Fair Trade Marketing - Consumer Marketing - Top Grade Papers - Academic Assignment

7/31/2019 Fair Trade Marketing - Consumer Marketing - Top Grade Papers - Academic Assignment

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Fair Trade Marketing

Proposal Consumer Behavior: 2nd May,

2010

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Fair Trade 1

Table of ContentsIntroduction and overview: .......................................................................................................................... 2

Literature review:.......................................................................................................................................... 3

Fair-trade movements in UK ..................................................................................................................... 3

Influence of marketing on consumer purchase behavior in UK ............................................................... 6

Drivers of Fair Trade: Marketers or Consumers? ...................................................................................... 8

Methodology: .............................................................................................................................................. 10

References: ................................................................................................................................................. 11



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Introduction and overview:

Our everyday life is filled with numerous products that we do not even consider the origin of

including food items, fruits vegetables, coffee, sugar, flowers and honey. The products that we

are aware are not produced in our metropolitans but come from some far away land. We

consume them daily and purchase more according to our need. Why do we bother the supply

chain process? Why looking into the system that particular product went through? Does its

manufacturers are getting their justified returns?

To answer these questions and look into the rightful distribution or at least ensuring dignified

returns to the producers, the concept of fair trade has been brought up. It was introduced in the

1940s when church groups and shops in the US and Europe started selling products made by

Chinese refugees or poor Puerto Rican communities. Such initiatives were recognized as

Alternative Trade Organizations. They were people from different ethnicities but their work lent

a great hand in the inception of the current phenomenon of fair-trade. It began with crafts, and

moved on to include food (sugar initially) in the 1960s. It was in the 80s however that there

began to be much more organizational approach to fair trade.

In 1988 the launch of the first Fairtrade label, Max Havelaar, under the initiative of the Dutch

development agency Solidaridad. The first Fairtrade coffee from Mexico was sold into Dutch

supermarkets. It was branded "Max Havelaar," after a fictional Dutch character who opposed the

exploitation of coffee pickers in Dutch colonies. (FairtradeFoundation.org.uk)

No conventional definition has been presented for the term Fair Trade, but The Fairtrade

Foundation, Oxfam and Traidcraft agree at the following definition of fair trade: Fair Trade is an

alternative approach to conventional international trade. It is a trading partnership which aims

at sustainable development for excluded and disadvantaged producers. It seeks to do this by

providing better trading conditions, by awareness raising and by campaigning.

According to the International Fair Trade Association (IFAT): Fair Trade is a trading

partnership, based on dialogue, transparency and respect, that seek greater equity in

international trade. It contributes to sustainable development by offering better trading

conditions to, and securing the rights of, marginalized producers and workers, especially in the

South.



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Fair Trade 3

(What is Fair Trade, Tribes Travel)

Analyzing the current system in existence regarding fair trade, we can see that organizations are

working to ensure that a direct relationship, with minimum middlemen be developed between the

customers and producers- farmers, artisans and similar cottage industry occupations, so that they

could be rewarded by direct involvement in the marketplace and uphold labor rights and

standards. Furthermore, by fair-trade the organizations and operating authorities also intend to

promote the consumer participation to purchase and acknowledge the original means of the

product and take responsibility to perform their role in the movement. (Articlesbase)

Literature review:

We will discuss various accumulated research and study materials here.

Fair-trade movements in UK

While digging deeper to the earliest traces of Fair Trade in relation to UK we get to know that it

started in Europe date from the late 1950s when Oxfam UK started to sell crafts made by

Chinese refugees in Oxfam shops. In 1964 it created the first Fair Trade Organization. Then

came the Third World Shops which are also known as Fair Trade Shops, in 1969, to add to the

Fair Trade movement across the world. Other than selling they also focus on spreading

awareness to the customers about how they can participate in the prosperity of the third world.

