Increasing Consumer Confidence in the Contract Catering Sector - Essay Example

Fair trade products as a means of increasing consumer confidence in the Contract Catering sector Corporate social responsibility The increasing level of awareness among customers regarding social responsibility has obliged the retailers to buy fair trade products. In 2008 Starbucks announced that it will double its purchase of coffee from fair trade brands, which now makes Starbucks the biggest purchaser of fair-trade coffee in the world. (Rickgoossen-makegood.com, 2009) The action of Starbucks was due to increasing demand from consumers to give value to the brand which gives value to people’s lives in developing countries. The past decade has seen an increasing demand in corporate social responsibility as well as demand of fair-trade products. Both of these are now seen together as evidence presented by retailers and sellers to show that they care. (Mohan, 2007) An extensive research has shown that although price plays a part in profits and buying behavior of consumers, it’s only in the past decade that corporate social responsibility of retailer and manufacture has started effecting consumer buying behavior. The research concluded that products coming from socially responsible companies had a very positive impact on purchases. (Mohr and Webb, 2005)Many studies go on to show that consumers are more aware of fair trade products and companies who are playing any part in promoting such products. It was also found that consumers whose buying behaviors are affected by such notions are not only buying products by socially responsible companies but are also making donations to corporate supported non-profit organizations. (Lichtenstein et al., 2004) Although some believe that CSR and fair-trade go side by side but it’s not always the case. Some academics believe that CSR look at supply chain and other things associated with it from its own point of view. Sometimes not realizing that it hurts local sellers businesses to its unreasonable demands. However on the other hand fair trade makes sure that the whole chain is benefited as its focus is on improving lives of small producers and their families. The difference is simply being short sighting by corporations to improve its own image. (Gooch, 2002) Consumer strategy Till now the literature has been covered the topics of fair trade products, small sellers, non-profits, manufacturer, and retailers, in this section consumers strategy regarding fair-trade will be looked at in detail. There is no doubt about the fact that fair-trade products are now being adopted by major brands because of consumer demands. Fair-trade products have been in existence for over 40 years now, but it was only past decade of awareness and demand by consumers that they made to the shelves of supermarkets and other brands. Consumer’s strategy in the past decade has not only been buying the products but buying the ethical products. Over 55% of consumers in the UK say that they are not just consumers but they are ethical consumers of products (Nicholls, 2002). This was the sort of buying behavior that created the demand of fair-trade products. These consumers are called ethical consumers. It’s estimated that one of every six consumers boycott products due to the reputations of the manufacturer. The rise in this type of consumer came in 1990 when issues such as child labor in developing countries became known. However ethical products currently appeal to most committed customers. It’s estimated that as soon as they start attracting less committed customers they will gain more market share. (Cowe and Williams, 2000) However there is no guarantee of long life for this strategy. A study conducted by UK ethical consumer magazine on the topic of ethical buying has shown that many consumers’ beliefs are formed by beliefs that other influential people carry. The research questioned if this sort of approach will last very long?(Shaw and Clarke, 1999)Although there is no guarantee that this purchase behavior will last forever, but one can’t deny the fact that this behavior did bring in the change in corruptions strategies and changed it for better Nowadays Consumer’s strategy involves demanding such products and process from retailers and manufacturer. Not only their demands are strict and high but they are also expecting to see the evidence of such claims. This strategy had made sure that retailers cant just get away with having such products in just one part of their supply chain, but they are obliged to show that how its benefiting the producers. (Strong, 1996) Legislations As mentioned earlier, fair-trade was only a concept pursued by NGO’s sometime ago. But now governments and huge corporations are getting deeply involved in it. This involvement is bringing all sorts of legislations to the fair trade products, its usage in supply chains, and selling to end consumers. The fair trade foundation of the UK has different standards for fair trade products labeling and selling in the UK. The labeling organization of fair-trade is owned by 24 different organizations that make sure that fair trade products are being produced and purchased by a fair deal from the producers. This organization also owns the label of fair-trade and only awards it when it’s fully satisfies that all the standards are being met. The fair-trade standards by the organization makes sure that guaranteed price is paid to the producers. These standards are also meant to ensure that revenue from such products is invested at the right places. A minimum standard is defined to ensure that only the right organizations get the label of fair-trade products. These producers are then certified by the organization to produce its products and sell it to middleman or end consumer. (www.fairtrade.org.uk, 2010) Some legislations of fair-trade are aimed at the selling end of these products. These legislations take the price freedom from the retailers making sure that they sell it on the price that’s agreed with the producers. These legislations help produce profits that can go to non-profits or the start of supply chain. (Grether, 1939)Although all the legislations are in place and seem to be working all right, it is expected that they will improve over the time. It was only 15 years ago that certification organization for fair-trade products started working in the USA. It might be sometime before we see standardized legislations all over the world. (Pricing and Rights, 2002) Competitive advantage The questions is if fair-trade products bring any competitive advantage to the other end of fair-trade products, which is the selling end concerning retailer, supermarkets, and other brands. Sainsbury in the UK recently claimed that adopting fair trade products has given them competitive advantage. It was said that organic products failed during the recession because their story is not as strong as fair trade products. However fair-trade products not only succeed but it’s been claimed that one in every 4 pound spent on fair-trade products is spent at Sainsbury’s (Mortimer, 2010) It is also said that fair-trade products not only gives a competitive advantage due to consumer awareness but it also brings more profit as fair-trade products are expensive compare to other brands. Researchers have shown evidence over the years that consumers are very receptive towards such products and notions by corporations are willing to pay high process for them, which bring competitive advantage and profits to the whole supply chain. (Loureiro and Lotade, 2005) Competitive advantage can’t only be gained by the kind of raw material a cooperation purchases, or the end products it sells, but it is gained by having a visions and view of such notions. This applies to the whole organization and affects the employees who work and do not work for organizations due to their personal values clash. (Grant, 2002) By delivering such visions which promote environment, fair-trade, etc, an organization can gain competitive advantage by having employees whose personal values match with organizations goals. References 1. COWE, R. & WILLIAMS, S. 2000. Who are the ethical consumers. Co-operative Bank, Manchester. 2. GOOCH, F. 2002. Fair Trade and Corporate Social Responsibility. In: ASSOCIATION, E. F. T. (ed.). 3. GRANT, R. 2002. The resource-based theory of competitive advantage. Strategy: critical perspectives on business and management, 135. 4. GRETHER, E. 1939. Price Control Under Fair Trade Legislation, Oxford University Press. 5. LICHTENSTEIN, D., DRUMWRIGHT, M. & BRAIG, B. 2004. The effect of corporate social responsibility on customer donations to corporate-supported nonprofits. Journal of Marketing, 68, 16-32. 6. LOUREIRO, M. & LOTADE, J. 2005. Do fair trade and eco-labels in coffee wake up the consumer conscience? Ecological Economics, 53, 129-138. 7. MOHAN, S. 2007. Market-based Price-risk Management for Coffee Producers. Development Policy Review, 25, 333-354. 8. MOHR, L. & WEBB, D. 2005. The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs, 39, 121-147. 9. MORTIMER, R. 2010. Fairtrade gives Sainsbury’s “a competitive advantage [Online]. [Accessed 21 March 2010 2010]. 10. NICHOLLS, A. 2002. 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