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Aiding fair trade online through place branding.

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). Place branding online, however, still under researched. Specifically, research on FTOs place branding online is scant. The purpose of this study is to investigate place branding as an aid to fair trade online. We argue that place branding is a promising method to improve and develop fair trade online.

The remainder of the article is organized as follows: First, the literature of free trade and place branding is presented. Second, fair trade principles and fair trade online are discussed. Concomitantly, it discusses why FTOs websites should adopt place-brand building activities. Finally, it suggests opportunities to improve websites design for the future growth of fair trade online.

LITERATURE REVIEW

The current fair trade movement can be traced in part to a) increasing frustration with the perceived out-of-control effects of free trade agreements; b) the lack of progress in terms of reducing extreme poverty; and c) increasing relative gaps between the rich and poor (e.g., Hira & Ferrie, 2006; Witkowski, 2005). The fair trade movement is not homogenous and it is composed of different political objectives as well as different business perspectives (e.g., Low & Davenport, 2006). Nevertheless, the fair trade movement requires that ethical standards be applied to the process of production and distribution. Bananas, coffee, chocolate, clothes, dried fruit, fruit juice, honey, sugar products, tea, art crafts, and textiles are some of the most commonly sold fair trade products (Jones, Comfort, & Hillier, 2003). Ethical driven consumers are willing to pay a premium for fair trade products. For example, in Belgium, consumers are willing to pay up to a 10% premium for fair-trade coffee (De Pelsmacker et al., 2005). A few fair trade producers and/or organizations, such as the Day Chocolate Company that links cocoa farmers from Ghana in West Africa with UK chocolate consumers (Doherty & Tranchell, 2005), are successful. Many fair trade producers and/or organizations are still trying to realize the benefits of fair trading (Moberg, 2006) despite their presence online.

FTOs' Web sites, similar to other Web sites, have been designed to promote products and/or brands, including providing contextual information and facilitating interactions with the brands (Dou & Krishnamurthy, 2007). To succeed in the global marketplace, places (e.g., cities, countries, and/or FTOs) must have a clear, credible, appealing, distinctive and thoroughly planned vision, identity and strategy (Anholt, 2005). FTOs should take advantage of their physical geographical identity as well as the identity of the fair trade producers, through place branding, to create a distinctive, appealing, and interactive image online to attract and retain online customers. However, the majority of FTOs do not take advantage of place branding nor have a systematic interactivity between producers and consumers. Barnett, Cloke, Clarke and Malpass (2005) suggests that geographical distance creates indifferences but the internet can "reduce" the perceived distance. Thus, FTOs, through place branding online, can increase concern for the welfare of third world producers.

Having a distinctive, appealing, and interactive Web site would allow FTOs to reduce consumers' online apprehension because the Web site will be more than just an online store (e.g., Friedman, Kahn, & Howe, 2000; Wu & Chang, 2005). The Web site will be a place for ethical consumers to interact with fair trade producers and to get to know the geographical area where the fair trade products originate. This interaction and geographical connection can help build a relationship with the FTOs' Web site, which increases trust (e.g., Mooreman, Despande, & Zaltman, 1993) and builds customer loyalty online (e.g., Lau and Lee, 1999). Additionally, the Web site may become a symbol of the place (e.g., country) and/or actor (e.g., fair trade producer) that ethical consumers would like to patronize (LeClaire 2003).

Place branding for countries, cities and regions has been studied for many years and provides a foundation for FTOs place branding online. For example, country branding can help a country, perceived as part of a region or continent, to stand out as a unique place with specific attributes (e.g., Wanjiru, 2006). Place branding for cities can provide the basis for developing policy to pursue economic development and it can serve as a conduit for city residents to identify with their city (Kavaratzis, 2004). In Japan, local governments intend to control regional brands by (1) developing and disclosing standards concerning agricultural, forestry and fishery products; (2) creating regional brands that are trusted by consumers; and (3) develop systems for the protection of regional brands (Ikuta, Yukawa, & Hamasaki, 2007).

There are a number of reasons why place branding should be used for fair trade e-commerce. Place branding helps advance and support principles that are critical to the success of fair trade, such as ethical consumerism, developing countries' economic development and sustainable marketplaces. Next we discuss the relationship between these principles and FTOs online.

