• The importance of cotton promotion

    Chapter 3 - Cotton marketing - Cotton promotion

    Promotion is critically important to the cotton industry to enable it to regain market share from polyester. Globally, cotton’s market share has eroded to about 40.6% from 50% in 1986, and polyester’s market share has grown to approximately 42%. Cotton consumption, however, has grown since 1998, and the current years are the longest and most substantial cotton expansion period on record. Cotton’s market share also showed a modest positive increase for 2005, the first in quite some time, but that is largely attributed to a price advantage over polyester.

    Polyester is cotton’s most significant competitor in the textile industries. Polyester competes with cotton on price, research and development of new products and new product variations, manufacturing efficiencies, and some categories of consumer performance, such as wrinkle resistance and physical durability. Cotton is usually the consumers’ choice because it is soft, comfortable, natural, sustainable and renewable. Appealing to consumers’ emotional preferences makes cotton promotion a viable way to improve cotton’s market share.

    Producing countries, trading countries, and consuming countries

    Producing, trading, and consuming countries participate in cotton promotion. Producing and producing/consuming countries tend to take the leading role in promotion activities, with United States cotton organizations being the most active. Other countries that actively promote cotton include Australia, Egypt, India and South Africa. Producing countries that have begun, or are about to begin, promotion efforts include Brazil, Colombia and Turkey. Usually countries beginning promotion enter through low and medium cost activities, but sometimes move to higher cost activities, depending on funding and support structure.

    Trading countries and trading/consuming countries, such as Germany, Poland and the United Kingdom, participate in middle cost and low cost activities, such as fashion shows, education programmes, contests, and publicity. Germany, through the Bremen Cotton Exchange (Bremer Baumwollbörse) manages a logo identification programme, as does Poland through the Gdynia Cotton Association (Izba Bawelny W Gdyni).

    Some countries, such as Italy, Spain and Zimbabwe, have very little active promotion, but support the international organizations that promote generic cotton through membership and sponsorship.

    International, national, state and private sector promotion programmes

    Cotton Incorporated, the marketing and research company of United States cotton producers, reversed cotton’s eroding market share in that country, which hit bottom in 1975 at 34%, by speaking directly to the consumer, and by working with the textile manufacturing supply chain to improve cotton’s manufacturing competitiveness. While the programme was successful by every measure and cotton had begun to significantly regain market share by 1983, other countries have not followed suit, largely because of lack of budget. Australia has developed many interesting promotion techniques, including a retail operation focusing on offering cotton products, and combining various promotions with education; but the severe drought and textile manufacturing moving offshore over recent years has impeded the ability to sustain these efforts.

    State and private sector funded and focused programmes are thought to be the next fertile sectors for cotton promotion activities. State programmes may be easier to facilitate, and private sector consortiums have fewer bureaucratic hurdles involved in the implementation.

    Generic and branded cotton promotion

    There are two types of cotton promotion. One country simply promoting its cotton against another country’s is one type, and the other is to promote all cotton against chemical fibres, recognizing that the true competition is polyester.

    The end-product retailer and consumers understand cotton branding primarily as country of origin. Some cotton organizations, however, will differentiate themselves by conveying the idea that specific cotton varieties can deliver some benefit to the consumer, and will communicate that benefit through the application of a visual logo or other icon. The benefit implied might be that the product meets a quality standard, a set of industry specifications, or perhaps was subjected to processes that will deliver important value to the consumer. Logos are also used to identify fibre content blend type or fibre blend level, with different criteria for the consumer depending on the individual programme focus. Most logo programmes have at least two versions of the icon to identify the product as either ‘pure cotton’, or a blend level limit.

    To some organizations, ‘pure cotton’ will mean 100% cotton while to some, 95% cotton content is considered ‘pure’. Blend levels for specific end-uses will be determined by the amount of other textile fibre that is required to support cotton in delivering an intended benefit to the consumer, and that intended benefit could be for a variety of end-uses. Examples of different blend levels to reach different end results would be the difference between the minimal amount of other fibre needed to achieve stretch, versus the larger amount of other fibre required to deliver wrinkle resistance, based on weight of fabric.

    These logo programmes are usually managed in several forms of licensing agreements, administered by non-profit organizations with directors made up of industry participants, and others who have an interest in the well-being of the cotton industry.

    Another example of cotton branding is through fibre length. Long staple and extra long staple G. barbadense cotton species have developed a consumer following with premium positioning, based on hand, lustre, texture and strength. While specific varieties command a price premium from fibre to consumer, they represent a very small portion of worldwide cotton production and consumption.

    Advances in fibre and fabric technology along with quality consistency improvements throughout the entire textile supply chain have created a competitive price-sensitive marketplace, making it more difficult to differentiate between different varieties of cotton in the end-products. The more consistency improves, the more the cotton industry focuses on generic cotton promotion, as it becomes clear that the competition is chemical fibres, polyester in particular, and that sustainable growth for the cotton industry must come at the expense of synthetics.

