The impact of brand equity on the financial performance of marketing cooperatives

Abstract

Because of inherent constraints, few farmer cooperatives use branding to pursue differentiation and competitiveness in the agri-food industry. Considering the complete lack of applied research on the brand-performance relationship for farmer cooperatives, it is unknown if branding is even profitable. This paper addresses the gap in our understanding with a novel panel study of 707 US marketing cooperatives for the 2005-2011 period. Informed by lagged observations of trademark and service mark data, the empirical analysis indicates a positive relationship of brand equity to the financial performance of marketing cooperatives. Specifically, 1% increases in the total stock of trademarks and service marks have a positive impact of $130,441 and $141,921, respectively, on the net sales of the mean marketing cooperative. The corresponding impact on net income is estimated at $3,815 and $17,286, respectively. Following the estimation of further specifications, there is also indication most of the impact is facilitated by older trademarks (>3 years) in the stock, which implies a delayed impact of brand equity on financial performance. Overall, the reported evidence serves as motivation to directors and managers of marketing cooperatives to pursue opportunities to build brand equity. To do so, however, may first require a solution to the equity constraint which appears at the foundation of most farmer cooperatives. K E Y W O R D S agricultural cooperative, brand equity, panel analysis, trademark J E L C L A S S I F I C A T I O N M31, O34, Q13 Agribusiness. 2019;35:234-248. wileyonlinelibrary.com/journal/agr 234 |

Do Corporate Governance Recommendations Apply to U.S. Agricultural Cooperatives?

“…In contrast to the investor-owned firm (IOF), which strives to maximize return on investment for its shareholders, a cooperative is a user-owned, user-controlled business from which benefits are derived and distributed equally based on use. Existing research evaluates cooperative financial performance as one would profit-maximizing IOFs and fails to account for empirical complications due to endogeneity of governance and performance [4][5][6][7][8][9]. Moreover, as the (dual) function of cooperatives (i.e., profitability and member benefits) is distinct from that of IOFs [10][11][12][13], the same governance recommendations may not apply and alternative performance measures may be appropriate.…”

Competitive Strategies for Wine Cooperatives in the German Wine Industry

“…Hanf and Schweickert [7] showed that member heterogeneity increases all challenges which were mentioned above. [35] The business principles of (wine) cooperatives as well as the internal structure and consequent problems often lead to a strong member orientation [14]. Furthermore, cooperative members are of different size and some are full-time grape producers whereas others are only active part time in viticulture.…”

“…Cooperatives which follow the approach of sustainable production should use this as an outstanding feature in communication with customers. Furthermore, the usage of the "farmer-owned" attribute can provide a marketing advantage over non-cooperatives [14]. Consumers might associate the cooperative with certain social values such as democracy, equality, or solidarity, which can also provide a marketing advantage [14,66].…”

“…Furthermore, the usage of the "farmer-owned" attribute can provide a marketing advantage over non-cooperatives [14]. Consumers might associate the cooperative with certain social values such as democracy, equality, or solidarity, which can also provide a marketing advantage [14,66]. Cooperatives could use these values for differentiation [67].…”

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