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Marketing Strategies Supporting National Plans Contributions of Universities
Anuwat Srikaew and Steve Baron
Research Paper Series
Management School University of Liverpool Liverpool, L69 7ZH Great Britain
Marketing Strategies Supporting National Plans: Contributions of Universities
Anuwat Srikaew Chiang Mai Rajabhat University, Thailand Steve Baron University of Liverpool, UK
Abstract The paper explores the potential for university knowledge transfer in the development of marketing strategies of rural community businesses as part of a nation’s plan that aims to make the community businesses self-reliant within a given timeframe. It reports on findings from reactive participant research with community businesses in the Chiang Mai province of northern Thailand. Using a cooperative marketing strategy framework, facts, perceptions and potential conflicts are identified from a study of the dynamics of community businesses which produce and sell cotton and silk fabrics and clothing. It is concluded that the university role should be that of coproducer, rather than catalyst, and that sustainable marketing strategies require a bottom-up approach that is dependent on the abilities of community business leaders to become rounded managers with a global view of the marketplace. The findings are relevant to all situations where marketing strategies are required to fit with multiple measures of performance that are laid down by a super-ordinate strategy.
Keywords Marketing Strategy; Thailand; Universities; Knowledge Transfer; Qualitative Research
Introduction It is recognised in the marketing literature that governments have adopted strategies aimed at promoting their country’s image (see, for example, Foster, 1999; Olins, 2002; Kotler and Gertner, 2002). Additionally, where a country’s economy is especially dependent on small businesses operating in rural communities, governmental strategies have included specially designed plans that promote the products of community businesses, knowing that purchasers of community business products will also be engaging in the cultural heritage of the country. The Thai Government produced such a plan in 2001, which was labelled the One Tambon1 One Product (OTOP) project. While this paper will focus on elements of the OTOP project in Thailand, and address the specific role of universities in enabling marketing strategies that support the plan, it should be noted that a similar plan is being adopted in the Philippines (also called OTOP, but in this case meaning ‘one town one product’) and that the original idea came from Japan (where it was known as OVOP, ‘one village one product’). In Thailand, there are approximately 7,419 tambons, or sub-districts, each of which produces a range of unique items of a local product (for example, handicrafts, cotton/silk goods, foods, pottery) using individual labour. The tambon community members work together to produce the particular product. They operate as a community business (CB). Approximately 1.5 million people work in the community businesses. The OTOP project is a governmental strategy that seeks to sustain CB jobs and income, encourage CB self-reliance, increase capabilities of the workers, maintain Thai cultural associations with the products, and encourage the creativity of the CBs. What is of particular importance to the research reported in this paper is that the OTOP project has, built into it, specific requirements of knowledge transfer from universities, and one of the identified areas for university help and intervention is the development of a marketing strategy for CBs. The paper provides some insights into the process of offering university knowledge to facilitate the development of a marketing strategy for CBs, based on research carried out in Thailand between 2004 and 2007. Although the data are context-specific, the findings have relevance to any situation where marketing strategies must be consistent with a super-ordinate strategy (one of a national government, in this case). The paper is structured as follows. First, schematic representations of the Thai Government’s OTOP plan are presented, and the roles of universities within the plan are explained. Second, using qualitative data collected on CBs in northern Thailand, the cooperative marketing activities of CBs are evaluated in the context of the national OTOP plan and its intended outcomes. Third, building on the findings of the qualitative research, the roles of universities in the knowledge transfer process – ‘reactive participant’, ‘catalyst’, ‘supporter’ – are critically assessed. The final section relates the findings to a more general discussion of the inputs of universities to marketing strategy development of small businesses or business units.
Thailand is divided administratively into provinces, then into amphurs (districts), then into tambons (sub-districts), and then into villages.
A Visualisation of the OTOP Project Figure 1 presents the essence of the OTOP project2, as outlined by the National Executive Committee of OTOP (2004)
Figure1: Key Features of the OTOP Project
•Natural raw materials into high quality products •Quality services •Local and global
•Promote Thai culture
•Independent, creative, original ideas •Motivated to be self reliant •Supported, not subsidised
The outcomes of the OTOP project represent multiple dimensions of performance relating to the CBs and the products which they produce. Underpinning the plan is the requirement that CBs ultimately become self-reliant and not subsidised, and that this entails creativity and innovation on their part. They must be able to turn natural raw material into high quality finished products, and this should be supported by equally high quality services to their customers. The products represent Thai culture and should meet global as well as local needs. The outcomes may well be very difficult to achieve for many CBs and so enablers have been identified to help them in their quest. It is recognised that CBs need updated knowledge management, access to successful examples of appropriate applied technology in their product field, and help with marketing. In this latter respect, the CBs will be expected to articulate and implement an appropriate marketing strategy. The providers of the enablers include the national and local government, private sector organisations and universities.