Following the lead, many Asian, African and other third world countries felt the need to set up

marketing organizations to carry the movement forth. The major force behind the Fair Trade

movements have been the development of the Third World countries to strengthen them and

directing them to a better state.(Sixty Years of Fair Trade, 2006)

In UK the Fairtrade Foundation was set up by CAFOD, Christian Aid, New Consumer, Oxfam,

Tradecraft and the World Development Movement. In 1997 the umbrella organization, Fairtrade

Labeling Organizations (FLO) International, was set up to co-ordinate the national schemes and

encourage efficient monitoring. (What is Fair Trade, Tribes Travel)

Led by Fairtrade Foundation, many retailers and producers in UK followed suit and adapted to

the fair trade phenomenon. Bananas at CO-OP stores, coffee at Sainsbury, Marks and Spencer



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Fair Trade 4

clothes started their fair trading activities. Last year Cadbury entered the list of fair trade labeled

organization. (FairtradeFoundation.org.uk)

There are more than 2,500 product lines in the UK that carry the Fairtrade mark. Last year we

spent 290m on fair trade food, furniture and clothing - an increase of 46% on the previousyear. (Brendan ONeill, 2007). It is evident that UK has been responsibly working hard to invite

more organizations to produce and operate fairly, taking into account the developing nations who

are deprived of their rightful returns. The Fairtrade Foundation introduced Fairtrade Fortnight to

be held in various institutes and workplaces where people swap their branded stuff with fair

traded alternatives. (Brendan ONeill, 2007).

Fairness UK is another organization that operates with the theme to bring people from academics

and practitioners in the respective field to work together on the subjects of Fairtrade or

Alternative Trade (Fairnessuk.ning.com). Similarly, British Association for Fair Trade Shops

(BAFTS) is spread out like a network of independent fair trade shops across the UK with the

purpose to promote Fairtrade Retailing (BAFTS.org.uk).

As discussed earlier, the focus of fair trading is upon providing the third world producers a

market to directly interact with, establish their operations in a more optimized way and in the end

earn their rightful share. Here we introduce our first hypothesis:

H1: Fair Trade is only about Fair pricing of the produced goods.

In a case study by Loraine Ronchi, the concept of fair trade and the way it has been marketed is

discussed. Loraine Ronchi is in the team of Poverty Research Unit at University of Sussex and

wrote this case about the impacts of ten years of Fair Trading of coffee in Costa Rica. He says

that the way Fair Trade has been marketed impressing more in the Fair Price factor for the poor

communities which catches more interest from the audience as they perceive it to be the way we

pay more/they get more. This limited conceptualization of Fair Trade has somewhat restrictedthe actual and deeper rewards in terms of organizational structures for these producers. The

second major element of Fair Trades purpose has been overshadowed by the one discussed

above; supporting the developing communities. It is not sufficient that these communities get the

premium price as the fair price and left alone. Fair trade demands the development in the

infrastructure of their business/earning operations. The closer these deprived communities get to



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the larger market base, the clearer they will become about how to establish their industry. Here

we added another important factor, industrialization. As we notice we can evaluate that all the

fair trade business are functioning where the people are more or less working in the form of

small cottage industries. The standards for producing need to be set up and formalized. (Ronchi,

2002).

Here we place our second hypothesis:

H2: These communities need to be developed by industrializing their operations and production.

In a case study on the effects of fair trade, the writers have discussed various perspectives

considering the implications and results of the system. They have developed a theoretical model

to better understand the benefits of fair trade. In the discussion, they say that Critics claim that

in their search for the cheapest location of production, MNCs coerce governments of poor

countries to grant them tax breaks and to turn a blind eye to both working hours and working

conditions of their laborers. This results in the creation of sweatshops, turning entire countries

into industrial slums and low-wage labor ghettos, with no end in sight, which is probably the

most important point existing fair-trade organizations aim to improve. (Baumann, Oschinski

and Stahler, 2008)

Discussing upon this, we can see another angle to this crucial state as to how the developing

communities have become rather dependent upon the importing nations. If the fair trade co-

operatives are available and accessible they will be getting the benefit of the movement. On the

other hand we also need to see that are these organizations available for the developing

businesses. From utilitarian perspective of ethical theories we can say that aggregately these

producers are earning significantly better than they were doing before. Though individually the

producers might be missing the opportunities presented by these fair trade co-operatives,

collectively these movements have added to the betterment of the developing nations. We will

further analyze and test our assumption if these nations can be developed by the help of theindustrialization through MNCs or they should be somehow provided greater assistance

regarding the infra structure perspective. Then again another question pops out:

H3: This abolishes the purpose of trading these communities by giving them all the aid to set up

their businesses.



