Originally published in The Speedy Bee, Vol. 25, No. 6, p. 12.

Does commodity promotion payoff? That provocative question was asked by Dr. John P. Nichols, Professor of Marketing, Texas A & M University. He attempted to answer this in a presentation on measuring the impact of these programs, given at the American Beekeeping Federation convetion, January 19, 1995 in Austin, TX. It is not possible to measure the effects of a program if it has no target, Dr. Nichols said. In developing a "vision," commodity programs must confront the fact that the global food economy is changing and increasingly there is an industrialization of the food supply. Any commodity promotional effort must focus on the market, according to Dr. Nichols, and the one for honey is no exception. The kind of marketing to be done, therefore, becomes a strategic decision based on planning and organization.

As an example of focused marketing, Dr. Nichols discussed the cotton industry. The cotton program was in trouble for a number of years, but has made a comeback by establishing a new strategic vision. The same thing is true for beef, Dr. Nichols said. The first promotional efforts used established movie stars to tell the beef story, but this failed to excite the consumer. More recently the program has found a different focus, concentrating on a lower fat image.

No commodity promotion program can be successful without the help of producers, Dr. Nichols said. They can do a number of things to assist in promotional efforts, including finding and using niche markets, cooperating with brand marketing efforts and, of course, paying assessments. The market for a commodity must be considered a resource, according to Dr. Nichols. It requires development, exploitation and protection to remain viable. If devalued, it can be lost.

Nationwide, commodity programs are a relatively big business. Dr. Nichols said there were some 100 programs of various sorts, including 14 national checkoff plans. About 50 commodities are involved with a total budget of $750 million. The largest program is dairy ($200 million), followed by beef ($60 million). Cotton is $40 million and honey is $3 million, with the assessment currently at a penny a pound.

Promotional objectives are expressed in many ways in commodity programs, according to Dr. Nichols. These may include increasing sales, maximizing producer return, changing beliefs and attitudes of consumers, or reducing surplus stocks. They may also be accomplished in a variety of ways. Generic advertising, researching new products and processes, and providing information to processors and producers are all valid methods.

Other issues to be considered in these diverse programs, Dr. Nichols said, are how assessments are collected and when referenda are conducted. With reference to assessments, debates rage about whether they should be mandatory and/or imports should be charged. Most programs have moved toward both these goals, Dr. Nichols said. The options concerning referenda (voting by producers to maintain the program or change assessments) are also extremely variable. A final consideration is how much federal oversight is required.

The bottom line for producers, Dr. Nichols said, is whether these programs work. Unfortunately, there is no cut and dried answer. Most evaluations look at only the advertising component. One study for beef found an aggregate sales increase of 5 percent; for dairy it was a 3 percent increase. Some studies have shown as much as a seven dollar return for every one expended! Unfortunately, some studies have found no market response at all. The weakness in most investigations continues to be the focus on advertising, Dr. Nichols said. This means that effects of new product development, rapid response to changing consumer habits and increased knowledge of the market by producers are not taken into account.

For any commodity promotion program, the evaluation must be broad enough to take into consideration the full range of promotional efforts to be valid Dr. Nichols said. It must also address both the market and industry goals. He suggested an ideal program would have the following characteristics:

1 1. Broad industry coverage.
2. Clear strategic vision.
3. A balanced strategy covering all important markets.
4. Willingness to invest in the long run.
5. Wide breadth of evaluation.
6. Contribution to industry vertical coordination.

With specific reference to the honey program, Dr. Nichols concluded, it is necessary to determine what is the critical threshold for promotional activities in the U.S.. In addition, he said it is important to find a way to differentiate domestic honey from imports and to also develop marketing niches based on differences in the domestic product mix.