There may be more than one product produced in a tambon. There should be at least one excellent product to represent each tambon according to the OTOP Executive.
It is seen, therefore, that there is a planned and specific role for universities to play in achieving the desirable outcomes of the OTOP project. Table 1 demonstrates more specifically what the role entails over an extended timeline. Universities (as well as private sector organisations) are expected to begin as reactive participants, become catalysts for developments and finally offer support to the CBs, with the ultimate aim that the CBs will eventually become self-reliant. In particular, as far as marketing is concerned, universities are envisaged to actively develop appropriate marketing strategies for CBs during the catalyst period, and offer subsequent support for the implementation of the strategies. Prior to these two stages, universities, as reactive participants, need to find out, in some depth, the nature of the internal and external factors that impact on the CBs themselves.
Table 1: Role Changes of Key Institutions Over Time in OTOP Project
Period Institution Government Private Sector and Universities Community Businesses 2001-05 Catalyst Reactive Participant Aid-Reliance 2006-10 Supporter Catalyst Key Driver 2010 Facilitator Supporter Self-Reliance
In this paper, the data collected on CBs, through the role of university as reactive participant, are analysed on the clear understanding that further university inputs will be required as the OTOP project develops over time. One of the authors is employed by a university in northern Thailand. The OTOP project has been the impetus for his current research (in conjunction with UK academics), and he will continue to be involved with the OTOP project as it reaches its later stages.
Reactive Participant Role: Methodological Considerations As illustrated in Figure 1, any developing marketing strategy of CBs is expected to contribute to the CB- and product-related outcomes defined by the overarching OTOP plan. At the time the OTOP plan was published, it was assumed that CBs either did not have any clearly defined marketing strategy, or, if they had, it was not articulated, and good practice was not readily shared. Given the relative lack of shared agreement on marketing strategies of CBs, we decided that further understanding was required of the existing micro-dynamics of the CBs, especially relating to their interactions with customers. This represents a bottom-up approach to marketing strategy (Mattson, Ramaseshan and Carson 2006), and requires research, in the role of reactive participant, that captures the everyday activities of CBs. Consequently, one of the authors spent two periods in northern Thailand in 2006: period 1, January to March 2006; period 2, September and October 2006. The Chiang Mai province of Thailand was chosen for the research; a province that consists of 228 CBs. Only CBs producing cotton and silk products were considered at this stage of the research (these products are produced by 56 CBs in Chiang Mai province).
In period 1, a pilot qualitative study was carried out, consisting of ten focus groups; five focus groups at the Chom Thong District of Chiang Mai province, and five focus groups at the Mae Chaem District of Chiang Mai province. Each focus group consisted of five participants; three leaders and two members. The purpose was to identify common problems and opportunities faced by the CBs, as articulated and discussed by leaders and members of several CBs, and to prepare a preliminary coding framework for the further, more detailed qualitative research that was to follow in period 2. It is seen, even through the preliminary research undertaken at period 1, that, although each CB is in competition with the others, cooperation between the CBs is expected in the context of the OTOP plan. It is unsurprising, therefore, that the findings from period 1 substantiate, to a large extent, the conceptual model of cooperative marketing strategy proposed by Dickinson and Ramaseshan (2004). An adaptation of the model (presented here as Figure 2) was employed, therefore, as a mechanism for facilitating the coding of the data captured in period 2. In period 2, semi-structured, in-depth interviews were carried out with ten leaders and members of CBs in the Chom Thong and Mae Chaem districts of Chiang Mai, ten government and private sector supporters, and ten customers of CBs (see Table 2). All the data transcripts were imported into NVivo 2 (Thai version), and phrases, sentences and paragraphs were coded, initially using headings derived from Figure 2. In the cases where new codes were introduced, they were done so in order to aid interpretation of CB activity in relation to, and in the context of the OTOP plan. Throughout the data collection and analysis at this stage, no attempt was made to enact the role of catalyst for the marketing strategies of the CBs. Only reactive participation was undertaken, in order to get close to the marketing reality of the chosen CBs (Gummesson 2007) by exercising cooperation and reflection that are characteristic of the early stages of a management consultancy process (Johannson 2004).
