This document has been made available in electronic format by the International Co-operative Alliance (ICA) 

Business lessons for handloom co-operatives (1998)

Oct., 1998
(Source: Co-op Dialogue, Vol. 8, No. 2, July-Sept, 1998, pp.6-12)

Business Lessons for Handloom Co-operatives by Rajiv I.D. Mehta, Advisor, CICOPA Project, ICA ROAP, New Delhi

Co-ops and Marketing
Co-operatives do have social objectives over and above normal business objectives. It is these objectives which put co-ops in a unique position to be sensitive to social, communal and environmental needs. Also as most handloom weavers’ co-operatives are small and have a narrow range of products and services, they can afford to give care and attention to satisfy specific sets of customer requirements.

However, they often have limited financial resources, a relatively small workforce and may lack specialist business skills. It is important therefore that they be given considerable thought to their marketing activities.

Co-ops need to develop marketing plans which state the business that the co-op is in, the direction which it intends to go in and the strategies which it is going to employ in achieving its goals. Above all, the co-ops must be sure to focus its whole attention on satisfying the needs of its distinctive customers.

Understanding Customers
Customers are those who are buyers. The buyers’ decision making processes are influenced by internal factors such as personality, beliefs, attitudes, motivation and memory and by external factors such as resources, family influences, reference groups and associates.

In case of handloom fabric, the personality, resources and reference groups play important role. Customers could be individuals or organisational, rural based or urban based, traditional or trend setters (fashionable) and from difference economic strategy of the society.

Market Segmentation
Market Segmentation is the process of breaking down large markets into a number of small market segments in order to improve market effectiveness and performances. Instead of trying to satisfy all of the people all of the time, one can meet the specific need to each group more completely by offering a range of pro-ducts and services clearly aimed at each segment or focus the co-operatives limited marketing resources on catering for the needs of one or two clearly defined groups.

There are number of different techniques for segmenting markets, some based on a head count or on the distribution of population and others based on customers’ characteristics, or their needs for the products on offer. Customer markets can be segmented some of the following ways:

(i) Geographic
(ii) Socio-economic
(iii) Cultural and
(iv) Income levels

Market segmentation enables co-ops to concentrate their limited market resources on identifiable groups of consumers.

Market Research
Good marketing decisions are the result of hunches, opinions, judgements allied to information about the market itself.

The better the information the less risk is involved in decision making. One will need to know the who, what, why, where, when and how of the market. In a more structured way one needs to consider six `O's:

Some of the ways in which one could carry out a small amount of market research are:

Good market information does not solve the problem but it does unable us to make better decisions, to reduce the risk elements in business and to keep the co-operative in tune with its customers, its competitors and its general  market conditions.

Marketing Mix
The marking mix is the term given to the particular list of marketing elements and these include product planning, pricing, branding, channels of distribution, selling. advertising, promotions, packaging, display, servicing. physical handling, fact finding analysis. The model of the marketing mix can guide a co-op in apportioning limited resources to each one of the elements so as to have the optimum impact on its target group of customers. Mixes of the elements at times are different for each market and group.

It is important to have the elements of the marketing mix in the forefront of our mind when developing marketing activities and when comparing our own services and producers to those of our competitors. We must assess strength and weakness of our products to identify any opportunities or threats which are arising in the market environment.

The Product
The result of the market research and the marketing mix is the answer to basic question i.e. what to produce? This question has a great relevance in handloom industry because it is linked with the ability of the weavers and demand of their customers. The product is what ultimately goes into the hands of customers. So, it ought to be the final product passed through all the phases of production i.e. warping, weaving, processing, finishing, stitching, value addition and packaging.

It is always in the interest of the co-op to integrate the economic cycle of the product, i.e. undertaking all the products making exercise under one umbrella. It will reduce the costs and make product more competitive and better saleable.

The time is set for ‘Fair Trade’. The co-op must protect the interest of producers and consumers. The fairness in operations is determined by the price tags. Consumers are well enlightened today and can appreciate the due costs tagged on the product. But, any unfair deal can turn the operations into red, so pricing must be determined very carefully. “Cost Minimisation” is the survival technique.