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Fair trade was meant to prevent the aid facet of the developed nations for the developing

communities in order to make them build themselves with the available resources rather than

looking towards the giving hands. If all this is to be provided them, than we are still standing at

the same pavement we started from. Our report will research the results regarding this issue from

the industry experts and the fair enthusiasts.

Below are several comments by Steve Daley, who works with the education development charity

Worldwrite, argues that fair trade's horizons are dangerously low.

"How can a few extra pennies a day from Fairtrade be celebrated as an outstanding achievement

for the poor?" he asks.

He cites a report from the Financial Times September 2006, which revealed that some fair trade

coffee farmers in Peru were being paid 10 soles a day (about US$3) for working from 6am to

4.30pm. This is more than the conventional coffee farming wage of eight soles a day, but not

much more. Mr. Daley is concerned that the fair trade movement is reshaping the debate about

underdevelopment, so that the main concern today is with increasing farmers' wages by fairly

small amounts rather than really transforming poor communities through development,

modernization, even industrialization.

"Fairtrade seems to be rooted in a conviction that 'small is beautiful'," says Mr Daley, who

argues that the movement does not focus enough on developing modern agricultural methods,

which is "surely what farmers in the developing world need". Mr Daley says that fair trade is

more about "flattering Western shoppers" than transforming the lives of Third World farmers.

(Brendan ONeill, 2007)

Are we evading a dilemma or resurrecting another one?

Influence of marketing on consumer purchase behavior in UK

Marketing has been evolved over the years and now has numerous elements to it as to how to

reach the target market. Previously when marketing was mentioned, advertisements were one of

the top of the mind recalls. To place your product at the right time at the right place is the key. At

a website of University of Southern California, Consumersycologist.com, Dr. Lars Perner says



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Fair Trade 8

Now accumulating all the above statistics, the profitability of Fair Trade marketing can be

evaluated through various channels. Firstly, the UK customers prefer communicating with

people who have observed or experienced the product already. They need to have an evaluative

response to depend their decision as referred to an experience. Secondly, internet presents a very

lucrative source to effect the consumer behavior. Fair trade is already an operation to enhance the

lifestyles of the developing communities, its marketing through the people who work on their

produce in a more basic level as being an assembly line worker or farmer can influence people to

trust the originality and give these people opportunity to come forward. And when the people

who are using these products in UK will be provided a portal to share their experiences with

these products, their reviews can influence a huge segment of the market.

Thirdly, combining both of these paths that is bringing all the three drivers, producer, consumer

reviews and potential consumers at one online portal, the effect can be multiplied as to what has

been achieved by merely being a co-operative between the customers and the producers. From

this data we build another hypothesis to be tested:

H3: UK customers prefer going through the reviews of the products, interacting with the

producers and internet is a major channel for communication and research.

Drivers of Fair Trade: Marketers or Consumers?

According to the trends seen in the consumption markets regarding fair trade, the consumer

response has been remarkable. Whereas, the marketers seem to be a little suspicious about the

idea implementation of fair trade. Some of the marketers and their representative companies and

organizations, who had foreseen the change in consumer behavior patterns and preferences, are

being appreciated and earning greater returns due to their progressive approach. In 2000

Starbucks had to implement the use of fair trade coffee in its 2300 outlets all across US because

of a huge customer movement towards fair trade product purchasing (Press Release, 2000).

According to the release, the customers feel good when they know that they are adding to

peoples lives in some far away land.