Findings from the Period 2 Research The textual data collected in period 2 amounted to almost 42,000 words of transcripts and observations, and was supported by 109 photographs of the production processes employed in the selected CBs. It provided a very detailed picture of the marketingrelated activity of cotton and silk product CBs at the point in time (late 2006), set in a framework guided by Figure 2. In particular, the interpretation of information contained within the data suggested three categories that overlay the elements in Figure 2: facts (especially relating to components of the cooperative marketing mix), perceptions of the three sets of ‘players’ (CB members/leaders, OTOP supporters, customers), and potential conflicts (in trying to achieve OTOP outcomes). The interrelated aspects of these categories are illustrated by taking examples of the facts and perceptions from a component of each of the cooperative marketing mix elements, and then identifying, through the use of these examples, some of the potential conflicts with the achievement of the OTOP outcomes. This will, in turn, inform the subsequent discussion on the knowledge transfer role of universities with regard to marketing strategy.
Figure 2: Conceptual Model of Cooperative Marketing Strategy
Cooperative Marketing Mix Strategy
Co-Products •Product Categories •High/Low Turnover Products •Product Design •Colour •Packaging •Product Quality
Community Business Characteristics
Co-Pricing •Price setting •Reasonableness
Customers •Who they are •Where they are from
Co- Distribution •Intermediaries •Successful channels •Unsuccessful channels
OTOP and Competitive Environment
Co – Promotion •Types of Promotion •Successful Promotions •Unsuccessful Promotions
Adapted From Dickinson and Ramaseshan (2004)
Table 2: Period 2 Interviewees
Producers – CB Leaders and Members Gender Position in CB Female Leader Female Leader Female Leader Female Member Female Member Male Leader Female Leader Female Leader Female Member Female Member
Interviewee Code P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
Location of CB Chom Thong Chom Thong Chom Thong Chom Thong Chom Thong Mae Chaem Mae Chaem Mae Chaem Mae Chaem Mae Chaem
Supporters from Government Organisations (GO) and Private Sector (PS) Interviewee Code Gender Organisation Location S1 Male Industrial Promotion Chiang Mai Centre Region 1 (GO) S2 Male Industrial Promotion Chiang Mai Centre Region 1 (GO) S3 Female Industrial Promotion Chiang Mai Centre Region 1 (GO) S4 Male Office of Community Chiang Mai Development (GO) S5 Male Office of Agricultural Chiang Mai Affairs (GO) S6 Male Office of Commercial Chiang Mai Affairs (GO) S7 Female Chiang Mai University Chiang Mai (GO) S8 Female Chom Thong District Chom Thong, Chiang Office (GO) Mai S9 Male Mae Chaem District Mae Chaem, Chiang Office Mai S10 Male Thai Lanna Industry Chiang Mai Association (PS) Customers of CB Products Gender Age Female 60 Male 42 Female 57 Female 34 Male 28 Female 45 Male 21 Female 47 Female 32 Male 55
Interviewee Code C1 C2 C3 C4 C5 C6 C7 C8 C9 C10
Home Location Chiang Mai Lampoon Chiang Mai Chiang Mai Chiang Mai Bangkok Nan Tarang Chiang Rai Bangkok
Facts and Perceptions - Co-Product: Colour Traditionally, naturally-sourced dyes (normally from the bark, core, roots and fruit of local trees) are used in the dyeing process for cotton and silk. More recently, chemical, synthetic dyes are being brought into the local fabric industry. The facts are that the naturally-sourced dyes have certain disadvantages as they are used currently in the production processes. They provide a limited range of colours (for example red from the morinda root, yellow from turmeric, light gold from the egg tree (ma-phud), and green from the myrobalan bark); are relatively expensive to produce (involving crushing, pounding, boiling materials in water and fermentation of resulting liquid); have unpredictable shades (due to age of tree, moisture level, health of bark, and season of the year (rainy/dry)), making it difficult to match dye-lots and attain colour brightness; and they lack colour-fast properties (the colour runs when washed). The synthetic dyes have a wider range of colours, are less expensive to source and produce, have standardised dye-lots, maintain their brightness and are colour-fast. In short, the process of making synthetic dyes is less labour intensive and more suited to mass production. Two negative facts associated with some synthetic dyes are that some ingredients in them have been shown to have carcinogenic factors, and the pollutants from such dyes are not bio-degradable at the beginning, so that, for example, the European Union (EU) has sought to implement restrictions on their use in imported these fabrics. The supporters who are aware of this problem have tried to educate CB producers, and there is an increased awareness of EU restrictions on Azo ingredients (Cotton and Silk Project, Chiang Mai University 2004). The perceptions of local customers of the dyes used for colour are mostly affected by the observable properties. “The products that contain natural colours have a problem – they always run when washed and the colour is no longer bright” (C1) “Where chemical colours are used, you achieve a bright colour in the fabric” (C7) From the supporters’ perspective, the negative aspects of chemically-based dyes can take on greater importance. “The difference between chemical colour and natural colour is that the chemical colours seem to adhere to the fabric. Some chemically-dyed fabrics that have Azo can cause cancer in consumers. The natural colours do not have an effect on the body because the colours come from different parts of trees and other plants. The big problem is that those colours run out of the fabric” (S5) Views from representatives of the two CBs demonstrate perceptions that are attuned to customer demand. “I use both chemical and natural colour to add more variety to the products” (P10)