    Toward that end, the industry has set up a forum for the exchange of ideas, which acts as a clearing house to evaluate promotion techniques meant to improve cotton’s market share at the retail level. The International Forum for Cotton Promotion (IFCP) is a non-governmental organization composed of regional, national and international cotton industry organizations and sponsors, with 18 members from 14 countries. The mission of IFCP is to encourage increased consumer demand for cotton through the implementation of national, state, and private sector cotton demand enhancement programmes. IFCP serves as a clearing house for information about proven techniques of cotton promotion, best practices in retail-level communication, and cost-effective measures of boosting consumer demand.

    IFCP was established in 2000 in recognition of the need for a proactive effort on behalf of the cotton industry to increase cotton’s share of domestic fibre markets at the consumer level. It does not promote cotton, but rather promotes the promotion of cotton. It has created a website, focusing on cotton promotion, for anyone interested in pursuing or learning about what it entails. See www.cottonpromotion.org.

    There are other generic cotton promotion efforts, including the Cotton Gold Alliance, a programme intended to increase cotton demand in India, and Cotton: Beyond Your Imagination, to achieve similar results in China. These programmes do not feature one country’s cotton over another’s, and are meant to stimulate demand for all cotton.

    The notion of having an international body that would actually collect funds and implement advertising and promotion of cotton fibre in major consumer markets outside the United States was attempted from 1967 through 1994. The International Institute for Cotton (IIC) was composed of the governments of as many as 14 producing countries. IIC’s mandate was to promote retail consumption of cotton in Europe and Japan. IIC was effective, but government support proved unsustainable. Based on that experience, it is unlikely that a similar venture will be attempted again in the near future.

    Demand enhancement vs promotion

    The world price of cotton and carry-overs are not considered or factored into demand enhancement activities, and nor are trade issues or legislative issues, unless they directly affect the effectiveness of cotton demand. The term ‘demand enhancement’ is used to describe this activity, as ‘cotton marketing’ is usually perceived to pertain to lint fibre trading activities, and ‘promotion’, while used frequently, must be clarified in some parts of the world, as it might imply price-cutting activities.

    Demand enhancement implies that market share can always be improved by creating positive activity at the retailer and consumer level, and that several small activities together can result in a meaningful larger programme producing a measurable impact.

    Textile fibre promotion activities are usually tied to the revenues produced by cotton fibre sales, usually based on an agreed assessed fixed price amount per bale, plus a percentage of the selling price, in order to fund promotional activities. Sometimes imports, exports or both are taxed, thus improving revenues, and increasing the range of activities possible. Sincemost organizations resist pooling funds for overall broad-brush cotton promotion, this manifests itself in various self-standing promotion activities, rather than a well-orchestrated series of events that could conceivably result in a lasting impact.

    Generally speaking, true promotional activity tied to the bottom line (including price cutting for front-loading promotions) is best suited to businesses that have clear brand differentiation and clear ways to evaluate the impact on the individual brand or business. Demand enhancement is better suited to commodities that have few ways to distinguish themselves from their inter-industry competitors other than price, and that have realized that overall market share improvement is necessary to sustain long-term growth for the entire industry.

    Export focused promotion and domestic promotion

    Export focused cotton promotion programmes are based on the ability of a cotton producing country to supply cotton to textile manufacturing countries or regions that are net importers of cotton. This usually occurs when the producing country does not have textile manufacturing capability, or produces more cotton than the producing country’s manufacturing capacity can consume. With the relocation and reorganization of the world’s textile manufacturing complex, country and regional configurations are changing. Some countries that previously were cotton producing, textile and apparel manufacturing and consuming countries are now cotton producing and end-product consuming countries, as textile and product manufacturing has relocated elsewhere. China, for example, is the world’s largest producer of cotton, the world’s largest producer of textiles and apparel, and still is a large net importer of cotton from other countries.

    Some countries that were always net exporters of cotton must now compete differently, because of a stronger focus on world price and unforgiving quality consistency demands. Most focus on price promotion, rather than trying to differentiate ‘cotton from other cotton’, unless there is a perceived built-in competitive advantage for the consumer.

    Domestically focused demand enhancement programmes are built on the premise that cotton consumption can be increased by improving demand within the countries of the stakeholders of cotton activity, including producing, trading, manufacturing, and consuming countries and organizations. If every country or region increases demand within its own borders, cotton consumption will also increase, thus benefiting the entire industry. There are several advantages to domestically focused promotion, including the ability to manage the scope of that promotion for effectiveness, and the ability to control the competitive landscape more successfully. Working in a familiar market presents strong advantages, including a better understanding of the culture, the target consumer, and ways that will help influence fibre preferences more easily, effectively and with limited resources.
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    Cotton Exporter's Guide

    Brochure - African cotton promotion
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