Social marketing has been around
for several decades, since Philip Kotler’s pioneering work in social cause
marketing. What started out two decades ago as an arena of marketing for
non-profit organizations to help good causes raise awareness, action and money,
has now evolved into a mantra of consumer and B2B branding.
A new principle has been added to the
traditional 4Ps of marketing – namely, the personal value to consumers of
participating in the wellbeing of their environment and community through
purchase of socially conscious goods and services. Let’s call this “P” people,
in the sense of the personal value of social and environmental betterment.
Companies in developed markets and in
the advanced sectors of developing markets are embedding their product and
service offerings in tangible programs of
social and environment improvement. Starbucks has pioneered cup recycling;
Subway is a QSR leader in the cause of anti-obesity. PetSmart has performed
great service for animal welfare. Many other companies have followed suit, like
the wilderness protection programs of Timberland; the fair wage policy of Patagonia;
and the renewable energy products of GE. Their purpose is to show the social
benefit of their products and services to the better the health, diversity,
human and animal rights, environment, education, and general well being of
society. They are marketing their products and services to do good for society,
and increasing their profits by doing this.
As quality differentiation in the
marketplace has flattened; as business scale has achieved cost and pricing
flexibility; as distribution has become universally accessible; and as
promotion has becomes ubiquitous, social value has emerged a the new frontier
of competitive advantage. Research has shown that all 4Ps being equal,
customers will select the alternative that they sincerely believe is doing more
good for society.
There a basically six ways that
companies are demonstrating their product, service and corporate social value,
as documented in GOOD WORKS, by Philip Kotler, David Hesekiel and Nancy Lee
(2012, Wiley): 1) Taking actions that promote a good Cause; 2) Enabling
consumer contributions to Causes based on product sales; 3) Marketing new
products and services that motivate and support positive personal and social behavior
change; 4) Making direct donations to a Cause; 5) Employee volunteering in
Causes and communities; and 6) Adopting socially responsible business
practices.
A few cases will suffice to
illustrate this trend: Starbucks, PetSmart and Subway.
● Starbucks: On the Cause awareness
and action front, Starbucks provides attractive cup recycling containers and
sponsors cup summits of manufacturers, materials suppliers, retailers and
academic groups to explore new systems of cup recycling. For Cause related
marketing, Starbucks contributes 5 cents for each bottle they sell of Ethos
brand water to the Ethos Water Fund for projects in water stressed countries.
In 2011, the Fund contributed $6 million to projects around the world. For corporate
social marketing, Starbucks gives customers free bags of coffee grounds for
organic composting, instead of using artificial fertilizer. For corporate donations,
Starbucks gave $22.4 million in cash and kind for community building projects
programs in 2010. With regard to volunteer service, Starbucks hosted in 2011 a
global month of community service, supporting its employees to take positive
actions to make a positive difference in their communities. With respect to
socially responsible business practices, Starbucks is committed to the goal of
buildings all new company owned stores according to environmentally sustainable
LEED standards.
●Subway: Some companies focus their responsibility on one or
several of the six paths of responsibility. Subway’s corporate social marketing
strategy to fight obesity has led it to a pledge to offer 50 percent of its six
inch sandwiches at a 400 calories cap. This is a benchmark social marketing challenge
to the entre QSR industry to attack obesity. Can McDonald’s meet this challenge?
●PetSmart has partnered with local animal welfare organizations
to promote the cause of animal welfare by providing free space for in-store
adoption centers of homeless pets. PetSmart employees operate the adoption
centers and the welfare organizations keep the adoption fees. In 2010, 403,000
pets were adopted. This brings traffic to the stores for the pet food and
accessory accessories that adoption entails. It saves the lives of animals and is
a win-win cause promotion program.
There are hundreds of exciting examples
of corporate social responsibility in GOOD WORKS, by Philip Kotler, Nancy Lee
and David Hessekiel (2012, Wiley). But let’s move on to why this is happening.
Why has traditional corporate donor contribution to charities blossomed into an
era of company cause promotion and branding, cause-related marketing, and
corporate social marketing? Put another way, why has social value become a
major force in brand strength and competitive advantage in the marketplace?
Tom Ostenton’s pioneering book, The Death of Demand (2004,
FT Prentice Hall) documents the decline among large companies of the growth
rate of sales revenues since 1980. Company earnings have since grown by cost reduction
through corporate re-engineering; mergers and acquisitions, which captures already
engaged customers of merged or acquired companies; and finally international
sales expansion.
Ostenton argues that the domestic
markets of developed countries have become saturated. The middle class largely
has what it needs, except for replacements and incremental innovations; and
there is no population surge or disruptive new technology to drive a period of
expansionary demand.
How can companies grow in this
“winter” of flat demand? Fortunately, there is a wellspring of new demand,
still small but growing. Generation Y, or Millennials, were born since the 1980s
and are the children of the prosperous Baby Boomer generation. They grew up
buying, or having their parents buy, what they wanted. They number roughly 80
million in the U.S. and have intra-generational segments within this cohort. The
central psychological character of this broad cohort is their sincere concern
about the social and environmental conditions of society, the sustainability of
natural resource and the planet, itself. This cohort has moved from the
personal career and wealth ambitions that motivated their Baby Boomer parents
to social concerns for human and animal rights, social justice, environmental
protection, physical fitness, healthy food and preventive health, and help for
the poor. Let’s call this agglomeration of concerns a desire for social value
and it has had a profound impact on business offerings and business practice.
The Millennials are an alarmed
generation. They despair at high unemployment; the greed of Wall Street manipulators
who caused the financial crisis; the growing disparity of rich and poor;
climate warming; endangered species and social violence. They occupied Wall
Street and protested widely for many causes. Their attitude has impacted their
consumption behavior. With the transparency of the Internet and rapid diffusion
of knowledge and experience of marketplace through social media, they know a
great deal about companies and their products. They have more confidence in self
informed consumption of better products than they have in government regulation
of health, safety and business practice.
Smart business has simply stepped
in, when government stepped out. Millennials look to socially conscious
businesses as a palpable social value. Social value and corporate social
responsibility are a central new tenet of their product and service selections.
Business has to creatively generate social value at part of the offerings to
achieve consumer selection. It is marketing’s job to amplify the good that
companies can do and the premium return on investment that comes with a new genuine
contributions of social value for consumers.
This
commitment of business to the fifth P, People, is the marketing challenge of
the 21st century. It is not only a feature of developed markets, but
of developing markets which will soon have more educated middle class consumers
that developed economies. It is as relevant to Chinese companies as it is to
American companies. The rewards for social value marketing for both society and
business are great. GE Imagination, one of the pioneers of “Green” advocacy has
just surpassed Vesta, as the largest wind power turbine maker in the world. Take
social value seriously. It is a key to your future profits, as future middle
class generations all over the world become more socially demanding.
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