“We make cotton products in colours that use both synthetic and natural dyes. The shade chosen [by the producer] depends upon which customers we are catering for and the colours we think they would like to see” (P4) Despite the producer views above, a report by the government’s Industrial Promotion Centre Region 1 in 2005 declared that CB operators tend to have little knowledge regarding colour development. It advised them to seek advice and help from government organisations on the most appropriate use of synthetic and natural dyes based on individual product specifications, in order to give them the capacity to meet the product quality levels of the Thai Community Product Standard. Other initiatives were put in place. According to a leader in the Mae Chaem CB, “At the beginning of the year 2006, one of the university lecturers in Chiang Mai province had conducted research, and trained us how to use traditional plant-based dyes without faded colour. It took about a month of training for us…subsequently the products are pretty and bright coloured. Government sector or involved organisations should support communities like this, since it is advantageous to communities” (P8) Facts and Perceptions – Co-Distribution: Channels There are currently five channels of distribution for CBs making cotton/silk products: • • • • • Booth exhibitions organised by the government (for example the OTOP exhibition, Industrial Promotion Center Region 1 exhibition) Sources of production – shops at the production sites Fairs – held by groups of producers at the centre of a province Via intermediaries – middleman traders who supply markets, stalls and middleman shops Via websites, for example http://www.thaitambon.com/
The majority of CBs, including the ones at Chom Thong and Mae Chaem, do not, at the time of writing, use the internet for sales of their products. Consequently, the perceptions of the CB members/leaders, supporters and customers relate to the relative merits of the other four distribution channels. Supporters and customers, alike, are aware of these channels. “There are many channels of distribution which groups of producers in Chiang Mai have implemented nowadays such as 1) sell at the sources of producers, 2) hold fairs in cities or communities, 3) deliver to middle man trader at Night Bazaar and Chiang Mai market, 4) participate in booth exhibition such as OTOP” (S1) “Channels of distribution I have known are producers’ shops, fairs organised by government and middle man traders at Waroros Market” (C3) There is an agreed perception, of producers and supporters, that the most successful channel of distribution is the government-organised booth exhibition.
“ Booth exhibition organised by the government is very successful, particularly OTOP fair at Meungthong Thani [in Bangkok], because there are lots of tourists and the products are sold at nearly two million baht a month” (P1) “The best seller channel of distribution for groups of producers is the exhibition organised by the government. For example the Industrial Promotion Center Region 1 exhibition takes place twice a year, with public relations supported by government” (S3) Equally, there is a shared perception of all the ‘players’ that selling products at the source of production is the least successful from a financial point of view. “The sales from sources of producers are not good since they are far away from cities. They are also not the areas for tourism. Products are sold as just one or two pieces…most income is from ‘made-to-order’” (P10) “The least successful channel of distribution is the sources of producers because customers don’t know the sources. Besides, there are no show rooms for products” (S2) “ …I strongly believe that the sources of producers generate significantly lower sales, since they are far away from cities…they are unknown places and just middle man traders buy products there” (C7) However, although the channels of distribution organised by the government are successful, it should be noted that these channels are held on only five to seven times a year; created events or festivals, such as New Year, Christmas, Songkran festival. Furthermore, the duration of each organised event is relatively short (a week or a month). The shops at the sources of production seem to be the least successful on an income per day basis, but they have a continuation of income throughout the year from made-to-order customers and consumers, and so, on average, sales from these shops contribute between 60% and 70 % of a CB’s annual income. Facts and Perceptions – Co-Pricing Most producers, and groups of producers, set their prices on a very traditional ‘cost plus’ basis. Therefore, the price differentiations result from varying labour, material and transportation costs. “The strategy for price setting is computed from all costs: raw materials, labour cost expense for water and electricity…” (P1) “The method of price setting is the combination of all costs: materials, labour, other expenditures and profit. The profit is set in consideration of the marketing situation. Normally, the price is set to be optimum; not too cheap, not too expensive. The estimated profit is approximately 10-20%” (P6)
There is a high level of competition between CBs. “Currently, there are lots of groups of producers, owing to government support and promotion… In general, products from most groups of producers are similar. Most groups of producers try to create products that are unique to Chiang Mai and Lanna. They have produced commonplace products, as learning has been passed down through generations. Above all, they have the same target customers. This leads to serious competition now” (S3) In addition, imported products, from neighbouring countries, such as Myanmar, Laos and China are sold in Thailand, and are affecting the prices charged for cotton/silk fabrics. “Most of the imported products produced by weavers are from Myanmar, China and Laos. They are sold around borderlands, in Chiang Mai city and in other big cities in Thailand. Normally, the quality of most imported products is inferior so that of products from Chiang Mai, but cheaper” (S6) Furthermore, there