Convincing growers to fund cooperative marketing activities: Insights from the New York wine grape...

Convincing Growers to Fund Cooperative Marketing

Activities: Insights from the New York Wine Grape

Industry

Linda Robinson Donald Lifton

The voting patterns among New York State wine grape growers are described to determine why a referendum to create a marketing order failed to reach a needed 65% threshold of support. Data analysis suggests that a crucial portion of the electorate, non-networked voters, disproportionately opposed the tax. Social marketing techniques might be helpful in future efforts to pass a marketing order referendum. 0 1993 John Wiley & Sons, Inc.

INTRODUCTION

In 1986, New York‘s wine grape growers, in partnership with the New York State government, contemplated undertaking a new and aggressive cooperative marketing program of the state’s wines. The critical funds for the project were to be raised through an annual 1% tax on the gross revenues of the state’s wine grape industry growers and processors. The enabling legislation for the tax required that a referendum on the tax issue among the state’s wine grape growers yield at least a 65% majority in support of the collective marketing effort. Only 55% of the voters supported the taxing measure and, thus, it was defeated.

The purpose of this study is to report findings from the testing of hypotheses

An Ithaca College grant in support of this research is gratefully acknowledged. An earlier version of this article was presented at the 1991 Annual Meeting of the Decision Sciences Institute.

Linda Robinson is Assistant Professor of Marketing and Donald Lifton is Associate Professor of Management at the School of Business, Ithaca College.

Agribusiness, Vol. 9, No. 1, 65-76 (1993) 0 1993 by John Wiley & Sons, Inc. CCC 0742-4477/93/010065-12

66 ROBINSON AND LIFTON

which explored the belief that support for the tax came disproportionately from those voters who both believed their business to be part of a larger, regional or statewide industry and who also engaged in networking behaviors with their industry colleagues. If this perspective holds true, then passage of the collective marketing tax in a future referendum could depend on the ability of leaders to use social marketing techniques successfully among those voting wine grape growers who are not networked-the very voters who disproportionately accounted for the program’s defeat.

BACKGROUND

Beginning in the early 1960s, a complex and interrelated set of changes in the external environment began to unfold, influencing how New York’s wine grape growing firms would operate. Over the next two decades these were to include: an international wine and grape glut; rising foreign imports; swift and dramatic changes in consumer preferences; shifts in the ownership of several major win- eries resulting in higher processor concentration; increasing domestic competi- tion; and sky-rocketing production costs. Concurrent with these external threats was a growing effort on the part of some firms in the industry to initiate Collective action strategies, specifically collective marketing activities. These efforts in- cluded: the formation of formal voluntary grower organizations and trade associations; local, regional, and state-level cooperative ventures; organized lobbying; and programs to increase generic marketing and promotion of wine and grape products.

The idea of a statewide marketing order for grapes took on momentum during the early months of 1986. To review, the proposed order called for a one percent (1%) levy on gross sales of grapes to wine processors. Specifically, it was planned that the money raised through assessments would be used to help fund the New York Wine Grape Foundation which had been in operation for one year.

Formal approval of at least 65% of the industry firms voting in a June 1986 referendum was required to establish the tax. The measure failed after receiving only about 55% of the vote. Since a majority of the industry’s producers had supported funding the collective marketing concept through the proposed tithing mechanism, the results frustrated New York’s political and wine grape industrial leaders.

METHODOLOGY

The data used in this study comes from a comprehensive field survey of New York‘s wine grape growers conducted in 1986.’ A mail survey was sent to a universe of 480 wine grape growing firms culled from a master list maintained by the New York Agricultural Statistics Service within the state’s Department of Agriculture and Markets. The size of the universe was winnowed to 384 due to postal returns of unopened surveys, deaths, and two initial survey screening questions.

The survey harvested 172 useable returns. This means that 45% of the total universe of New York State wine grape growers responded to the mailed question- naire. Response rates over 30% to mail surveys are considered high.2 A previous study found the sample respondents’ geographic distribution comparable to that of the universe and thus represenlative of the entire population.3

WINE GRAPES 67

Among the many questions posed, respondents were asked their attitudes about the general condition of their industry, their personal participation in industry-related associations, and how they voted in the collective marketing tax referendum. In keeping with research hypothesis stated in the introduction, the present researchers framed the vote as the dependent variable.

