Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at Ilam Province from Members’ Perspectives

doi:10.4236/ajibm.2012.24025

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American Journal of Industrial and Business Management, 2012, 2, 194-199

http://dx.doi.org/10.4236/ajibm.2012.24025 Published Online October 2012 (http://www.SciRP.org/journal/ajibm)

Studying the Status of Marketing Mix (7Ps) in Consumer

Cooperatives at Ilam Province from Members’

Perspectives

Purashraf Yasanallah, Bidram Vahid

Management Department, University of Ilam, Ilam, Iran.

Email: [email protected], [email protected]

Received July 2nd, 2012; revised August 1st, 2012; accepted August 31st, 2012

ABSTRACT

Concerning the particular importance of cooperatives in a cooperation system, the author has tried to study the status of

marketing mix (7Ps) in cooperatives and to provide proposals to i mprove the conditions of su ch cooperatives. This is a

descriptive and survey research. Its population consists of all members of consumer cooperatives in Ilam province se-

lected by a ranked sampling method proportionate to the volume of the population by which necessary sample was de-

termined. According to research aim, seven hypotheses are provided and tested by one sample t-test. As a result, hy-

potheses on price, location, promotion, product, operation management and physical assets which show lower than av-

erage status of these elements were confirmed. The only hypothesis that was rejected was the hypothesis related to the

personnel element. This shows th e prop er condition of this element of marketing mix.

Keywords: Cooperation; Consumer Cooperatives; Marketing; Marketing Mix

1. Introduction

In the past, economists believed that the important thing

for growth and development of communities is physical

capital. Since 1950s, another factor namely human capi-

tal and social capital was considered. According to social

and economic connoisseurs, the most beautiful aspect of

social capital is seen in cooperatives. Cooperatives are a

new shape of economic activities which have created a

new generation of middle class in the society by using

the talents and facilities of majority and sharing them in

the profits of their operations so they enjoy a similar

ownership as a balanced combination of social-economic

parameters. Often, they give their capital deliberately and

voluntarily. The participation of cooperatives in social/

economic development is important since they are proper

mechanism to establish social justice and to promote

awareness and public culture and they move economic

capitals and fertilize social capitals.

Today, we are facing with the depression of coopera-

tives especial consuming ones. Unsuccessful and depres-

sion of cooperatives (35% of such cooperatives) are con-

sidered as an important challenge since depression and

failure of such cooperatives waste financial resources,

HR unemployment, loosing new job opportunities and a

negative impact in public opinion [1]. On this basis, it is

felt that cooperatives should be studied more different

than before. So, a key question arises: Can discussions on

marketing and implementing lead into a guideline to exit

such depression?

In present study, authors attempts to look at consum-

ing cooperatives in terms of marketing and identify the

strength and weak points of cooperative and provide its

recommendations to improv e weak poin ts and to en hance

strength points by studying marketing mix of Ilam coop-

eratives including price, place, promotion, product, per-

sonnel, procedure management and physical assets.

2. Literature Review

Needs and demand of man is the starting point for mar-

keting activities which pave the ground for sharing

products and transaction through demand for products.

Cooperatives are also established to satisfy the common

needs of people. In contrary to other entities which sat-

isfy human needs and demands through other ways, in

cooperatives needs are met by member s in a ma nner that

members try to meet their own needs and demands [2]. In

the time of serious problems, cooperatives can be a hope-

ful option [3].

The beginning of cooperatives adding movements

backs to the establishment of a Rochdale’s Fair Com-

pany in 1844. Cooperation refers to a collective and sys-

tema tic v olun tar ily op erat ion [4]. Navcovic believes that

Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at

Ilam Province from Members’ Perspectives 195

cooperatives are democratic organizations which create a

benefit for their members [5].

Cooperatives have an important status in Iranian Con-

stitutional Law which has led into the expansion of co-

operative activities and forums and their remarkable

growth [6]. According to the law, cooperatives are cate-

gorized in three ranks one of them is consumption field

[7]. According to statistics provided by Cooperative Mi-

nistry, there were 155,241 registered cooperatives by Co-

operative Ministry until March 2010. According to the

same data, the number of cooperatives in Ilam province

is more than 2000 [6].

