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CAUSE MARKETING EDWARDS 1 TOMS Shoes: a Case Study TOMS SHOES: CAUSE MARKETING EDWARDS 1 TOMS Shoes: A Case Study Presenting TOMS’ Successful Use of Cause Marketing and How it Helped Build Brand Equity Natalie Edwards IMC 401: Brand Marketing & Communications Professor Marian Azzaro Roosevelt University December 5, 2016 TOMS SHOES: CAUSE MARKETING EDWARDS 2 TOMS Shoes: A Case Study Presenting TOMS’ Successful Use of Cause Marketing In an effort to develop an innovative business and leverage corporate social responsibility, founder Blake Mycoskie “built TOMS upon a single philosophy: One for One; for every pair of shoes sold, a pair of shoes would be given to a child in need” (Tribby, 2014). TOMS is the leader in the cause-marketing world, in that their marketing efforts involve the cooperative efforts of a “for-profit” business and a non-profit organization for mutual benefit (Tribby, 2014). With the combination of a for-profit and One for One business model, the cost of providing the shoes to kids in need is built into the sales price of the shoes. Therefore, the customer is ultimately the benefactor, “enabling TOMS to become a sustainable organization based on giving back to the world on a continuous basis” (Murphy, Laczniak, Prothero, 2013). As long as consumers continue to buy TOMS’ shoes, children in need across the globe will receive a pair of shoes in return. In this process, TOMS is able to “turn a profit, support itself, make the world a better place, and educate consumers on how they are helping children in need by providing them with a pair of shoes” (Murphy, Laczniak, Prothero, 2013). This case discusses TOMS’ One for One business model, as well as the factors that helped contribute to the company’s global success. We will start with a brief company background, and then we will begin to analyze TOMS’ One for One business model. After, we will talk about their cause marketing efforts and their overall marketing approach. Most importantly, we will focus on their popular “One Day Without Shoes” campaign, and discuss how social media has played an important role on the promotion of the company, its products, and their mission. We will end with an analysis of what makes the company successful, as well analyze the company’s future with the One for One model. TOMS SHOES: CAUSE MARKETING EDWARDS 3 Company Background TOMS was founded in 2006 by 29-year old Blake Mycoskie, an experienced businessman who had started five companies, ranging from advertising to laundry services, before he had accidentally stepped into the shoe industry (Murphy, Laczniak, Prothero, 2013). In early 2006, Mycoskie was inspired to create a for-profit shoe business after visiting Argentina, where he had witnessed extreme poverty among their villagers and noticed that many people could not afford to buy shoes (Mycoskie, 2011). There, he immersed himself in their culture by wearing their national shoe: the alpargata, a casual canvas shoe worn by a majority of the country’s natives. He viewed the shoe as being very versatile, and believed that the alpargata could have some market potential in the United States (Mycoskie, 2011). On a mission to create a new organization, he returned to the U.S. with two hundred pairs of Argentinean shoes, and in order to finance TOMS, he decided to sell one of his companies for $500,000 (Murphy, Laczniak, Prothero, 2013). After visiting many different retailers to pitch his idea, a couple of Los Angeles stores finally agreed to sell his shoes, which then led to his idea being picked up and publicized by the Los Angeles Times (Murphy, Laczniak, Prothero, 2013). Surprisingly, with the help of publicity and word of mouth, his business earned him $88,000 in orders in the very first week. Therefore, a new business was established that he called TOMS, a name which derived from the original company concept “shoes for tomorrow project” (Murphy, Laczniak, Prothero, 2013). TOMS Shoes opened for business in May of 2006, and they also created a non-profit subsidiary called “Friends of TOMS”. The for-profit TOMS and the non-profit Friends of TOMS work together in operating the business, making sure that the One for One model is in effect and that shoes are being properly distributed. TOMS SHOES: CAUSE MARKETING EDWARDS 4 The TOMS Business Model Starting out in Argentina and eventually expanding to over 70 countries, Blake Mycoskie started this for-profit business with the goal of implementing a One for One business model by providing a free pair of shoes to a child in need for every pair of shoes sold (Naeini, Dutt, Angus, Mardirossian, Bonfanti, 2015). Their One for One business model has proven to work seamlessly, in that “the cost of the free shoe was built into the price of the one that is sold, making a seemingly charitable effort also contribute to its profitability”(Naeini, Dutt, Angus, Mardirossian, Bonfanti, 2015). Mycoskie also refers to this business model as “Philanthropic Capitalism” because of how the company makes a profit, yet incorporates