A bi-variate cross-tabulation analysis was conducted to determine the existence and strength of relationships between this dependent variable and several independent indicators regarding industry condition and participation in industry-related associations. Tests of statistical significance will be reported at the .05 threshold level.

In addition to a test of significance, a measure of the strength or importance of the relationship is reported. For this analysis Kendall’s Tau, a conservative statistic that is particularly appropriate when cell sizes are small, serves as the measure of association. For the relationship between variables to be of some practical use, the Kendall’s Tau absolute value should be at least “moderately7’ strong, that is greater than .2O.* All statistically significant associations reported here do, in fact, exceed an absolute Kendall’s Tau value of .20. The intent of the analysis is to determine if those voters who felt less connected to their industry disproportionately opposed the marketing order taxation mechanism.

EXPLORING ALTERNATIVE HYPOTHESES

Before undertaking the analysis, it seemed appropriate first to examine a more likely theme that would explain voting behavior: money. Survey respondents were asked to provide information about their 1986 gross revenue from grapes, the very figure to be taxed if the marketing order had passed. Table I shows the distribution.

Two conflicting hypotheses come to mind: either (1) The fewer large growers (N = 40) who would provide the bulk of the financing through the 1% tax on their larger gross revenues balked at the steep absolute dollar value they would have to pay and disproportionately voted against the marketing order; or (2) The many

Table I. Distribution of 1986 Gross Revenues from Sale of Grapes.

Cumulative N Percentage Percentage

$100,000 or more $80,000-99,999 $60,000-79,999 $40,000-59,999 $20,OOO-39,999 $10,000-19,999 $5000-9999 Less than $5000

13 11 16 15 25 28 16 39

163

8.0 6.7 9.8 9.2

15.3 17.2 9.8

23.9

100.0%

8.0 14.7 24.5 33.7 49.0 66.2 76.0

100.0

Missing cases: 9 (5.2% of 172 cases).


Table 11. Voting Patterns by 1986 Gross Revenue from Sale of Grapes.

~

Gross Revenue from Grapes- 1986 $60,000 + Marketing Order Vote

Count Column % In Favor 19

Against 12

Column Total 3 1

61.3%

38.7%

100%

Less than $60,000

Row Total

37 64.9% 20 35.1% 57 100%

56 63.6% 32 36.4% 88 100%

~~

Pearson = 0.114; DF = 1; Sig. = .74-not statistically significant.

smaller growers ( N = 123) disproportionately voted against the regressive nature of the flat tax that made it financially harder for them to part with the absolute value of their smaller gross revenue. The question is analyzed in Table 11.

Voting patterns of those growers with 1986 gross revenues from grape sales over $60,000, 25% percent of the population, were compared with those below the cutoff figure. The chi-square analysis proved to be not statistically significant. Thus, even though the marketing order would tax gross revenues, support for it was not linked to a pattern of individual grower sales.

THE IMPORTANCE OF BEING NETWORKED

Having found no linkage between the size of wine grape grower gross revenue and the pattern of voting for the marketing order, the authors returned to their original hypothesis that support for the tax is correlated with how growers feel about their connectedness to their industry and their networking within it.

One section of the assembled data base used a Likert scale to measure the respondents’ attitudes about their state industry. Voters were asked their views on whether a major problem of state grape growers “is their lack of organization,” whether growers would have to “stick together” in the future to survive, and whether they were “members of a state-wide grape growing industry.” In each case, as the next three tables demonstrate, there was a statistically significant correlation between those who saw the existence of andlor need for connectedness with other industry members and those who voted for the marketing order.

Table 111, for example, shows that 79% of those who saw a lack of organization among the growers as a major problem voted to support the marketing order while those who were neutral or in disagreement with the notion showed significantly less enthusiasm for the tax.

The results in Table IV indicate that 77% of those voters who believed that New York State wine grape growers needed to “stick together” to survive supported the marketing order while 85% of those who disagreed with the need for mutual efforts voted against it.

Finally, the voting position on the marketing order correlated in a now predict-

WINE GRAPES 69

Table 111. Voting Patterns by Respondents’ Attitudes about Their Lack of Organization.

