EXECUTING GROWTH STRATEGIES: Achieving a Strong Brand Name

1
EXECUTING GROWTH STRATEGIES Achieving a Strong
Brand Name

• Shermain Hardesty, Moderator
• University of California, Davis

2
IMPORTANCE OF BRANDING

• Differentiation strategy
• Competition for shelf space
• Competition for consumers dollar
• One brand often covers broad product line

3
CO-OP STRUCTURE CAN IMPEDE BRAND-BUILDING

• User-benefit principle
• User-financed principle
• User-control principle

4
USER-BENEFIT PRINCIPLE

• Focus on member deliveries
• Limited product line
• Seasonal product availability
• Horizon problem
• Net margins distributed primarily in proportion
  to patronage, not investment
• Members whose earnings are deferred for
  brand-building get no direct return
• Brand-building expenses can cause co-ops returns
  to be uncompetitive

5
USER-FINANCED PRINCIPLE

• Member retains are primary source of equity for
  most co-ops
• Members often reluctant to contribute equity or
  build reserves to invest in brand building
• Cash-strapped members want to maximize cash
  patronage payments by minimizing retains

6
USER-CONTROL PRINCIPLE

• Ag marketing co-op board membership is often very
  homogeneous
• Boards can lack marketing finance expertise to
  provide strategic oversight
• Producer members often advocate for marketing
  programs in their communities

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CO-OPS CAN OVERCOME THESE STRUCTURAL CHALLENGES

• Dairy Farmers of America
• Don Schriver, Vice President
• CROPP/Organic Valley
• Jerry McGeorge, Cooperative Coordinator