are small business enterprises, who have replaced the traditional hand-weaving with machines. As was indicated above, prices of fabrics produced with chemical-based dyes are lower than those produced with traditional, plant-based dyes, because of the cost savings of sourcing and production. “They have factories and use machines to produce fabrics. Most of them locate in the city and Sankampang districts of Chiang Mai. They are high production capacity. Moreover, their products reach the appropriate standards and have pretty designs. Overall, they are not much different than products from groups of producers” (S10) The perception of some producers is that there is a danger of a price war, resulting in price cutting strategies being employed because of the highly competitive environment. “Nowadays, I have lots of competitors, since there are new groups of producers in Chiang Mai and up-countries. They try to imitate my products. Moreover, they tell customers that their products are from my group, but sell them at a cheaper price. Owing to the resemblance of their products to mine, some customers strongly believe them. Products from new groups of producers are substandard since the fabrics produced by their weavers are not meticulous. As a result, it may affect my group’s reputation, because customers may think that products from my group are sub-standard” (P7) “My group has had a good reputation for a long time…production staff from my group are invited by the government sector to be guest speakers to teach the methods of weavers and product designs to other groups, or new groups of producers. As a result, their products are similar to mine. They are not modified in order to make product differentiation. This leads
automatically to increased competition. It is very difficult to sell products now because of cutting prices” (P6) This perception is shared, to a large extent, by supporters. “The price set by groups of producers is no longer reasonable and is too cheap. Perhaps it is the high competition in the market now” (S10) Generally, the customers who were interviewed thought that the prices charged by CBs are reasonable, with one dissenting voice. “I strongly believe that prices are reasonably set by groups of producers. It is computed from costs plus profit, competition and market demands. When you compare the price to product features, it is balanced and reasonable” (C10) “There is no deceptiveness of product price among the groups of producers. Products are sold almost at the same price…” (C9) “In my opinion, products which I buy from groups of producers are too expensive…when you compare the quality, the price should be reduced. I am not satisfied with the price setting of groups of producers” (C5) Facts and Perceptions – Co-Promotion The current promotional tools are: • • • • • • • CB brochures CB name cards CB leaflets CB signboard Package advertising Local radio PR and advertising by private and government sectors (TV, radio, newspaper, internet, booth exhibition).
Apart from the last named, the other tools tend to be used at the initiatives of individual CBs or groups of producers. They have widespread usage. “Currently, promotion activities that I have done are, for example, name cards, brochures, signboards at home and at shops, local radio communication, and direct selling to customers” (P1) “My group has conducted promotion activities by distributing brochures, name cards and paper bags made from the paper mulberry with log, name and address of my group…” (P9) “Currently, promotion by advertising is very rare for groups of producers. Generally, most of them use name cards, brochure, leaflets, signboards” (C6) 12
PR and advertising support is given when, for example, booth exhibitions take place, and it is normally paid for by the organisers, i.e. government and private sector. One producer observed: “There are few promotional activities from my group. Most promotion activities are supported by government” (P3) There is a large amount of agreement amongst all parties that brochures, name cards and the government/private sector PR/advertising represent the most successful promotional tools. The perceptions of the producers, supporters and customers are represented by the following quotes. “Now the best promotion activity is the brochure as it contains many pictures, information on processes of production, together with the business’s story and product information…cost of production of brochures is not high” (P10) “The most successful marketing promotion is brochures with name cards. They are distributed to customers when producers participate in booth exhibitions and fairs…” (P2) “Promotion activities are name cards, brochures and local radio. Name cards and brochures are the most successful, since customers can find addresses and information from them. Public relations, supported by government, is successful as well, because customers are attracted to visit booth exhibitions and buy products later” (S1) “Public relations, organised by government via television or newspapers or fairs are successful. Successful promotion activities that groups of producers have done are name cards and brochures. Customers can know production information and the producer’s address. As a result, groups of producers can gain substantially more customers” (C2) The two tools that are perceived to be the least successful are local radio communication, as it only reaches people in the local communities and lacks a visual stimulus, and CB leaflets as they are deemed to be less professional (and so less official), and it is felt that customers throw them away. Potential Conflicts The facts and perceptions above, relating to co-products, co-distribution, co-pricing and co-promotion, imply strongly that, in attempting to achieve the outcomes of the OTOP plan (as in Figure 1), any marketing strategies that are to be adopted by CBs must take account of several potentially inhibiting conflicts. Five potential conflicts, which are inferred from the period 2 analysis, are highlighted below.
