones for other strategies or for developing an entirely new strategy.  With the Market Development Research being ever-evolving, the nature of marketing developments are also evolving and hence, the potential for new marketing developments are also limitless.


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