Small farms building global brands through social networks

Abstract

Small farms have the option of competing in the global market by pursuing a niche brand differentiation strategy. However, they usually face tight financial constraints when attempting to build a food brand that meets both the desires of a small segment of distant final consumers and the requirements of its international buyers. In this study, we explore how small farms can use social networks to start transacting with international buyers and to build global niche brands. Following a 'grounded theory' approach, we analyzed the evidence collected from 34 cases of small farms producing single-estate extra-virgin olive oil and other specialty food products in Italy. The analysis led to the following conclusions. First, small olive oil farmers can build brand associations and perceived brand quality, and ultimately brand equity, by developing social ties with third-party endorsers that are outside the product supply chain but have high status in the market. Second, to intentionally develop these social ties, small olive oil farmers need to obtain information both on (a) international consumer preferences for olive oil attributes and (b) which actors have the high status to endorse and promote the individual brands. Third, use of social ties with high-status endorsers for brand development is more effective when international consumers' familiarity with the product is lower and their preference for credence attributes stronger. While concerning a developed country that moreover enjoys a strong reputation in relation to the product, we posit that this study is rich with lessons for small producers of specialty food in both developed and developing regions whose reputations associated with the specific products are high. From a policy perspective, this study suggests that public market development programs can play a key facilitation role for the development of social networks linking small companies and international buyers by providing relevant market information on third-party endorsers as well as final consumers and buyers.