FAIR TRADE PRINCIPLES AND PLACE BRADING

Ethical consumerism

Consumers, as concerned individuals, can orient their choice and exercise purchaser power in favor of products whose production has caused least harm to the environment (Coles & Harris, 2006). Thus, ethical consumers drive the fair trade industry (e.g., Goodman, 2004; Witkowski, 2005). Most consumers' purchase decisions are influenced by the price and quality of the product (Carrigan & Attalla, 2001). However, ethical consumers are willing to pay a premium for fair trade products (e.g., De Pelsmacker et al., 2005). Consumers that are fully informed or aware of product production practices tend to become engaged, and production practices tend to influence their purchase decisions (Carrigan & Attalla, 2001). Thus, information, such as how the product is produced, about fair trade products is an important influence.

Inherent in the fair trade industry is the desire, on the part of the consumers, to be connected to the producer of the good they are buying, rather than supporting a nameless, generic means of supply. For example, Royal Blue Organics, a U.S. online retailer of organically grown blueberries and coffee created a Web site for its coffee. The Web site, www.Cafemam.com, describes where the coffee comes from (a fair trade cooperative of native Mayan farmers in Mexico and Guatemala) to provide a connection to the produced/place or origin. It branded its coffee, Cafe Mam, relating it to the geographical production site. Mam is a branch of the Mayan Indians of Central America. In addition to information about the coffee producers, the Web site displays several certifications (fair trade certification (TransFair USA), organic certification (Oregon Tilth and USA Organic), and cooperative certification (Coop America)) reassuring buyers about their pending ethical purchase. Thus, information and branding increases consumers' awareness and influence their purchase decision.

The fair trade online customers are self-motivated in creating marketing opportunities for fair trade online. For example, there are several MySpace Groups (on MySpace.com; e.g., Myspace Impact, created by the TransFair USA organization) that provide information about fair trade events and links to fair trade online stores. Among them, the Bay Area Fair Trade Coalition, a group of consumers, students, non-profits, fair trade businesses, activists and community members, working together to raise awareness and build demand for fair trade in San Francisco (www.myspace.com/bayarefairtrade).

In fair trade e-commerce, there is the potential for consumers to become involved in the sourcing of the products they purchase through utilizing the Internet attributes of free information gathering and exchange (Coles & Harris, 2006). To leverage consumers' motivation to actively promote fair trade, FTOs' websites should actively engage consumers instead of being managed and marketed as just another e-retailer. Place branding can help FTOs' websites actively engage consumers by creating distinct symbols and images, i.e., a branding identity that represent the ideas ethical consumers support. Branding allows product differentiation and higher prices (Kerin, Hartley, & Rudelius, 2009). Thus, FTOs need to differentiate their offerings online through a branding identity representing the actors and place where the fair products are produced to charge higher prices as well as to effectively engage consumers.

Place branding is the result of both coordinated and ad hoc efforts by merchants, special interest groups, clubs, fraternal organizations, and consumers (Pryor & Grossbart, 2007). Consumers may actively resist place branding management efforts, if these are viewed as artificial or lacking credibility (Pryor & Grossbart, 2007). Providing information about and interaction with fair trade producers, including where they live, increases consumers' awareness about world inequities (e.g., Barnett et al., 2005; Goodman, 2004), which could trigger socially responsible or ethical behavior (Carrigan & Attalla, 2001). This may lead to ethical consumerism or purchases of fair trade products, to increase activism to promote fair trade (e.g., Goodman, 2004; Witkowski, 2005), including fair trade social network Web sites, and provides credibility to place branding.

Informed consumers may demand greater social justice in the world (Carrigan & Attalla, 2001) but at the very least information creates awareness (Goodman, 2004). Place branding can make world social inequalities more salient. Advances in communications technology, such as the Internet, reduces the influence of geographic distance (e.g., Barnett et al., 2005) and allows consumers to become aware of products, social, and ethical issues around the world (Nijssen & Douglas, 2008). Through place branding, FTOs' Web sites may engage consumers and encourage them to purchase fair trade product and thus, do their part to reduce social inequities around the world.

Economic development

Fair trade e-commerce provides fair trade producers from less-developed countries market access to other parts of the world (Jordan, 2000). By accessing the world marketplace, fair trade producers can potentially improve the livelihood of their poor families (Jordan, 2000). Additionally, interacting with the world marketplace may aid fair trade producers' business skills. Fair trade producers and FTO's may successfully market their products online if they conform to modern standard business practices, including maintaining product quality, streamlined distribution, and/or maintaining up to date communications with clients (e.g., Carrigan & Attalla, 2001; Nicholls, 2002; Poddar et al., 2009). Thus, fair trade e-commerce may play an important role in the economic development of less-developed countries (e.g., Barnett et al. 2005; Witkowski, 2005).

