What are Trade Associations?

Published by Thomas Herold in Economics, Laws & Regulations, Trading

'Trade Associations' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Trade Associations refer to those groups which offer a means for businesses in a certain industry or segment to interact in a way that benefits all parties concerned. Such an organization will be funded by member company contributions. These associations typically work to promote the industry’s image to the public.

It might also deliver a single voice in the form of a government legislative lobby. They interact with government officials on issues which will affect the industry itself. Besides such critical functions as these, associations have other roles. These could include a way for the organization to educate the consumers of the general public on the main products and concerns of its particular industry.

Much of the time such industry trade associations will be established as not for profit organizations. This allows companies which associate in the same segment to cooperate together on those issues which affect them all in common. It is also true that these organizations are particularly useful for safeguarding an industry’s integrity. This is because they commonly establish behavior standards which all member companies have to honor in order to maintain a good standing record.

Those companies or groups which refuse to live up to the standards the group develops and enforces in common suffer from the consequences. The leaders of the trade association might eventually choose to expel the business from the trade association for continued misbehavior. This would cost the offending company a serious amount of credibility before not only the industry, but also buying customers of the general public.

It is these trade associations which typically maintain all necessary means to ensure the industry’s undivided voice will be heard by the law makers in a given nation or jurisdiction. This is why many participating member corporations choose to operate through the trade association in order to encourage industry-friendly legislation which will best help their industry segment to succeed. Similarly, this association could choose to lobby against any legislation that they feel will harm their collective best interests and those of their industry as a whole.

It is true that a number of businesses will elect to back marketing plans and public relations campaigns on their own to increase the exposure of their products and name brand with the relevant consumers. The beauty of a trade association such as this is that it will similarly endeavor to create interest through making members of the public aware and educating them on the industry in general and also the various products it offers. They will not concentrate their efforts on the goods for sale by a given member company. Instead, they will back publicity and marketing or advertising campaigns which lead customers to buy and consume the given industry’s goods they produce in general.

This starts with offering the public facts and figures which consumers can easily understand and appreciate. The idea behind such education efforts of the trade association is that it will make it easier for the marketing efforts of the individual companies within the industry to have maximum impact. Besides lobbying, educating, and marketing, these trade associations frequently act as conference sponsors for their member businesses to attend.

Such a conference’s purpose and offerings typically center on boosting the industry’s overall practical performance. They do this through delivering useful information that every conference participant is able to grasp and remember. Members then take home this information to the other members of their firm and share it with those who could not attend the conference. Practically every business or trade association will sponsor at least one or more of these forms of gatherings or conferences once every year.

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The term 'Trade Associations' is included in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.