Wine Grape Growers Row Lack Organization Agree Neutral Disagree Total

Marketing Order Vote Count Column %

In Favor 41 5 12 58

Against 11 9 11 31

Column Total 52 14 23 89

79% 36% 52% 65%

21% 64% 48% 35%

100% 100% 100% 100%

Pearson = 11.35; DF = 2; Sig. = .OO; Kendall’s Tau = .29.

able pattern with the grower’s beliefs about whether they were members of a state-wide industry. Those who were neutral on this question split their votes on the order about evenly (see Table V). Seventy-seven percent (77%) of those who saw themselves as part of an industry, however, voted for the marketing order while 78% of those who did not sense a connectedness to the state-wide industry opposed the tax.

In summary, the above bi-variate cross-tabulation analysis found a statistically significant correlation between support of the marketing order and indicators of the degree that wine grape growers perceived themselves to be members of a largely fragmented statewide industry that, if formally organized, could improve their individual capabilities to survive. Those who felt connected were more likely to have voted for the tax than those who did not.

The authors decided to pursue this line of analysis further. They explored whether similar patterns of support for the tax would emerge among respondents who felt that their personal involvement in local, regional, and/or state-wide

Table IV. Voting Patterns by Respondents’ Attitudes about the Need to “Stick Together”.

Wine Grape Growers Need to “Stick Together to Survive


In Favor

Against

Column Total

Agree Row

Neutral Disagree Total

46 77% 14 23% 60

100%

12 2 60 67% 15% 66%

6 11 31 33% 85% 34% 18 13 91

100% 100% 100%

Pearson = 17.87; DF = 2; Sig. = .00; Kendall’s Tau = .34.


Table V. Voting Patterns by Respondents’ Attitudes about Being Members of a Statewide Industry.

Growers Are Members of Row a Statewide Industry Agree Neutral Disagree Total


In Favor 50 7 2 59

Against 15 8 7 30 77% 47% 22% 66%

23% 53% 78% 34%

100% 100% 100% 100% Column Total 65 15 9 89


Table VI. Voting Patterns by Respondents’ Attitudes about Efficacy of Local Grower Associations.

Participation in Local Grower Assoc:iation Row Would Help Firm Agree Neutral Disagree Total


In Favor 3 1 1 3 15 59

Against 6 6 19 31

Column Total 3 7 19 34 90

84% 68% 44% 66%

16% 32% 56% 34%

100% 100% 100% 100%


Table VII. Voting Patterns by Respondents’ Attitudes about Efficacy of Regional Grower Associations.

Participation in Regional Grower Association Row Would Help Firm Agree Neutral Disagree Total


In Favor 34 14 11 59

Against 10 3 18 31 77% 82% 38% 66%

23% 18% 62 % 34%

100% 100% 100% 100% Column Total 44 17 29 90

~ ~

Pearson = 14.60; DF = 2; Sig. = .OO; Kendall’s Tau = .34

WINE GRAPES 71

Table WIT. Voting Patterns by Respondents’ Attitudes about the Efficacy of Statewide Grower Associations.

Participation in State Grower Association Row Would Help Firm Agree Neutral Disagree Total


In Favor 37 11 10 58 77% 69% 40% 65%

23% 31% 60% 35%

100% 100% 100% 100%

Against 11 5 15 31

Column Total 37 19 34 89


Table M. Voting Patterns by Respondents’ Participation in Wine Grape Grower Organizations.

Participation in a Not a Grower Organization Member


In Favor 9

Against 14 39%

61%

100% Column Total 2:

At Least One Membership

51 74% 18 26% 69 100%

Row Total

60 65% 32 35% 92

100%

Pearson = 9.20; DF = 1; Sig. = .OO; Kendall’s Tau = (.32).

grape grower association activities would increase their chances “to expand or stay in business for the next 5 years.” The results echo those already discussed above. In Table VI, 84% of those who felt it likely that participation in local grape grower association activities would enhance their business supported the marketing order while only 44% of those who felt unlikely to be benefitted by local association participation voted for it.

Table VII shows that 77% of those who felt that participation in regional grape grower associations voted for the marketing order; only 38% of those who doubted the utility of regional associations voted for the marketing order.

