EXECUTING GROWTH STRATEGIES: Achieving a Strong Brand Name Shermain Hardesty, Moderator University of California, Davis

IMPORTANCE OF BRANDING Differentiation strategy Competition for shelf space Competition for consumer’s dollar One brand often covers broad product line

CO-OP STRUCTURE CAN IMPEDE BRAND-BUILDING User-benefit principle User-financed principle User-control principle

USER-BENEFIT PRINCIPLE Focus on member deliveries Limited product line Seasonal product availability “Horizon problem” Net margins distributed primarily in proportion to patronage, not investment Members whose earnings are deferred for brand- building get no direct return Brand-building expenses can cause co-op’s returns to be uncompetitive

USER-FINANCED PRINCIPLE Member retains are primary source of equity for most co-ops Members often reluctant to contribute equity or build reserves to invest in brand building Cash-strapped members want to maximize cash patronage payments by minimizing retains

USER-CONTROL PRINCIPLE Ag marketing co-op board membership is often very homogeneous Boards can lack marketing & finance expertise to provide strategic oversight Producer members often advocate for marketing programs in their communities

CO-OPS CAN OVERCOME THESE STRUCTURAL CHALLENGES Dairy Farmers of America Don Schriver, Vice President CROPP/Organic Valley Jerry McGeorge, Cooperative Coordinator