MODULE [PRINCIPLES OF MARKETING]

Chapter 8: CONSUMERS COOPERATIVE

OBJECTIVES:
1. to assemble the needs of the consumers in good
eminence goods and services at a reasonable price;
2. to conduct trading and public services; to serve the
inhabitants within the trade enterprises (shops, stalls,
tents) and within the catering facilities (restaurants,
canteens, cafés);
3. to produce goods, to supply household and
manufacture.

A consumers' co-operative is an enterprise owned by consumers and managed

democratically which aims at fulfilling the needs and aspirations of their members. They
operate within the market system, independently of the state, as a form of mutual aid,
oriented toward service rather than pecuniary profit.
Basic Cooperative Principles
1. Open and voluntary membership. Cooperatives are voluntary organizations,
open to all people able to use its services and willing to accept the
responsibilities of membership, without gender, social, racial, political or religious
discrimination. Anybody can join a co-op—they don't separate dependent on
sexual orientation, social, racial, political or strict variables.
2. Democratic control. Cooperatives are democratic organizations controlled by
their Members, who actively participate in setting policies and making decisions.
The elected representatives are accountable to the membership. Members
control their business by deciding how it’s run and who leads it.
3. Limited returns on capital. Cooperatives are permitted under law to pay limited
dividends, but their priority is to provide economic benefits to their members.
Cooperatives recognize that capital, together with management, labor, and the
products handled, are necessary resources for operating their business.
4. Patronage refund. Patronage refund is the name for how co-ops send profits
back to their owners. Essentially, each owner gets back part of the profit from
their own purchases. Co-ops are distinctive businesses based on cooperative
ownership. ... Those records are the basis for the patronage refund in profitable
years.
Cooperative Practices
1. Cash trading. This is business done on a cash and carry basis. The customer
enjoys at least the use of the goods and services for the cash payment he/she
gives. Cash trading promotes equality since anybody with cash can enjoy the
service patronage. This practice can train members to observe the habit of
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balanced spending. Furthermore, the cooperative would be able to avoid bad

debts and stabilize business operations. Finally, it is a way of increasing growth.
2. Sales at prevailing market prices. Cooperatives offer goods and services at
prevailing market prices. This promotes stability. It can cope with operational
expenses and cover up the negative effects of shrinkage, depreciation and
losses. It helps maintain the prices of goods;
3. Religious and political neutrality. The cooperative accepts members
regardless of politics, race or religion. The cooperative remains neutral on these
issues and does not discuss or promote one belief over another. The cooperative
respects the beliefs of others.
4. Continuous educational campaign. Cooperatives need to educate about
cooperatives is that assumptions about how businesses operate are not always
appropriate to cooperatives. If co-op members, officers, and employees are to
know how to operate a cooperative well, it falls to the cooperatives to provide
education. Co-ops need the support of their members. In fact, the members of
many co-ops don't stick together, but use the co-op only occasionally, making it
difficult for the co-op to serve any of its members well. This failure of co-op
members to cooperate should no really surprise us, since the idea of loyalty to a
particular business is fairly foreign to our society. What is more American than
the ability to hop in a car and pick a supermarket at whim? Co-op members need
to know both why their co-op is special, and why their participation is important to
the co-op.
5. Adequate and accurate bookkeeping. Efficient operation in any enterprise is
possible with adequate recording of the day-to-day transaction.
6. Reserve fund. A reserve fund is a savings account or other highly liquid asset
set aside by an individual or business to meet any future costs or financial
obligations, especially those arising unexpectedly. If the fund is set up to meet
the costs of scheduled upgrades, less liquid assets may be used.
Types of Consumers Cooperative
1. Commodity cooperatives. They are primarily engaged in the procurement of
essential merchandise to serve the needs of its members.
2. Service cooperatives. Service cooperatives are a type of "consumer
cooperative" which help to fill a need in the community. They allow consumers
the opportunity to supply their own needs, gain bargaining power, and share
earnings. They are organized to give members more control over the services
that are offered. Examples: service co-ops such as child care, health care clinics,
and funeral services.
3. Specialized consumers cooperatives. Under this category are rural electric
cooperatives, telephone cooperatives, insurance associations, transportation
cooperatives.
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Immediate Objectives of Consumers Cooperative

Whenever the consumers of a particular area collectively establish a cooperative
society with a view to purchasing daily necessary commodities at the optimum price this
cooperative society is called Consumers’ Cooperative Society. A consumer cooperative
is a cooperative business owned by its customers for their mutual benefit. It is a form of
free enterprise that is oriented toward service rather than pecuniary profit. Consumer
cooperatives are an essential element of the economic landscape, existing as a self-
governing organization that democratically serves the needs of those who choose to
belong to it. It is a cooperative business owned by its customers for their mutual benefit.
1. Elimination of economic wastes. A consumers cooperative acquires
merchandise for use by its members. The cooperative, knowing the needs of
members, has a unique bargaining strength in acquiring what members want.
Only needed items are purchased, thereby reducing costs.
2. Elimination of unfair trade practices. The false representation of a good or
service; false free gift or prize offers; non-compliance with manufacturing
standards; false advertising; or deceptive pricing.
3. Elimination of unnecessary middlemen. This process enables the cooperative
to save for its members what is known as the middleman’s profit. This profit is
now conserved as “savings” of buying members.
4. Promotion of initiative and enterprise. A consumers’ cooperative offers a rich
field of opportunities by providing for their growth.
Patronage Refund
Patronage refund is the name for how co-ops send profits back to their owners.
Essentially, each owner gets back part of the profit from their own purchases. Co-ops
are distinctive businesses based on cooperative ownership.

Activity:
List down five (5) consumers’ cooperative that exist in your community.
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References:
https://www.qsstudy.com/business-studies/objectives-consumers-cooperative-society

https://www.economicsdiscussion.net/management/cooperative-societies/types-of-cooperative-
societies/32203#:~:text=Consumers'%20Cooperative%20Societies%3A&text=This%20society%20buys%2
0goods%20in,the%20profit%20among%20the%20members.

https://consumerfed.org/consumer-cooperatives/

https://www.co-oplaw.org/co-op-basics/types/consumer-cooperatives/