To maximize the influence of fair trade e-commerce on less-developed nations, FTOs' Web sites must succeed. None of the most commonly sold fair trade products are new or distinctive products. To attract consumers FTOs' Web sites must distinguish their products through a brand identity (e.g., Connolly & Shaw, 2006), and place branding may allow them to do so.

For millennia, citizens of the world have honed their talents and comparative advantages to trade goods around the world. Unfortunately, this method of survival rarely results in an outward cycle of poverty (e.g., Wilkinson, 2007). Making ends meet is often difficult as access to markets is extremely complicated for small businesses and artisans globally, especially those in remote locations (LeClair, 2003). When some of their goods are sold, they are often in small quantities and with no consistent customer recurrence (Scrase, 2003). This does not allow small producers to rely on these sources of income for survival. Thus, many small producers tend to abandon their crafts and/or small businesses for a steady income or job (e.g., Humphrey, 2000; Jordan, 2000). Many of these jobs can often be less rewarding but are preferred because they provide reliable payment. For many, these jobs do not provide them with an opportunity to move out of poverty nor a good standard of living. In many areas where there are no alternative sources of income, however, small producers continue to struggle with the challenges associated with selling their wares (e.g., Nicholls & Opal, 2005).

Small producers can take advantage of FTOs Web sites to sell their offerings. While all marketing challenges for small producers have not entirely been hashed out by the Internet, ecommerce provides a market opportunity that did not exist before. Fair trade products can be certified with a Fair-Trade Mark (Humphrey, 2000) but FTOs Web sites' challenge is in differentiating their offering from other e-tailers. Some lessons can be learned from place branding.

To better position products, a city in New Zealand has made numerous attempts to build the uniqueness of a place through place branding (Gnoth, 2002). By creating this uniqueness, the place becomes a particular class of product (Florek,Lnsch, & Gnoth, 2006) that can distinguish the Web site from other e-tailers. Currently, there are a few place-branding efforts made by FTOs online. Ten Thousand Villages, a fair trade retail pioneer that began in 1946, runs a well-crafted Web store that features artisans from more than thirty countries. Customers can click on the map to find artisans by region or country and meet the artisan, read his/her story. This gets the customer involved and coming back to the visit the Web site. Thus, actively engaging customers online through place branding, may increase Web traffic and may improve the livelihood of small fair trade producers around the world, which may improve the economic development of less-developed nations.

Sustainable marketplaces

E-marketplaces for fair-trade products distribution have the potential to lead the charge towards viable, sustainable supply chains. With the worldwide explosion of information technologies, e-marketplaces are vastly expanding to replace the traditional markets in the expectation of supporting and improving supply chains (Sharifi, Kehoe, & Hopkins, 2006). Building e-marketplaces consisting of business-to-business (B2B) hubs and business-to-consumer (B2C) portals for profit and non-profit organizations, many retailers are able to source fair trade products more effortlessly and customers are able to find them with a click of a mouse. However, it is no easy task for locating and marketing fair trade products from around the globe. This process is facilitated in numerous ways that are constantly being redefined and evolving to more efficiently compete in our increasing mass-market economy.

New York-based OneNest.com (now Novica) that aimed to cut out middlemen encouraged big stores, such as Neiman Marcus Group Inc.'s Bergdorf Goodman, to order goods through a wholesale Internet site (Jordan, 2000). World of Good launched a partnership with eBay, that puts a whole sub-site selling fair trade products from a link on eBay's home page. Now millions of eBay users around the world can be directed to fair trade products without having to specifically seek them out. Novica and World of Good are fair trade hubs developing their e-marketplaces. Like cities and countries, these e-marketplaces do have brands and those brands do affect buyer's decision. It is suggested that countries, regions and cities are likewise best promoted indirectly by a harmonized and strategically informed approach to the promotion of their 'products' and 'sub-brands', and their overall reputations built by their actions and behavior (Anholt, 2005).

