Product innovation and promotion of value-added products via marketing cooperatives

Abstract

Marketing cooperatives (MCs) can have a competitive advantage over investor-owned firms (IOFs) when communicating complex qualities where information asymmetries exist between consumers and producers. For example, the cooperative business model lends credibility and authenticity to health, sustainability, and local production claims. We review the existing literature to discuss opportunities for cooperatives in modern agricultural markets characterized by increased product differentiation. Marketing orders (i.e., regulated producer organizations operating in select industries and geographic regions) can complement cooperatives’ investments in product innovation and brand-specific advertising, and we compare and contrast their actions with functions provided by MCs. A description of the efforts pursued by the Almond Board of California and Blue Diamond illustrates how coordinated producer and market research, product innovation, generic advertising, and brand promotion can ensure MCs' long-term growth and success. We conclude with a discussion of future data and research needs.