Cooperation versus Competition CBs are expected to cooperate with each other within the OTOP plan for the ‘general good’ that can result from sharing business, social and technological knowledge and expertise. Yet, at the same time, they are competing with each other for customers. There are, undoubtedly, success stories associated with cooperation amongst enterprises in an industrial cluster, but it is also noted that “firms whose outputs complement each other are more likely to cooperate than firms with near identical products” (Schmitz 2000, p325). The accounts of what is happening with CBs making cotton/silk fabrics in the Chiang Mai province demonstrate that, not only are the products similar, but also the government-encouraged sharing of good practice is increasing the amount of imitation of products and production practices. This is resulting in a perception of a price war, especially as more CBs are created and encouraged, and the failure of many CBs to develop the independent, creative and original ideas expected of them in the OTOP plan. Production Efficiency versus the Maintenance of Thai Cultural Associations with Products It is clear that the costs of production of fabrics made by weavers using the traditional Thai methods and natural dyes are higher than those made with machines and synthetic dyes. The OTOP plan looks to encourage the use of natural raw materials in the production of high quality products, in order to promote Thai culture. Yet the CBs striving to do this are faced with the knowledge that consumers may not associate the use of natural raw materials with high product quality, if quality is judged by the brightness of the colours, or colourfast properties. And the prices of their products, calculated on a cost-plus basis, are generally higher than those of products that incorporate chemical dyes in their production processes. Government Subsidies versus Self Reliance From 2010 onwards, it is intended, through the OTOP plan, that CBs should be selfreliant. However, ultimate self-reliance may be more difficult because of government support that is being given during 2004-07. For example, the most successful codistribution of the products is perceived to be the booth exhibitions that are organised, and subsidised by government. Additionally, the PR and government-subsidised advertising for booth exhibitions are perceived to be some of the most successful forms of co-promotion. If the government subsidies for booth exhibitions were withdrawn, then the continuation and the organisation of them would be left to the CBs. If so, it will be necessary to clarify the notion of ‘support but not subsidy’ that is specified in the OTOP plan, and also consistent with research findings on industrial clusters that advise that, although protective measures may be of benefit at the outset, in the longer term state subsidies will not result in CBs being proactively market related (Morosini 2004). Local versus Global Markets There are at least three potential conflict issues associated with CBs meeting both local and global markets. The first is that products that sell particularly well to Thai customers may not be those that are popular with customers from other countries,
especially in the case where the consumers themselves would have to have creative skills to make items from the pieces of fabric. The Pha Sin, the traditional Thai tube skirt, is a case in point. “The most well sold product now is ready-to-wear clothes such as trousers, ladies clothes and Pha Sin, because they are popular among local people. Women love wearing them – especially blouses and Pha Sin” (P7) “I like buying formed cloth because I can use it to make Pha Sin or household articles. Additionally, I buy it for my relatives” (C4) Second, the notion of what is ‘local’ may not be universally agreed. Wattanapun, Wattanapun and Srijumnong (2001) suggests that local woven products may be characterised by antique design, or contemporary design. With antique design, ‘local’ refers exclusively to the method of production: traditional weaving methods and materials, and plant-based dyes. The Teen Chok fabric from Mae Jam, Chiang Mai is an example. With contemporary design, ‘local’ includes the recognition of Thai customer demands, and products are designed to reflect current and fashion trends. Producers choose colours to match current styles and practices, and are prepared to use chemical dyes for colouring. It is argued by Wattanapun, Wattanapun and Srijumnong (2001) that contemporary designs link unique local culture with the broader Thai culture. Third, the current, long-standing concentration on the local or national market has resulted in distribution mechanisms where the customer must travel to the point of sale (booth exhibitions, night bazaars and markets, sources of producers), and in a high concentration, by producers, on personal selling skills associated with interpersonal interactions at these venues. While this may satisfy the tourist market, it is not sufficient for a global marketing strategy. Offering the products to customers across the globe will mean on-line promotion and selling, with a commitment to quality of service (an OTOP plan intended outcome) that goes beyond interpersonal selling. The literature on technology-based services, including that on service failures and recovery methods (for example, Forbes, Kelley and Hoffman 2005), suggests strongly that the issues that result in customer (dis)satisfaction with on-line services are not the same as the ones that result in customer (dis)satisfaction on-site. Day-to-day Operations versus Learning New Skills Finally, an issue that is not unique to Thai CBs, and one that affects small businesses in whatever country, is how the CB leaders and members can afford to spend time away from labour-intensive, day-to-day work, and thus find time to be taught new skills that encourage them to be creative and innovative. As one supporter observes, “Our organisation tries to develop CBs by arranging many projects, such as product design, packaging design, colours and dyes. However, only a minority of producers are interested in these specialist training programmes, even though it is free training…” (S3) The leader of a CB in Mae Chaem explains the problem,
