Academic journal article Communications of the IIMA

Aiding Fair Trade Online through Place Branding

Academic journal article Communications of the IIMA

Aiding Fair Trade Online through Place Branding

Article excerpt

INTRODUCTION

Fair trade is "the marketing and sale of products at greater than free trade prices" (LeClaire, 2003, pp. 66). Broadly, it ensures socially just economic principles, and more specifically it's a certification process that tracks products from raw materials to finished products assuring producers in developing countries a fair wage and safe working conditions (the Appendix presents detailed description of the process). Its popularity revolves around the growing niche-to-mainstream trend of ethical consumerism, "which has emerged over the past 15 years to describe actions taken by individuals seeking to actively support products according to their perceived ethical credentials" (Coles & Harris, 2006 pp. 1). Ethical consumerism attempts to utilize the rhetoric of consumer power to actively shape the market in a particular way. Fairly traded goods carry a guarantee that part of the price is devoted to a social premium, which is invested in the welfare of the producers (Coles & Harris, 2006; Moore, 2004). Some consumers from developed markets are prepared to pay premium prices for such products (Coles & Harris, 2006; De Pelsmacker, Oriesen, & Rayp, 2005).

Concurrently, over the last thirty years, communication and information technologies have fast emerged as mechanisms with many world-changing applications, as well. Today every business model is evolving to adapt to the growing acceptance of the Internet and ecommerce. In a convergence of old-world cottage industry with a modern technological platform, the Internet is allowing greater market access to geographically remote producers in less-developed nations than ever before, and at the same time is informing the public at large about global living conditions. Operating a successful fair trade business on the web such as TenThousandVillages.com or implementing key web business strategies such as customization and market segmentation all require that Fair Trade businesses understand the technology and keep track of web developments.

E-commerce has aided the rise in fair trade popularity over the last decade; however, fair trade online still faces challenges that need to be addressed. Two issues facing fair trade organizations (FTOs) online are consumer's online apprehension and retention of customers. Lack of trust influences consumers' choice of electronic retailers (e-tailers) (e.g., Mukherjee & Nath, 2007). Familiar and trusted e-tailers are preferred to new, unfamiliar, and untried e-tailers (e.g., Becerra, 2009). Additionally, lack of a well-designed website has a negative influence on customers' online perceptions and purchase decisions (Poddar, Donthu, & Wei, 2009). The fair trade industry, again due to its niche nature, is already at a marketing disadvantage because of unfamiliarity when competing with major commercial retailers such as Target, Wal-Mart, Pottery Barn, etc. Not surprisingly, "consumers often feel more comfortable with buying from the web sites that are well-known and sell familiar brand names " (Halepete & Park, 2006). Therefore, FTOs have to spend more resources on marketing their Web stores beyond having a simple Web presence, such as advertising and having adequate web interfaces. FTOs' challenge is to attract shoppers to their Web sites and to convert shoppers into buyers but poor Web site functions and lack of trust may prevent them from accomplishing this (e.g., Johnson, 2007).

To succeed online FTOs must differentiate their Web sites from those of major commercial online retailers that carry popular name-brand products. One way to do this is through place branding. Place branding is the process of inscribing to a place (usually a geographical area) symbols and images that represent that set of central, enduring, and distinctive characteristics that actors have ascribed to that place, thereby creating a focus of identity; and it differs from product branding in at least four key areas, including product development, brand identity, brand building activities, and brand management (Pryor & Grossbart, 2007). …

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