By using marketing mix, cooperatives can further meet

their members’ needs and expand their sale in their non-

member markets [2 ].

The initial studies on marketing mix were conducted

by Harvard University in 1929 [8 ] while th e manage ment

paradigm of marketing mix was dominated the market

since 1940. In 1964, McCarty developed this idea and

revised them as principles recognized as 4Ps today [9].

Marketing mix includes four elements namely product,

price, promotion and place [10]. Owing to the fact that

any decision on each element should be compatible with

other three elements, marketing mix term was selected

[11]. In reality, marketing mix is a set of tools by which

entities achieve their marketing goals in their target mar-

kets [12]. Booms and Bitner believe that services need

another type of marketing and a different type of mar-

keting mix. To the same reason, they distinguished ser-

vice marketing from product marketing. In their market-

ing mix, three Ps namely personnel, physical assets and

procedures were added and fi n a l l y 7Ps were shaped [13].

Below, one can find the definition of marketing mix

elements:

Product is all necessary components and elements to

do a service which generate value for customer [14]. Pro-

duct is an element of marketing mix which respecting it

in cooperatives leads into the satisfaction of members

and customers. For instance, supplying products with a

credible brand and attractive package increase the sale in

addition to the satisfaction of customers [2].

Price and other costs of service sector show the man-

agement of various costs endured by customers in a-

chieving the advantages from generating the services

[14]. In consumer cooperatives, the first and main aim is

to satisfy members that should be considered in pricing

followed by achieving the profit, sale increase, more

share in the market, survival and development of the

company [2].

Place is the managerial decisions on where customers

should be provided with services and it may include

electronic/physical distribution channels [14]. Consumer

cooperatives are a kind of distribution channels which

can establish the relationship between consumers and

manufacturers and play a vital role in mitigating the

prices and preventing the growth of unnecessary dealers

[2].

The value and importance of promotion for service

organization is in the benefits achieved from buying their

services. In many cases, promotional methods are similar

for services and products [14]. In the position of eco-

nomic corporation, consumer cooperatives have the func-

tion to distribute products among members and other

consumers and it is necessary that they move toward

promotional activities to increase their sale.

Personnel are a main component in providing services

[15]. According to Pheng and Martin, personnel are the

only component that provides customers with services.

Since consumer cooperatives are firms in which em-

ployees face with consumers directly, such organizations

try to achieve a special situation in the market through

training their employees on sale knowledge and how to

treat with customers [16].

Procedure management ensures availability and sus-

tainable/proper quality of services. The task and role of

this component of marketing mix is to balance service

demand and supply [17]. By improving the procedure of

providing services to customers, cooperatives can pave

the ground for consumers’ convenience which leads into

repurchase and, finally, sale increase.

Physical assets refer to environment and facilities

needed by companies to provide services to their cus-

tomers [18]. Consumer cooperatives can expand con-

sumers’ choices by providing facilities like self-service,

paramount shelves, etc as same as big shops and can

prevent that a buyer leaves the company without any

purchase.

In their study, Safari, Aryanfar and Ebrahimi studied

structural, contextual and content factors and their impact

on the success of consuming cooperatives. Marketing

shapes a content factor as one of the most important ele-

ments in the success of consuming cooperatives. It seems

that the authors have not been able to study all elements

due to the quantity of structural, contextual and content

factors. Therefore, it seems necessary to study each fac-

tor separately especially marketing factor in the success

of cooperatives [19].

Zaranejad and Sharifi say that workforce mixed with

what called as employees can impact on productivity. In

present research, constituents like training, consultancy

and education are used to study the impact of manpower

on the productivity of cooperatives. Therefore, studying

the status of marketing mix with more constituents can

remarkably help to improve their productivity [20].

Ebrahimi, Toluei, Mahdieh and Kanani found some rea-

sons for the stagnation of cooperatives and they explored

Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at

Ilam Province from Members’ Perspectives

196

it in members’ contribution which in present study, the

author also looks for it. The results of this research could

show the necessity of more attention to the components

of marketing mix [21].

Davies and Burt (2007) studied the internationalization

of retail cooperatives. They attempted to expand the rea-

sons of cooperatives’ failure generally and to prepare

more profound literature on internationalization of coop-

eratives but they forgot to consider the application of

marketing in coop eratives’ internationalization [22].