“My group is very far from Chiang Mai, and it takes a long time to travel. Even though it is free training, the expenses for travelling, hotel, food and so on are very high. Unfortunately we cannot attend the programmes that are arranged by the government…” (P6)
Discussion The section above is highly contextual, based on detailed information collected through the role of reactive participant. Nevertheless, it highlights important generic issues associated with both the role of universities in knowledge transfer and the development of a marketing strategy that is expected to achieve multiple performance dimensions that are specified in a super-ordinate strategy or plan. The University Role: Catalyst or Co-Producer of Knowledge? Explicitly contained in the OTOP plan is the role of universities as catalysts for the development of marketing strategies for CBs for the period 2006-2010. The popularised definition of ‘catalyst’ is a person or thing that causes a change, and is derived from an original definition of a catalyst as a substance that causes an increase in the rate of a chemical reaction, without itself suffering any permanent chemical change (Collins Dictionary). It is hard to conceive that, in the light of the content of the previous section, representatives of universities are going to contribute to the OTOP plan without themselves changing (through the specific knowledge acquired in a form of work-based learning (Gustavs and Clegg 2005)) during the changes they are expected to bring about. It would certainly be unwise to assume that templates of strategic marketing management (for example, in Aaker 2007) that have been developed to aid large companies in industrialised contexts, can simply be offered to CBs to encourage the necessary changes. So, maybe, catalyst is not the appropriate word, with its implication of universities providing knowledge that brings about required changes. In the management learning field, this has been labelled as ‘Mode 1’ knowledge (Gibbons et. al. 1994), which makes an assumption that universities are privileged, elite sites of knowledge production. The universities’ role, regarding the marketing aspects of the OTOP plan, should better be considered as ‘Mode 2’ knowledge production, that according to Starkey and Tempest (2005, p71), “…takes place in a growing variety of sites outside the university and has as a prime characteristic the co-production of knowledge by many knowledge workers addressing problems in the context of application and in a manner that transcends disciplines”. The leaders and members of the CBs, the local government office and private industry supporters and the customers of CBs are knowledge workers involved with co-production of knowledge with university representatives. The data collected in the reactive participant role serves to reinforce the on-site, at-work knowledge base that exists. It is important, therefore, for universities to redefine their role as co-producer of knowledge, rather than adopting the more one-directional role of catalyst. By such a means, more flexible, and even interdisciplinary approaches can be adopted to the opportunities or problems of marketing for the CBs.
In a different context, that of universities/firms co-producing ICT knowledge, Lam (2007) provides evidence that an effective mechanism is for firms to set up universitybased research units that are partly or fully funded by the firm, and which consist of academic and industrial researchers carrying out collaborative projects. Here firms acknowledge the importance of an extended pool of resources and the continuity of knowledge co-production. There may be parallels with the OTOP plan, given its longterm objectives. Government could support the creation and continuation of regionalbased research centres that facilitate the development of marketing strategies through continued knowledge transfer between university academics, CB leaders and CB supporters. Such centres could take on the responsibility for knowledge dissemination and transfer at the province level. For example, universities could use their expertise to carry out customers surveys on behalf of the CBs (an initiative that the authors are currently undertaking), but the value of such surveys for CBs, in their development of marketing strategies, will be very limited if the survey findings were presented as ‘Mode 1’- type knowledge, and only made available to relatively few CBs. There are practical issues, in reaching CBs, which have been raised by CB leaders and district officers. “…From my point of view, training programs should be organised in the Amphur because of convenient travelling and cost saving. Ultimately the outcome will be better than the program organised in Chiang Mai city centre” (P6) “…The training venue should be in Amphur where it is the centre of each zonal area. Therefore, it is convenient for entrepreneurs of the community businesses to attend the training. Similarly the trainers from government organisations would find it convenient to organise training, and it would not be necessary to travel to every village…” (S9) The producers and supporters are making reference to the convenience of the amphur level for carrying out training, and similar issues would need to be addressed if longterm research centres with university involvement were to be set up at the level of the province, rather than the amphur. Marketing Strategy as Part of a Super-Ordinate Plan It is clear that, in the OTOP plan, a super-ordinate or ‘grand’ strategy (Mattson, Ramaseshan and Carson 2006) exists, and that cooperative marketing strategies for the CBs are expected to be devised so that they contribute to the grand strategy. Furthermore, the OTOP grand strategy includes multiple performance dimensions, some of which, as has been shown, result in potential conflicts. As Varadarajan and Jayachandran (1999, p133) observe “…alliances of various types including those with a marketing thrust have become increasingly widespread (e.g. joint product development, joint marketing, and reciprocal marketing alliances)”. This is very much the case with the OTOP plan, but the alliances are encouraged as part of a governmental plan rather than being created by the firms (CBs) themselves. The recommendation, by Varadarajan and Jayachandran (1999, p138), that an understanding of alliances is “enhanced by studying them from a network perspective