ETHICAL business is becoming big business. Access to the internet means that shareholders

and customers can tap into information about the companies they invest in or buy from to check

that they are acting ethically. (Times Online, 2006)



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Globally, the sale of Fair Trade products grew 22 percent in 2008 to $4.3 billion. In April the

results of the first international survey of consumers attitudes on the subject were released. The

survey, commissioned by Fairtrade Labelling Organizations International (FLO), questioned

1,000 randomly selected consumers in each of 15 rich countries.

Opinions in the US and the other countries were remarkably similar. Over half of those

questioned said they reward companies for being socially responsible. 57% of Americans (and

60% of all respondents from all 15 countries) said they were willing to pay at least 5% more for

Fair Trade Certified products.

Companies often like to paint their adoption of Fair Trade products as a sign of corporate social

responsibility. But Susan Koehler, Senior Manager of corporate communications at Sams Club,

the membership-only retail warehouse club of Walmart, adds that carrying Fair Trade products

before competitors do can bring a marketing advantage. The move is an opportunity for us to be

different in the market place.Sams Club has been carrying Fair Trade coffee since 2006, two

years before Walmart did. They reasoned their early adoption to the better-educated, more

affluent customers they cater to tend to be more interested in Fair Trade. Sams Club has

expanded its selection of Fair Trade products to about a dozen items including bananas and

winea wider selection than is yet available at Walmart.

Customers are astonishingly aware about the fair trade movements and are not only participative

in these campaigns but instigator as well. This shows an extraordinary potential that more

customers will join the cause and the movement to be a part of communal development

movements.

A study in the UK has found in May 2008 that 70% of UK adults are able to recognize the

Fairtrade label, and 64% of them associate that with a better deal for producers. 2007 score was

57%, so there has been a good improvement. UK is a leading country regarding Fair Trade: they

have the largest number of Fairtrade towns and the first Fair Trade country: Wales, not to

mention that London itself is a Fair Trade city. This level of awareness is astounding yet

appreciating for the numerous campaigns and movements being conducted. (A Fair Trade Hub)



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Methodology:

Though the research for the proposal have brought out a sufficient amount of secondary data for

the subject, still there has been very less academic and research work available for the students

and public officials. This is one of the crucial economic subjects that need significant research to

support its presence and future directions.

We will pursue the research from the fundamentals. We will be conducting interviews with

people from these fair trading organizations as well as the organizations who take responsibility

for the implementation of justified rules and values of fair trading. These officials can give us an

insight as to how the base for this concept was formed to build an incredibly inspirational

network across the globe. Secondly, we will be communicating with the retail outlets and other

businesses that carry out fair trade products. We need to understand their perspective for

adopting fair trade and how responsive their consumers are to both the fair trade and the

companys adoption to it. We will also try to look into the developing communities production

standards and skills. It will be the most difficult part of the research but equally intriguing one.

Once we have acquired a basic framework, we can build the questions that need to be answered

by the consumers to study their current response and involvement into the concept. We will

concentrate at the customers visiting the retail outlets and the greater focus will be on online

purchasing as the available figures direct that a considerable segment is transacting through

internet. Consumer surveys will be conducted through internet, telephone and mall intercepts.

In addition to that, we will need to see into the co-operatives duties and activities as to how they

reach and connect the two parties; customers and producers. Then the marketers also play a great

role in the entire process. We need to see into their strategic planning for the purpose.

This almost sums up our requirement for primary data through the above mentioned means

assuming that these interviews and surveys will provide insights to our hypothesis.