Considering new economic conditions of the country

on the objectivity of subsidies and owing to the fact that

removing the problems of consumer cooperatives im-

pacts on purchase increase and the level of members’

lives directly, the author decided to measure the status of

marketing mix in consumer cooperatives at Ilam prov-

ince and to provide guidelin es to enhance marketing mix

in order to improve the p erformance of such cooperatives

and to meet members’ satisfaction.

The aim of present research is to study the status of

marketing mix (7Ps) in consumer cooperatives at Ilam

province. To this end, seven hypotheses are devised:

1) The status of price in consumer cooperatives is

lower than average;

2) The status of place in consumer cooperatives is

lower than average;

3) The status of promotion in consumer cooperatives is

lower than average;

4) The status of product in consumer cooperatives is

lower than average;

5) The status of personnel in consumer cooperatives is

lower than average;

6) The status of procedure management in consumer

cooperatives is lower than average;

7) The status of physical assets in consumer coope-

ratives is lower than average.

3. Methodology

Present study is a quantitative and ap plied one and it is a

descriptive-survey in terms of research type. To collect

information on research background and theoretical

framework, library method and to collect needed infor-

mation on testing the hypotheses and measuring mem-

bers’ opinions, feasibility study method along with a

questionnaire is used . The validity of the questionnaire is

confirmed by connoisseurs and its reliability is also sup-

ported by using Cronbach’s alpha (0.814).

Its population consists of all members (11,495) of

consumer cooperatives in Ilam province selected by a

ranked sampling method (193 subjects) proportionate to

the volume of the population by which necessary sample

was determined. Table 1 indicates the share of each rank

based on the type of the consumer cooperative.

Table 1. The share of each rank at population for sampling.

Cooperative

Members

Labor-

Based

Cultural Local

Employer-

Based

Members 1037 5205 267 4986

Shares 0.09 0.452 0.0230.432

Source: Co mprehensi ve system of register ed statistics by C ooperative Min-

istry 2011 and authors’ calculations.

Finally, the questionnaires were distributed more than

determined quantity and 199 ones were returned. The

questionnaire consists of general and special items based

on previous questionnaires, conducted studies and the

opinions of guiding professors/advisors. General ques-

tions consist of members’ demographical traits including

gender, age, education and two questions based on a face

scale. The special questions gathered their ideas about

marketing mix based on Likert five-scale. The constitu-

ents of research hypotheses are shown in Table 2.

By using one sample t-test in SPSS, research hypothe-

ses were tested so that numbers were initially hypothe-

sized for population average and then through t-test is

was determined whether they are true or false. Freedman

test was used to rank marketing mix components.

4. Discussion and Conclusion

Of 199 distributed questionnaires, 164 belonged to men

and 35 to women. In terms of gender, most consumers

and members of cooperatives (82%) are men. It shows

limited membersh ip of women in the cooperatives. Since

women constitute a main p art of shoppers throughout the

world, it is necessary that cooperative step toward more

participation of women in such cooperatives through

implementing special marketing plans.

The answers of respondents to their age are ou tlined in

Table 3.

As seen in Table 3, more than 50% of members are

less than 40. It shows that they can be de facto customers

of cooperative in at least next 20 years and cooperatives

should use encouraging activities to maintain this major

resource.

Table 4 shows that more than 50% of members’ co-

operatives have M. A. and higher education. According

to such level of education, this should be included in

propagandas and other marketing activities by coopera-

tives.

The first hypothesis studies the status of price in the

consumer cooperatives. By using one sample t-test, this

hypothesis is converted into statistical hypotheses name-

ly H1 (the claim) and H0 (the contrary).

H0: The status of price in consumer cooperatives is

equal or higher than average;

H1: The status of price in consumer cooperatives is lower

Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at

Ilam Province from Members’ Perspectives 197

Table 2. The constituents of each hypothesis variable.