philanthropy into its overall business strategy (Murphy, Laczniak, Prothero, 2013). TOMS’ business model follows a four-step process that explains their purchase and product distribution procedure: purchase, plan, support, and give. The first step in the process begins with a purchase, where every person in need is helped with every product acquisition (TOMS, 2016). The next step is the planning stage, where TOMS’ Giving Team collaborates with Friends of TOMS and their Giving Partners to plan on distributing products and donations to the people in need (TOMS, 2016). Next, TOMS gains support from neighboring businesses through tailored products, logistical support, and local production (TOMS, 2016). Lastly, TOMS’ Giving Partners provide the products and services to the communities in need, while also supporting sustainable and responsible programs (TOMS, 2016). Currently, TOMS works with more than 100 Giving Partners to deliver shoes to people in need in over 24 countries like Argentina, Peru, and Ethiopia (TOMS, 2016). Their “Giving Shoes” are offered in many styles and sizes that fit infants to teenagers (TOMS, 2016). TOMS SHOES: CAUSE MARKETING EDWARDS 5 Their Shoes & Pricing Model Since its inception in 2006, TOMS’ has introduced different product lines in addition to its original Argentinean alpargata shoe design: the Bota, Cordones, Vegan TOMS, and a wedding collection (Murphy, Laczniak, Prothero, 2013). A white and blue flag-like label is placed onto the back of each pair of TOMS shoes, which “acts as a signal of the wearer's participation in, and support of, the company's social philosophy” (Amos, 2012). In regards to pricing, TOMS can afford to include the price of the free pair of shoes in the product cost while supporting higher prices because “the brand’s target audience is willing to pay a premium for philanthropically focused products” (Soat, 2012). According to Edelman’s Goodpurpose study performed in 2012, 44% of global consumers are willing to pay a premium price for products from a company that actively and continually supports an important cause (Soat, 2012). Jim Stengel, former global marketing officer at Procter & Gamble, explains that “Most of these brands [TOMS], if not all of them, are very premium-priced and they really have to do that to sustain their business model” (Soat, 2012). Overall, as long as TOMS is authentic in their promise and consistent with their business and pricing models, people will be happy to support a brand that makes a lot of money in conjunction with a cause (Soat, 2012). TOMS’ Cause Marketing Approach TOMS recognizes that cause marketing is growing and that their business – where philanthropy is ingrained into their One for One business model – is likely to captivate and encourage the support of consumers who want to make a difference (Murphy, Laczniak, Prothero, 2013). With that being said, TOMS’ business model does not support or finance any TOMS SHOES: CAUSE MARKETING EDWARDS 6 type of traditional advertising or marketing. In the absence of high-profile advertising campaigns, TOMS relies on its community of consumers and “fans” to market and spread the word of its fashion philanthropy through its in-store community message-boards, at creative charitable events, through social media, and via its website (Roncha and Radclyffe-Thomas, 2016). TOMS especially encourages word of mouth communication, an affective form of marketing that consumers believe to be more “trustworthy than corporate advertisements” (Murphy, Laczniak, Prothero, 2013). TOMS’ also has a Five C’s approach to cause marketing, in which their chief digital officer, Zita Cassizzi, explained to Forbes that this approach is helping TOMS connect with its enthusiastic base of consumers to create lifelong customers (Ellett, 2014). TOMS’ Five C’s of cause marketing include: customer-centric, collaboration, community, content, and conversation. Cassizzi explains that TOMS makes it a priority to engage with consumers and to make it clear that their company is “not just about selling a product, but create a movement and lifelong relationship with its customers” (Ellett, 2014). TOMS emphasizes the importance of implementing a cause related marketing backed business, in that these programs are a valuable tool that marketers use to improve sales and enhance corporate image (Howie, Lifeng, 2015). According to research performed by the Society For Marketing Advances Proceedings, consumers have a favorable response when purchasing a product similar to the product being donated to a recipient (Howie, Lifeng, 2015). TOMS SHOES: CAUSE MARKETING EDWARDS 7 “One Day Without Shoes” Campaign TOMS began promoting their popular “One Day Without Shoes” campaign in 2008, where they aimed to raise awareness regarding the impact a pair of shoes can have on a kid’s life (Murphy, Laczniak, Prothero, 2013). The campaign asks individuals to go one day without shoes, which let people experience how it feels to be in the situation of a shoeless child (Binkley, 2010).
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