This article about Fairtrade from a marketing perspective has been written by Heather Skinner who is a Principal Lecturer in Marketing at Glamorgan Business School. We are very grateful to her for these thoughts in Fairtrade Fortnight.
As an academic whose subject specialism is marketing, I recognise some interesting paradoxes around the marketing and consumption of Fair Trade products.
Marketers tell companies they should provide what a customer wants. While customers are usually quite effective in expressing what their problems and needs are, they can not always express what they want companies to provide to fulfill these needs. Customers also face the problem of wanting low priced yet good quality products that offer good value for money on the one hand, while also believing companies that supply these products should take on a wider remit for social responsibility, in particular with regard to sourcing, production and supply on the other hand.
Indeed, the American Marketing Association changed its definition of marketing in 2007 to reflect this wider social responsibility – the AMA now defines marketing as:
the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
There is an alternative perspective such as that proposed by the economist Milton Friedman who famously said that he believed “the business of marketing is business”. Other authors agree, basing their opinion on the argument that, in a democratic society, marketers do not, and should not have the responsibility for deciding what is best for the people – that is the role of politicians who have been elected by the people. Marketing’s social responsibility is therefore to concentrate on meeting customers’ needs profitably and stay away from social responsibility, leaving that to elected government. However, in a marketplace economy it is impossible to separate the social from the economic. Many of the functions of the business world greatly affect society and social well-being and vice versa. What society feels and thinks about business can greatly affect business results, and being socially responsible can bring a company financial rewards. Therefore, while marketing has historically focused on meeting customer needs, a more socially responsible and societally aware view of marketing is that it should not solely focus on meeting the needs of customers if that causes detriment to other stakeholders, including suppliers. Of course, companies may see the benefits of the business case outweighing any intrinsic desire to be good corporate citizens, but does that matter if the end result is the same?
Price sensitivity is also an issue, especially in tough economic times. It is quite usual for innovations to enter the marketplace at a relatively high price, with prices falling as more consumers start to purchase the new products and the product moves from introduction to maturity in the marketplace. When Fair Trade products first entered the marketplace they were generally priced higher than more mature products. As more people move to purchasing Fair Trade over more traditional products, the price has come down. When costs are similar, customers also have less price-based reasons not to purchase goods that are fairly traded, and this allows for more ethical purchasing by consumers. As more consumers choose to purchase fairly traded goods, more products flow into the marketplace to meet this growing need.
There is an element of a ‘chicken and egg’ situation here – are marketers offering fairly traded goods because customers demand them, or are customers demanding more fairly traded goods because they are more widely available? The answer to this question may not matter, but from a marketing perspective, while social responsibility and societal marketing is a concern, companies will continue to offer goods that meet stakeholder concerns. The question that may matter more is whether or not companies will or indeed should cease meeting the need to be socially responsible if and when customers ever stop demanding that companies concern themselves with those issues.