Variable Measure

Price

1) Cheaper prices of cooperatives’ products com-

pared to other shops

2) Discount

3) Credit purchase

4) Adoption of commodities’ prices to

members’ expectations

5) Purchase by instal l ments

Place

1) Needs to cooperatives in the region

2) Easy access to coo p e ratives by public

transportation

2) Transportation of members’ purchased

commodities by cooperatives

3) Using telephone and other

communicational tools to order

Promotion

1) Using awards in cooperatives to

encourage members

2) Using deadline incentive to encourage

members

3) Plans of cooperatives to penetrate into

members’ i n s i g hts and beliefs

4) Popularity of the cooperative as a

distinguished shop

5) Using members’ ideas and proposals

Product

1) Diversity of cooperatives’ commodities

2) Delivering the goods with

well-recognized brands

3) Quality of supplied commod iti es

4) Attractive package of commodities

5) Delivering the newest commodities

in cooperatives

Personnel

1) Providing necessa ry advices by personnel

to shoppers

2) Employees’ courtesy

3) Employees’ enthusiasm to respond

members’ quest ion s

4) Employees’ skills and knowledge to sale

the products

Procedure

management

1) Self-services

2) Investigating and r esolving shoppers’

problems during shopping

3) Considering the i mportance of shoppers’ time

4) Categorizing the p roducts based on

members’ convenience

Physical

assets

1) Beautiful decoration of the cooperative

2) Proper amenities like refrigerator and

electronic scale

3) Physical facilities like wheeled baskets

4) Calm and enjoyable ambience of the

cooperative

Table 3. The frequency of respondents’ age .

Age Frequency Frequency (%)

<30 35 17.6

31 - 40 96 48.2

41 - 50 57 28.6

51 - 60 6 3

<61 2 1

Total 196 98.5

NA 3 1.5

Total 199 100

Source: Author’s calculations.

Table 4. The frequency distribution of respondents’ educa-

tional level.

Education Frequency %

Under Diploma 8 4

Diploma 33 16.6

Associate of art 45 22.6

Bachelor 94 47.2

Masters and higher 17 8.5

Total 197 99

NA 2 1

Total 199 100

Source: Author’s calculations.

than average.

0:3





1:3





Other hypotheses are explained as above and their re-

sults are shown in Table 5.

Table 5 shows that the average of respondents’ opin-

ions on the status of price, place, promotion, product,

physical asset and procedure management in coopera-

tives is lower than 3 and less than test rate. Concerning

the estimated significance level (0.000) and in 0.95% as

confidence level, one can claim that the status of such

components in consumer cooperatives is lower than av-

erage. On the other hand, concerning the one-way test

and negative high and low levels, the average rate of all

six variables is smaller. Therefore, H0 is rejected. In fact,

since the critical figure in the table is 1.64 and calculated

t is less than mentioned t in the table, H0 is rejected and

the contrary hypotheses are supported, that is, H1 is sup-

ported for six hypotheses and it is only rejected for hy-

pothesis 5 (personnel) which shows better situation of

this component than other ones.

Ranking Hypotheses’ Variables

Friedman test is used to rank th e variables of hypotheses

in order to identify which component in marketing mix

has better situation than other components. The results

are shown in Table 6. As seen in the table, personnel

component has the best and promotion has the worst

status. Bad situation of promotion shows the lack of

attention by cooperatives’ officials to this valuable com-

ponent. Lovelock and Wright (2003) equals watching to

sale. This shows the importance of all marketing mix

components including incentives and awards. After pro-

otion, price has the worst status. This also shows the m

Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at

Ilam Province from Members’ Perspectives

198

Table 5. The results of testing hypotheses.

variable df

T Significance level average Standard deviation High level Low level

Hypothesis 1 198 –16.132 0.000 2.152 0.740 –0.7437 –0.9508

Hypothesis 2 198 –13.935 0.000 2.228 0.781 –0.6626 –0.8810

Hypothesis 3 198 –18.067 0.000 1.989 0.789 –0.9002 –1.1209

Hypothesis 4 198 –5.347 0.000 2.676 0.825 –0.2039 –0.4423

Hypothesis 5 198 1.899 0.059 3.115 0.858 0.2356 –0.0044

Hypothesis 6 198 –11.091 0.000 2.389 0.776 –0.5020 –0.7191

Hypothesis 7 198 –4.086 0.000 2.734 0.915 –0.1371 –0.3930

Source: Author’s calculations.

Table 6. Ranking the variables of hypotheses.

