Capitol Consumers

By Boller, Gregory W. | Business Perspectives, Spring 1995 | Go to article overview
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Capitol Consumers

Boller, Gregory W., Business Perspectives

A class of MBA students at The University of Memphis is using modern marketing research tools to learn about a unique target group - the U.S. Congress.

Marketing, by its simplest definition, involves creating exchanges. One party has something to offer; the other is in need of something. People engaged in marketing make sure the exchange happens.

In today's business environment, companies do business in one or more of a variety of markets. Some companies market to consumers. Others are engaged in industrial marketing. Many companies are engaged in financial marketing, working to sell their strengths to stockholders or to sources of capital. And, many companies today are engaged in political marketing.

Political marketing, a term that sparks discomfort among some companies and most elected officials, is a fact of business life in the 1990s. Decisions made in Washington affect companies today in many ways, perhaps more so than ever before. And, many companies today are using political marketing in an effort to influence those decisions.

This spring, 15 graduate students at The University of Memphis are studying political marketing as part of the University's Master's in Business Administration (MBA) program. Using electronic and traditional research methods, they have been collecting information and devising strategies to help a group of businesses package certain "products" they can offer in exchange for benefits members of Congress have available. The class is not theoretical; it is an exercise in reality.

Products to exchange

The term "political marketing" denotes exchanges in political markets. What companies have to offer in the exchange are a variety of products that political officials want and need, including:

* Campaign financing funds. Direct corporate contributions are prohibited, but PACs, corporate bundlings of individual contributions, and the like are not.

* Information and expertise. The job on Capitol Hill is complex, and legislators need quality information to be able to make informed decisions.

* Casting benefits. Political decisions are often controversial. Members of Congress need reasons, expressed in human terms, for advancing or killing various legislative initiatives.

* Perks of power. Fact-finding missions aren't all work. Photo opportunities, such as the opening of a new factory, give politicians the visibility they covet. Companies can find numerous ways to win friends among politicians.

Direct and indirect benefits

it is easy to see why American businesses, both large and small, would want to have influence in Washington today. Government is a primary source of revenue for some companies. With a $1.5 trillion federal budget, there is a lot of money to share. Grants, appropriations, and direct sales to government are revenue opportunities worth cultivating.

Just as important are the indirect ways companies are affected by political decisions today. The growing body of governmental regulations is a major reason why American companies want to get more involved in the political decision-making process. New regulations and regulation rollbacks can affect a company's bottom line just as surely as a drop or boom in sales. So can tax increases and tax cuts. If a company can, by getting involved in the political process, help engineer significant tax breaks, the result can, again, be as important as sales success.

Getting involved

The National Hardwood Lumber Association (NHLA), with its headquarters in Memphis, is a 1,300+ member trade organization. Member companies are primarily family-owned and average 125 employees. Whereas most of the nation's large paper and forest product companies have their own lobbyists or political consultants, many smaller companies, including NHLA members, are new to political marketing.

In January 1995, NHLA joined with 15 other lumber industry associations serving small, family-owned firms to form Family Business First, a coalition that represents more than 7,500 lumber industry businesses throughout the U.

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