Marketing Co-operation in the Global Economy
by J. Tom Webb*
Co-operators involved in any area of human endeavour need to situate their work and thought in the context of the trends which are sweeping our world. Co-operatives will be part of the problem instead of part of the solution, if they are acting without reference to the crisis in the ecology of our planet. They will be out of the loop if they are not aware that the distribution of wealth in the emerging global economy and society is becoming more unjust. Co-operatives will be unaware of their potential to contribute if not cognizant of the shift in power away from institutions based on one person one vote, to those based on one dollar one vote. It is this last trend I wish to focus on for the purpose of this presentation.
The ability to move money around the world with a click of the cursor on a computer and the emergence of global corporations and financial institutions has dramatically changed the power basis of our world. The nation state now has to cope with international economic institutions, which can move money almost instantly away from nations which do not meet the needs of investors for maximum returns. Corporations are under tremendous pressure to search for their investors' opportunities, where the environmental, tax, regulatory climate, health and safety requirements, and wages are conducive to maximizing returns in the relatively short-term. The question which co-operatives need to reflect upon is whether any meaningful form of democratic society can endure in the absence of a democratic economy or an economy with widely held wealth. (See A Preface to Economic Democracy by Robert Dahl)
This represents an enormous shift in decision-making to corporations and the marketplace at the expense of national and local governments. The implications are strong. The nation state is based on the foundation of one person, one vote. Both markets and corporations are based on the foundation of one dollar, one vote. In a world where 358 billionaires own the same amount of wealth as 45% of the world's population, this shift is of some significance. In a world where 20% of the people receive 82.7% of the income, this shift is not to be ignored. In North America, 75% of network time is paid for by the 100 largest US corporations. (In the Absence of the Sacred, Jerry Mander, 1991)
What this means for co-operatives depends on how they see themselves. Are they simply organizations with populist roots striving to become more like the corporate interests with which they compete? We know they face enormous pressure to behave exactly like their investor-driven competitors. We know they are islands of co-operation in a sea of capital-based business. Are they content to slide into the sea?
In the late 1980's, I was working for a major Canadian consumer co-operative and part of my work was to develop and implement market research. I was impressed by the positive attitudes of people toward co-operatives (and credit unions) and co-operation. Very few people had a negative response to the values and principles of co-operation or to the idea of getting goods and services they needed from co-operatives. Indeed, more than 30% said they would pay a little more to shop at a co-operative. This led me to explore the market research carried out by others to see whether or not their findings were consistent with mine. The results were consistent.
The attached graphs portray the results of some of the market research done by North American co-operatives and co-operative organizations.
What is the Relationship Between Education and Marketing?
The messages from this research are clear. People like the co-operative values and the idea of using co-operative enterprises to meet their needs. But, what does it mean for co-operative enterprise? Many co-operatives have been reluctant to become involved in advertising and marketing on the basis that they should not have to sell to their member owners. Their job was education, not marketing. But, the reality was that people, including many members of co-operatives, are learning a great deal from the marketing of investor-driven corporations. In North America, the top 100 corporations spend billions on advertising, both on creating the advertisements and on the time to air and print them. They are a very successful form of education or perhaps more correctly, training. They work.
- The research tells us clearly that people value co-operatives and co-operation.
- Marketing is part of the education role of co-operatives. Education is more than marketing and represents an opportunity to reinforce education and extend its reach.
- Co-operatives spend more on marketing than on education. I have not yet found one where this is not true.
- What co-operatives do, is their most effective advertising. Whether co-operatives like it or not, the way they merchandise and market is very educational for members and the public. People learn more about co-operatives by walking in the door or trying the product than by reading pamphlets.
- Integrity involves being what we say we are. Co-operatives are no exception - they must be what they say they are. Marketing, resting on false or exaggerated claims, is worse than ineffective; it can be very damaging. Co-operatives are more vulnerable than investor owned businesses because they have values, principles and an image. The risk is balanced by greater opportunity.
Can Co-ops Market Co-operation?
Two hot marketing concepts which have worked very well for many large corporations in North America are relationship and character marketing.
Relationship Marketing is an attempt to create a relationship and a sense of identity between a company and its customers. Such a link improves product loyalty and leads to increased sales. There are many examples of relationship marketing, including frequent flyer points and retail sales clubs. Their effectiveness is best measured by their pervasiveness.
Character Marketing is marketing which promotes some action or product of the company. This is perceived, for example, as good, environmental responsibility or promotion of a good cause, such as adoption of children or hiring people with disabilities.
The irony is that co-operatives have not generally been as excited about marketing their unique relationship or their values, even though market research shows people value both. In fact, in terms of relationship, co-operatives have the opportunity to carve out a Unique Selling Point (USP). Strong USPs are a marketer's dream.
Similarly, while investor-owned business has but one bottom line, (maximization of return on invested capital) co-operatives are characterized by multiple bottom lines including values people consider important. Such values include trust, community support, democracy, justice and fairness. Co-operatives are blessed with two USPs, their ownership structure and the values they hold. These unique selling points would be difficult to match without becoming a co-operative.
Character, relationship and trust are advantages that have led to a growing interest in the idea of Marketing Our Co-operative Advantage (MOCA) in North America. There have been two MOCA conferences and another is planned for this fall. There have been numerous MOCA workshops at major co-operative meetings. Key national co-operative organizations, including the National Co-operative Business Association, Credit Union National Association, the National Rural Electric Co-operative Association in the United States, and the Canadian Co-operative Association in Canada have all provided support to MOCA. In addition, MOCA has won an award for excellence from the Association of Co-operative Educators as an educational program.
Based on market research from across the continent, there is a growing sense that the time has come for the idea of Marketing Our Co-operative Advantage. It is an idea whose attractiveness has been increased by the concerns people feel in the face of the emerging global society and economy. It is not a quick fix or a panacea. It demands creativity and innovation. To date, co-operatives have only begun to find creative ways to market a pride in their co-operative nature. If every major co-operative enterprise began creatively marketing education about the benefits of co-operation, then the potential would exist to make popular values and attitudes the way corporate marketing has popularized buying our way to happiness.
Co-operatives do market and merchandise and often it is very effective education. For example, when a consumer co-operative puts high margin items at eye level like its corporate competitors, there is a message to its members that would require many educational brochures to counter. Moreover, most co-operatives invest much more resources in marketing than in education. As we learn from our children, what we do is far more important than what we say. For co-operatives, education includes how we market as well as merchandise. It would be wise for co-operatives to proceed as if marketing and merchandising were part of their education programme. That being accepted, the marketing must then be consistent with co-operative education and the co-operative nature of the enterprise. This is very challenging and rewarding, both in terms of a sense of accomplishment and in terms of enterprise success.
* Mr. Webb is the Director of the Extension Department at St. Francis Xavier University, Antigonish, Nova Scotia, Canada