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References:

What is Fair Trade, Travel Tribe, available at:

http://www.tribes.co.uk/responsible_travel/what_is_fair_trade

The Importance of Fair-trade and Ethical Products, Articlesbase, available at:http://www.articlesbase.com/ask-an-expert-articles/the-importance-of-fairtrade-and-

ethical-products-737955.html

Sixty Years of Fair Trade, A brief history of the Fair Trade movement, 2006, available at:

http://www.european-fair-trade-association.org/efta/Doc/History.pdf

Fairtrade labeling international history,Fairetrade Foundation, available at:

http://www.fairtrade.org.uk/what_is_fairtrade/history.aspx

Building Knowledge for the Fair Trade Movement, Fairness UK, available at:

http://fairnessuk.ning.com/

British Association for Fair Trade Shops, available at: http://www.bafts.org.uk/

Loraine Ronchi, 2002, The Impact of Fair Trade on Producers and their Organisations: A Case

Study with Coocaf in Costa Rica, available at:

http://www.sussex.ac.uk/Units/PRU/wps/wp11.pdf

Florian Baumann, Matthias Oschinski and Nikolai Stahler, 2008, On the Effects of Fair-Trade on

the Welfare of the Poor, available at: https://editorialexpress.com/cgi-

bin/conference/download.cgi?db_name=MED2008&paper_id=40

Dr. Lars Perner, Assistant Professor of Clinical Marketing, Dept. of Marketing, Marshall School

of Business, University of Southern California, available at:

http://www.consumerpsychologist.com/

Press Release, 2000, Global Exchange, Fair Trade, available at:

http://www.globalexchange.org/campaigns/fairtrade/coffee/pressrelease092200.html

Times Online, 2006, Customers demand fair trade from big business, available at:

http://business.timesonline.co.uk/tol/business/article723837.ece

A Fair Trade Hub, available at: http://www.fair-trade-hub.com/fair-trade-facts.html

http://www.tribes.co.uk/responsible_travel/what_is_fair_tradehttp://www.articlesbase.com/ask-an-expert-articles/the-importance-of-fairtrade-and-ethical-products-737955.htmlhttp://www.articlesbase.com/ask-an-expert-articles/the-importance-of-fairtrade-and-ethical-products-737955.htmlhttp://www.european-fair-trade-association.org/efta/Doc/History.pdfhttp://www.fairtrade.org.uk/what_is_fairtrade/history.aspxhttp://fairnessuk.ning.com/http://www.bafts.org.uk/http://www.sussex.ac.uk/Units/PRU/wps/wp11.pdfhttps://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MED2008&paper_id=40https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MED2008&paper_id=40http://www.consumerpsychologist.com/http://www.globalexchange.org/campaigns/fairtrade/coffee/pressrelease092200.htmlhttp://business.timesonline.co.uk/tol/business/article723837.ecehttp://www.fair-trade-hub.com/fair-trade-facts.htmlhttp://www.fair-trade-hub.com/fair-trade-facts.htmlhttp://business.timesonline.co.uk/tol/business/article723837.ecehttp://www.globalexchange.org/campaigns/fairtrade/coffee/pressrelease092200.htmlhttp://www.consumerpsychologist.com/https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MED2008&paper_id=40https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MED2008&paper_id=40http://www.sussex.ac.uk/Units/PRU/wps/wp11.pdfhttp://www.bafts.org.uk/http://fairnessuk.ning.com/http://www.fairtrade.org.uk/what_is_fairtrade/history.aspxhttp://www.european-fair-trade-association.org/efta/Doc/History.pdfhttp://www.articlesbase.com/ask-an-expert-articles/the-importance-of-fairtrade-and-ethical-products-737955.htmlhttp://www.articlesbase.com/ask-an-expert-articles/the-importance-of-fairtrade-and-ethical-products-737955.htmlhttp://www.tribes.co.uk/responsible_travel/what_is_fair_trade


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Burton Bollag, 2009, How Deep Is Demand For Fair Trade?, available at:

http://www.fairtraderesource.org/2009/10/14/how-deep-is-consumer-demand-for-fair-trade/
http://www.fairtraderesource.org/2009/10/14/how-deep-is-consumer-demand-for-fair-trade/http://www.fairtraderesource.org/2009/10/14/how-deep-is-consumer-demand-for-fair-trade/

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Fair Trade Marketing - Consumer Marketing - Top Grade Papers - Academic Assignment