Finally, Table VIII demonstrates that at the state-wide grape grower association level, 77% of those who valued the utility of participation supported the marketing order while only 40% of those who doubted the pay-off of their participation in state-wide organizations voted for the marketing order.

The last table of data displays the next logical step in the analysis. To this


point, the discussion has demonstrated that support for the marketing order disproportionately correlated with the voters’ sense of being connected to the industry and their belief that their participation in formal wine grape associations at either the local, regional, or state level would enhance their ability to survive or expand their operations over the next five years. Table IX examines whether the voters actually report having participated in an association and links that membership choice to their voting behavior.

While only 39% of the nonmember voters supported the tax, 74% of those voters who were members of a wine grape association voted in favor of the marketing order.

INTERPRETATION: A SOCIAL MARKETING PERSPECTIVE

Any leadership attempt to resuscitate the marketing order through another referendum would be better served if the analysis of the past voting patterns described above were taken into account. The social marketing perspective would be useful to develop a successful strategy for persuading wine grape growing voters to cast supportive ballots.

In 1971, Kotler and Zaltman5 published the seminal article in social marketing. They defined social marketing as “. . . the design, implementation, and control of programs calculated to influence the acceptability of social ideas . . .’, (Ref. 5, p. 5). Many others have followed.6-10 Mushkat Jr.,ll for example, seems to view plan implementation and social marketing as heavily overlapping:

Concepts such as market structure analysis, market definition, market segmenta- tion, market positioning, market orchestration, the design of marketing strategy, product development, pricing, distribution and promotion appear to all to have their counterparts in various activities undertaken in the public sector. By closing the gulf between public planning and social marketing, the author hopes to have opened new vistas to the understanding and management of public plan implementation. (p. 29)

In the case of the New York wine grape industry, it appears that the industry leadership was able to craft a cooperative marketing plan but was unable, due to its inability to garner a threshold number of votes in a referendum, to implement the marketing order as a funding mechanism. The data analysis conducted in this study might suggest to a social marketer that one strategy that could lead to success on a future referendum would be to dichotomize the eligible voters into segments depending on whether or not they participate in formal wine grape associations, that is, whether they are “networked” or “non-networked” within the industry. Each segment would then require a different social marketing plan to enhance the likelihood that members of that market segment would vote in favor of the marketing order.

Because most of those who are networked support the marketing order, it might be particularly strategic to develop a marketing plan targeted at the predomi- nantly nonsupportive, non-networked growers and processors. A previous study reported that, in comparison to networked growers and processors, the crucial non-networked market segment was less educated, tended more to come from farm backgrounds, engaged in less sophisticated farm management practices,

WINE GRAPES 73

were unlikely to operate a small farm winery, were more risk averse, and tended to own less diverse grape growing operations on comparatively smaller acreage. l2

The remainder of this discussion will focus on social marketing strategy elements that could be developed to appeal specifically to this non-networked target audience.

Kotler and Zaltman5 state that social marketers use the same conceptual framework found in more traditional settings. Thus, they focus on the same key variables in the marketing mix offered by McCarthy,13 the famous four P‘s of product, place, price, and promotion.

Product

As Kotler and Zaltman5 point out, the marketing of an idea typically is more challenging than the marketing of a good because there is rarely one product that can accomplish the idea’s aims: “In general, the social marketer remains aware of the core product . . . and tries to create various tangible products and services which are ‘buyable’ and which advance the social objective” (p. 7, italics in original). In this case, the idea/core product to be marketed is the survival of the New York wine grape industry through cooperative efforts. Examples of the tangible products that advance the core include local, regional, and state-wide formal trade organizations as well as grower cooperatives. Using this perspective, the marketing order can be viewed as another tangible product in support of the core idea, one that aims to provide funding to support cooperative research and generic promotion of wine grape products. As the data in this study suggested, however, this product as designed, promoted and priced did not appeal equally to both market segments.

Place

This variable “. . . means arranging for accessible outlets which permit the translation of motivations into actions” (Ref. 5, p. 9). In this case, the mail-in ballot distributed to each eligible voter provides the channel. Given the lower educational levels of the target segment, care must be taken to word the ballot and the accompanying material in easily understandable prose. Beyond this, there seem few ethical alternatives that would not clash with the dominant value structure rooted in democratic principles of full and equal access to voter participation. Choosing to alter the channel and distribute ballots at meetings of relevant organizations, for example, would probably yield a more favorable vote tally but violate both the letter and spirit of the law.