Sustainability is a marketing opportunity for fair trade hubs or portals on the web. Fair trade has proved that production and trade can be organized in a sustainable way (Auroi, 2003). The image of environmental sustainability is displayed on many fair trade websites to build their identities. For example, Alaffia (alaffia.com) claims that all of the oils and butters for their skin care products are extracted with traditional methods. They also take the care to only use non-plantation grown coconuts, palm fruit and cacao beans. Plantations have multiple environmental, social and economic consequences, while the small farms they support have been sustainable for centuries.

RECOMMENDATIONS

We recommend place branding to systematically improve and grow FTO's e-commerce. FTOs need to differentiate their Web sites to compete against establish e-tailers. Place branding stakeholders include customers, communities, fair trade producers, and fair trade organizations. Thus, there are several directions to build or enhance FTOs' Webs ties through place branding. First, the functionality consumers want most on a retail website are customer ratings and reviews (Burke, 2008). For fair trade, this feature is a top priority because it allows customers to share opinions and ideas, which engages consumers. Consequently, it increases their loyalty and generates enthusiasm to produce brand building activities.

Second, local products and the branding of regions can be depicted as two sides of the same coin (Ikuta et al, 2007). To develop a market for fair trade products, FTOs online must brand local producers and products using the regional characteristics of local countries/areas. Fair trade websites could adopt a model like NorthStarNet (NSN). With NSN providing the infrastructure, local libraries in Illinois of USA can create the Web content (O'Leary, 2000). Each library is free to provide local information, such as local history, tourist sites, recreational opportunities, events and public programs, to engage their stakeholders. Similarly, FTOs may allow each local producer to provide information that may engage consumers and may create a distinctive image of the FTO's Web site.

Third, FTOS Web site may use reciprocal marketing/branding activities. This could be accomplished successfully with two preconditions: a philosophy of cooperation and an appropriate infrastructure to facilitate this reciprocal marketing/branding activity (Warnaby & Bennison, 2006). Fair trade e-commerce potentially meets these preconditions. There are a lot of reciprocal branding opportunities with environmental protection organizations that have created websites for environmental public health practitioners (Wigington & Sims, 2008). In the meantime, the web technology is advancing to build a global information infrastructure. Now, people can tweak their campaign website so that hotlinks to their new press releases, calendar or key issues can be automatically sent to subscribers with Really Simple Syndication (RSS) readers across the web (Dysart, 2005). Moreover, a news-feed exchange system such as FeedEx can be developed (Jun & Ahamad, 2006). Using FeedEx, an alliance of websites (nodes) form a distributed overlay network, over which RSS news feeds are exchanged.

Finally, the community leaders that support fair trade act as role models for fellow members. Many tools are available to facilitate the communication with millions of young generations on the Web.

* Weblogs. They combine the immediacy of up-to-the-minute posts with a strong sense of the author's personality, passions, and point of view; therefore, blogging is a useful medium that can be employed for achievable support of group collaboration and community (Nardi, Schiano, Gumbrecht, & Swartz, 2004).

* Twitter. It is known as micro-blogging. Users, who join the service free of charge, can post short messages via the twitter.com Web site, Instant Messaging clients, or cell phone text messaging. Messages appear as posts on the member's Twitter profile and are also sent directly to his or her followers who have signed up to receive that person's updates (Kroski, 2008).

* Social Networking. Beyond the sites such as Facebook and MySpace, there is a broader process at work through online spaces to form connections with others, build virtual communities, and engage in self-expression (Kleinberg, 2008).

The knowledge inherent in the market opportunities for fair trade must be passed on from customers to customers. It is no doubt that the web is an inexpensive and effective platform to build fair trade consumer communities.

A Facebook example

A Facebook application (see Figure 1) is presented here to illustrate the implementation of place-branding to aid fair trade online using advanced Web technologies. Facebook has provided a toolset for software engineers to develop applications that can take advantage of their existing social networks. Today, there are only relatively simple Facebook applications available for news, sports, and entertainment (Baumann & Greenwood, 2008). Nonetheless, some developers have started aggressive projects, such as the one for making Facebook-compatible learning management systems (Goth, 2008).

[FIGURE 1 OMITTED]

This application intends to provide the following features for a fair trade organization:

* To display information about the countries that produce fair trade products to Facebook users.

* To allow the users click a link to visit an online product catalog.

* To allow the users view a message board to know more about a particular country.

* To allow the enthusiastic users enter a message about a particular country.

* To allow the enthusiastic users invite their friends to visit the main page of this application.