Variable Rank average Rank

Price

3.03 6

Place

3.33 5

Promotion

2.50 7

Product

4.61 3

Personnel

5.90 1

Procedure management

3.81 4

Physical assets

4.82 2

Source: Author’s calculations.

lack of attention by officials.

5. Conclusion and Recommendation

Of seven mentioned hypotheses, 6 ones were confirm-

ed and the hypothesis on the status of personnel was re-

fused. It shows the low positio n of marketing mix 7Ps in

Ilam consumer cooperatives. Friedman test indicated that

among marketing mix components, Personnel have the

best and promotion has the worst status.

5.1. Suggestion for Managers at Ilam Consumer

Cooperatives

In developed countries, there are huge costs on advertis-

ing and it has a close relationship with their economic

progress. Concerning the average of marketing mix com-

ponents and low average of promotion compared to other

variables, cooperatives’ managers are recommended do

not fear the costs of advertising and step toward it. They

should remind members to purchase cooperatives by pro-

viding with incentives.

Complaining customers, in fact, are providing the

company with the opportunity to reform problems, to

revise their relations with complainants and to remedy

the quality of their services. On this basis, cooperatives’

managers are recommended to patient in resolving the

problems of members and shoppers and address to mem-

bers’ recommendations and critics by organizing regular

meetings.

Although personnel component has the best status

among other marketing mix components, cooperatives’

managers are recommended to address their employees

and increase their awareness and train them in order to

improve this status since customers know service pro-

viders under the name of the organization and if the per-

sonnel have not passed adequate training, it will be dif-

ficult for them to provide competent services.

The key of effective pricing is to recognize shoppers’

traits, the reason of their shopping and how to decide to

shop. Since many members of cooperatives are em-

ployees of entities with medium income level, discounts

can impact highly on the purchase by such members.

Hence, cooperatives’ managers are recommended to de-

crease the prices rationally or to give discounts to shop-

pers and to pave the ground for paying the price of ex-

pensive commodities by installments so that customers

and members will be encouraged to further shopping .

Customers look for more convenience and they expect

to receive their goods anywhere and anytime they like.

On this basis, cooperatives’ managers are recommended

to establish phone order and delivery system in order to

pave the ground for more orders an d eliminate shoppers’

concerns by transporting heavy and big co mmodities.

Cooperatives’ managers are recommended to estab lish

a regular polling system in order to identify customers’

demands and to meet them. In the meantime, by pro-

viding a variety of products like home appliances, clothes,

cosmetics, etc, they can pave the ground that customers

can find all their needed goods through one cooperative.

The conditions of physical ambience can impact nega-

tively or positively and most companies pay high atten-

Studying the Status of Marketing Mix (7Ps) in Consumer Cooperatives at

Ilam Province from Members’ Perspectives 199

tion to this issue. Unfortunately, it is neglected in most

cooperatives at Ilam. The appearance of the environment

aids to proper feeling and reflection of customers and

personnel. On this basis, cooperatives’ managers are re-

commended to create conditions for buyers to purchase

in an enjoyable sense by designing a nice, clean and heal-

thy physical ambience.

Since shoppers tend to buy commodities with broad

propaganda or in other words, to buy modern goods, co-

operatives’ managers are recommended to supply such

goods. Shoppers prefer to find commodities in different

brands when they enter cooperatives.

5.2. Suggestion for Future Study

Future researchers are recommended to study the status

of marketing mix in consumer cooperatives in next

year’s and compare their findings with this research and

then investigate about the reasons of improving or wors-

ening the situation.

Since the author has simply studied the status of mar-

keting mix in members’ perspective, future authors are

recommended to study the status of marketing mix in

other cooperatives including manufacturing ones.

According to findings of promotion component with

the worst status among other elements of marketing mix,

future authors are recommended to study this element

separately.

Since the author has simply studied the status of mar-

keting mix in members’ perspective, future authors are

recommended to study it in managers’ perspective and

compare the ideas of both groups.

6. Research Limitations

The lack of precise and updated information on con-

suming cooperatives in Ilam Cooperative Directorate made

it difficult for author to access such cooperatives.

Since Ilam is a border province, it has special political

and geographical status which makes it difficult to con-

duct such researches and t o ga t her needed data.

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