Price

The social marketing perspective views target audience calculation of price as basically a cost-benefit analysis. Once primary benefits and costs have been assessed, “. . . motivation to act is directly related to the magnitude of excess benefit” (Ref. 5, p. 9). Therefore, the task for social marketers is to attempt to make the tangible product-in this case the marketing order-more appealing either by increasing perceived benefits relative to perceived costs or by decreas- ing perceived costs relative to perceived benefits.


Attempts by industry and government leaders to influence motivation of the target group in this study through an increase in the perception of excess benefit could take two directions. First, given their greater aversion to risk, non-networked wine grape growers may perceive the costs associated with the marketing order as to be too high and, thus, have a lower motivation to support its passage. One fear may be loss of control over how the funds collected under the order will be allocated once marketing activities are implemented.

To lower perceived risk (i.e. , lower perceived price), social marketers could find means to reassure non-networked growers prior to the vote that they will have ample opportunity to influence how marketing order proceeds will eventually be spent. For example, it could be suggested that an elected advisory board be established to set priorities and oversee spending once the order is in place.

As an alternate strategy to influence price perceptions, focus could be placed on the benefit component of the cost-benefit analysis. It can be assumed that benefits derived from the passage of a marketing order (e.g., increased demands and higher revenues) could be significant for all growers involved. Non- networked growers-simply because they are not well integrated into the industry-may not be sufficiently aware of them.

The task for industry and government leaders becomes one of articulating these benefits clearly and concisely and communicating them appropriately to the target audience. As in any marketing mix, communication with the targeted segments is best accomplished through a well-conceived promotion plan. The next section outlines suggestions for promotion elements which could be instru- mental in influencing the perception of excess benefit (i.e., lower price) among non-networked grape growers and, thus, increase their motivation to vote for a marketing order.

Promotion

This might seem the most challenging of the marketing mix variables for the social marketer in this case: How to communicate the intended message to a crucial market segment that is difficult to reach because of their non-networked status. The problem is somewhat less daunting because the total universe is manageable in size and the target segment is a smaller portion of it.

Publicly available lists of eligible voters can be compared to membership lists of industry organizations to identify those who are non-networked. Advertising in the form of direct mail pieces can then be designed especially for this targeted group. Given the group’s educational level, these pieces must be easily understandable in their wording and compare in a straightforward manner the pro- jected benefits of the tax (i.e., increased revenues) to the relatively small costs. In addition, given their farm backgrounds, copy emphasizing the low risk nature of the program (due, for example, to the presence of an advisory board) could be coupled with a brief explanation of how the cooperative marketing approach is rooted in family farm values such as neighbors helping each other.

Personal selling, another element of promotion, might also be used effectively. For example, cooperative extension agents, acting within the boundaries of the law, could approach each non-networked voter to lobby for support of the referen-

WINE GRAPES 75

dum. These agents could also educate members of the voters’ informal network such as retail store staff and church leaders to enlist them as potential reinforcers of the intended message.

SUMMARY, CONCLUSIONS, AND IMPLICATIONS

This article briefly described the New York State wine grape industry through the mid-1980s and examined the voting patterns among its growers to determine why a referendum to support a marketing order failed to reach a needed 65% threshold of support. Data analysis suggested that a crucial portion of the electorate, non-networked voters, disproportionately opposed the tax. It was concluded that social marketing techniques might be helpful in future efforts to pass a marketing order referendum, particularly in the marketing mix variables of price and promotion.

Ten years after coining the phrase social marketing and establishing it as an accepted subdiscipline of marketing, Kotler seemed frustrated. l4 Social marketing had been broadened beyond his intent to cover activities that he felt were more aptly termed “societal marketing” and/or “nonprofit organization marketing.” He and Fox offered three situations where social marketing seems particularly appropriate: when new information and practices need to be disseminated; when countermarketing is needed; or when activation is needed. In order to reemphasize the focus on the marketing of socially beneficial ideas and causes, they offered possible synonyms such as “social cause marketing,” “social idea marketing,” and “public issue marketing”. l4

One implication of this study is the inclusion of the private industrial sector as an appropriate arena where socially beneficial ideas can be spread through the techniques of public issue marketing. In the case of the New York State wine grape industry, for example, the very survival of an important sector of the state’s economy is at stake. Thousands of jobs and the vitality of many communities are held in the balance. In this instance, firms are the decision makers. Their business leaders become the key market to be appropriately segmented and targeted as part of a strategic social marketing plan.