that views the actions of firms [in this case, CBs] as embedded in the social context”, is endorsed by the findings of the reactive participation phase reported above, which took a bottom-up approach to marketing strategy. Grand, overarching strategies, such as the OTOP plan, can make synergies more visible, be used to develop benchmarks and comparative measures, aid reorganisation of competencies, and support the generation of external networks (Mattson, Ramaseshan and Carson 2006). However, the conflicts associated with meeting the multiple performance dimensions, make cooperative marketing strategy-making very difficult for the CBs if a totally top-down strategic approach is adopted. Furthermore, ultimate self-reliance by CBS may require the development of marketing strategies more grounded in the day-to-day experiences of the CBs, and, in particular, the roles of the CB leaders. If a bottom-up approach to strategy is to be considered, then the role of people at the ‘supervisory’ level is believed to be crucial. On the negative side, for example, Gustavs and Clegg (2005, p27) have identified a principal barrier to cooperation between businesses and universities as “the supervisors who must play the role of coach but are most reluctant to do so, seeing it as neither their core responsibility nor as necessarily in their interests”. On the positive side, the CB leaders can be seen to have the potential to develop strategy from the bottom up, precisely because of their dual role; “interacting with customers and simultaneously organizing for improvement” (Mattson, Ramaseshan and Carson 2006, p171). If the CB leaders can be continual learners, partly through knowledge transfer processes with academic marketers, then they can increase their capacity to move beyond production-based issues to thinking long-term, and to communicating to their members the consequences of the actions of their CB. The creation of successful marketing strategies for the CBs is likely to depend on the co-production of knowledge between the CB leaders and university marketers. As government subsidy is withdrawn, the CB leaders, although still ‘supported’ by government, will find themselves needing to make strategic marketing decisions as a result of acquired learning and conceptualisation of complex interactions, rather than through following templates of marketing strategy that are contained in text books. It will require their judgement as to how they should prioritise the performance measures contained in the OTOP plan, given the potentially conflicting issues associated with the measures. In particular, it will require their judgement as to how to deal with the cooperation versus competition conflict. Conclusions The sustainability of CBs is very important to the Thai economy. The OTOP project plan was developed to focus the input of resources – government, private sector, universities – on achieving desirable outcomes relating to the CBs and their products over a period of more than ten years, after which point the CBs would be self-reliant. The OTOP plan is an overarching strategy, within which the marketing strategies of CBs are expected to be developed. The plan includes an expectation that universities will play a significant role in enabling CBs to develop effective marketing strategies. Given that there are nearly 20,000 community businesses in Thailand, employing 1.5 million people, the complexities associated with the development of CB marketing
strategies that are consistent with the OTOP plan are widespread. Some of them have been described above, in the section on the facts, perceptions and potential conflicts that were highlighted in the qualitative research undertaken in the role of university as reactive participant. Preliminary findings suggest that 1. The future role of universities, insofar as the development of CB marketing strategy is concerned, would better be seen as co-producer of knowledge, rather than as a catalyst. The latter is believed to be too suggestive of a one-way flow of knowledge. The practicalities of designing opportunities for knowledge coproduction need to be taken extremely seriously. One possibility is for the government to create regionally-based research centres at each province that encourage and allow knowledge co-production on a continual basis between university academics, CB leaders and other interested parties. Because of the potential conflicts in achieving all the performance measures listed in the OTOP plan, a totally top-down strategy process is unlikely to achieve the desired effects. Some form of bottom-up marketing strategy is called for. This suggests a very important and different role for leaders of CBs; potentially a move from producers to marketers. They appear to be key to an effective implementation of a bottom-up marketing strategy, with their knowledge of the production process and the local marketplace. It will be difficult for universities and other enablers to engage in knowledge coproduction with CB leaders unless the leaders are prepared to give more priority to regular attendance at the regionally-based research centres over their day-today production activities. Financial support for such attendance could come from government sources up until 2010. There must be a significant move on the part of the CB leaders from a local to a global mindset.
The research being carried out by the authors is ongoing, and the findings are being fed back to producers and supporters. The two underlying pillars of this work – the role of universities working with businesses, and the development of a marketing strategy within the context of a super-ordinate strategy - are common to many strands of business and management research. It is hoped that the context and discussion in this paper will provoke, and encourage further research.
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