As you can see, the Facebook users' names are programmed in the application. However, it is not necessary for the users to register as long as they are able to log in the Facebook site. This application is able to retrieve the information of the users and their friends on Facebook.

A concrete example of place branding (see Figure 2) is the campaign by the country of Colombia (http://www.colombiaespasion.com/VBeContent/home.asp?idcompany=26) to improve its image (slogan: Colombia is passion), which includes a Web site, videos, t-shirts, etc.

[FIGURE 2 OMITTED]

CONCLUSIONS

Of the many benefits that our modern technological revolution provides, perhaps the most important is the global interconnectivity it facilitates. The significance of our actions on each other and the world may be known in real-time. It is indeed comforting to know that while we have created the potential for an isolated and cold existence with our modern machines that require little human interaction, the most popular places on the web are social networking sites where people virtually get together. Our politics and commerce have forever been changed because of a smaller and "flatter" world, as well. Ultimately, the Internet and its possibilities provide an opportunity for aggregate power to be spread to every civilization and community, for the first time in human history. While it has not yet spread equally, there is a momentum moving in that direction. People are hungry for knowledge and eager to use these information technology tools to make a grassroots, positive impacts on the world. Fair trade's success is one example of an innovation that would not be possible, were it not for the ability to communicate, share information, and purchase goods online. These two movements ethical consumerism and the technological revolution-are intertwined.

For centuries, access to the global marketplace has been a barrier to poor communities and those interested in maintaining their cottage industries. For the first time in history, e-commerce has provided not just broad economic access to these producers of fair trade products, but has also encouraged consumers to access knowledge and understanding with regards to the realities of the world. Far from being a turn-off, this has empowered consumers to alleviate exploitation and negative externalities of modern production and consumption. By highlighting the obstacles that fair trade e-commerce needs to overcome and suggesting areas for improvement, our goal is to offer the fair trade movement more cohesive insights and market development tools to further its case.

We believe that place branding online expands FTOs's reach and increases awareness of ethical consumerism in the global economy. By producing cyber-place branding activities so that customers are brought to make purchases and will visit again in the future, fair trade retailers can be more successful. There are indeed many realms where study of fair trade commerce, in general, needs to be investigated, from supply chain sustainability to e-marketing strategies, retail expansion, and local impact. But one thing is clear, in our connected world the status quo will continue to be boycotted in favor of better methods of doing business, even if only by a minority of individuals. For that reason, these industries must not be taken lightly and in-turn these companies, consumers, communities and fair trade organizations must corporate and embrace the very best creative strategies and ideas. Again, there are many relying on fair trade to succeed, therefore the industry must utilize the available tools of technology and diversified methods to the best of their abilities in order to fulfill their commitments, while maintaining their ethical core. We are at the helm of a new green economy and fair trade is one aspect that can be very successful and will play a huge roll.

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APPENDIX

Fair Trade Principles

* Fair price: Democratically organized farmer groups receive a guaranteed minimum floor price and an additional premium for certified organic products. Farmer organizations are also eligible for pre-harvest credit.

* Fair labor conditions: Workers on Fair Trade farms enjoy freedom of association, safe working conditions, and living wages. Forced child labor is strictly prohibited.

* Direct trade: With Fair Trade, importers purchase from Fair Trade producer groups as directly as possible, eliminating unnecessary middlemen and empowering farmers to develop the business capacity necessary to compete in the global marketplace.

* Democratic and transparent organizations: Fair Trade farmers and farm workers decide democratically how to invest Fair Trade revenues.

* Community development: Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects like scholarship programs, quality improvement trainings, and organic certification.

* Environmental sustainability: Harmful agrochemicals and GMOs are strictly prohibited in favor of environmentally sustainable farming methods that protect farmers' health and preserve valuable ecosystems for future generations.

* Fair Trade Certification Mark (USA):

Source: Transfair USA: http://www.transfairusa.org/content/about/overview.php

Vivek Shah Texas State University-San Marcos USA

vshah@txstate.edu

Hsun-Ming Lee Texas State University-San Marcos USA

sl20@txstate.edu

Enrique P. Becerra Texas State University-San Marcos USA

eb25@txstate.edu
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Author:Shah, Vivek; Lee, Hsun-Ming; Becerra, Enrique P.
Publication:Communications of the IIMA
Article Type:Report
Geographic Code:1USA
Date:Aug 1, 2009
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