The notion of collective marketing activities as an appropriate response is still a relatively new idea and practice within this particular setting. Activation among the growers and processors is required if the industry is to succeed. The situation seems ripe for the application of social marketing techniques.

The authors believe that this discussion has offered only one example of how cooperative efforts can benefit not only private enterprise but the larger socioeco- nomic community as well. Encouraging the collective marketing idea to be adopted in the New York State wine industry is an appropriate focus for public issue marketing or social marketing. While this article has focused on the link of social marketing to an agribusiness situation in New York State, the applications in our increasingly globalized economy are numerous in terms of the potential for cooperation in areas such as research, development, marketing, and production.

Cooperation in the formation of consortia will be crucial, for example, in the race for dominance in the high definition television (HDTV) technology competi- tion emerging between American and Japanese firms. l5 Again, the results can potentially have socially beneficial consequences for the prevailing national


economy. It seems appropriate, therefore, to explore how the use of social marketing techniques among business leaders can lead to effective consortium creation.

Thus, the policy issues implicit in this study go beyond the application of social marketing to the New York State wine grape industry. Instead, it is hoped that the discussion here helps to broaden the use of the techniques to many areas of the industrial sector where socially beneficial ideas need to be permeated and adopted.

REFERENCES

1. L. Robinson and D. Lifton, “The Index of Dissimilarity-A Tool for Market Researchers: Exploring Bias Between Early and Total Sample Survey Respondents,” Proceedings o j the Annual Meeting, Atlanta, Decision Sciences Institute, 1990, pp. 1157-1159.

2. P. Alreck and R. Settle, The Survey Research Handbook, Richard D. Irwin, Inc., Homewood, IL, 1983.

3. L. Robinson and D. Lifton, “Reducing Market Research Costs: Deciding When to Eliminate Expensive Survey Follow-up,” The Journal of the Market Research Society, 33(4), 301 (1991).

4. H. Blalock, Social Statistics, McCraw-Hill Publishers, New York, 1972. 5. P. Kotler and G. Zaltman, “Social Marketing: An Approach to Planned Social Change,”

Journal ojMarketing, 35, 3 (July 1971). 6. J. Baruch, “Applying Marketing Principles to Social Causes,” Business Horizons, 27(4), 65

(July/August 1984). 7. D. Leather and G. Hastings, “Social Marketing and Health Education,” Journal ojSeruices

Marketing, 1(2), 49 (Fall 1987). 8. M. Rothchild, “Marketing Communications in Non-business Situations or Why is it So Hard to

Sell Brotherhood Like Soap,” Journal of Marketing, 43, 11 (Spring 1979). 9. M.J. Sirgy et. al., “The Question of Value in Social Marketing: Use of a Quality-of-Life Theory

to Achieve Long-term Life Satisfaction,” American Journal ojdconomics and Sociologx 44(2), 215 (April 1985).

10. M. Thomas, “Social-Cause Marketing and the Pitfalls Beyond,” Quarterly Review ojMarket- ing, 9(1) 1 (October 1983).

11. M. Mushkat, Jr., “Implementing Public Plans: The Case for Social Marketing,” Long Range Planning, 13(4) 24 (August 1980).

12. L. Robinsot. and D. Lifton, “Networking Among the Non-networked: Social Marketing Oppor- tunities in the New York Wine Grape Industry,” Proceedings ojthe Annual Meeting, Atlanta, Decision Sciences Institute, 1991, pp. 245-247.

13. E.J. McCarthy, Basic Marketing: A Managerial Approach, 3rd ed., Richard D. Irwin, Inc., Homewood, IL, 1968.

14. F. Fox and P. Kotler, “The Marketing of Social Causes: The First 10 Years,” Journal of Marketing, 44, 24 (Fall 1980).

15. R. Jurgen, “Chasing Japan in the HDTV race,” IEEE Spectrum, 26-30 (October 1989).

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