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). The overall premise of the campaign is to “instill a sense of appreciation for what a difference a pair of shoes can make”, and to make an impression on others while walking around barefoot in support of a cause (Roncha and Radclyffe-Thomas, 2016).

Every year since 2008, TOMS executes a One Day Without Shoes event that encourages people to promote the cause using social media (Roncha and Radclyffe-Thomas, 2016). Each year in May for a two-week period, TOMS is determined to raise awareness for children’s health by challenging consumers to post a picture of their bare feet on Instagram (Roncha and

Radclyffe-Thomas, 2016). For every photo tagged on Instagram with the hashtag

#withoutshoes, the brand gives a new pair of TOMS shoes to a child in need (TOMS, 2015). This particular campaign addresses the purpose of brand advocacy, where the effectiveness of an

Instagram campaign has increased through powerful narratives and leads to highly positive consumer perception and awareness of the brand (Roncha and Radclyffe-Thomas, 2016).

Referring to future One Day Without Shoes campaigns on Instagram, Mycoskie (2016) clarifies:

“Next year’s One Day Without Shoes will be different than any we’ve ever done. We’re

extending the timeframe to build awareness and anticipation, but most importantly, so

that more people can participate in an effort to give more. The best part is that even if TOMS SHOES: CAUSE MARKETING EDWARDS 8

someone is not a TOMS customer, he or she can simply take a photo and post

#withoutshoes to make sure a child in need somewhere in the world will get a pair.”

Binkley (2010) explains that “corporate America has had a long track record of charitable fund- raising, exploring brand tie-ins with charities, and utilizing social media to promote these charities, but TOMS is going a step further than most in blurring the difference between brand and charity with their smart Instagram campaigning”. The success of their One Day Without

Shoes campaign can be attributed to college students and Campus Clubs nationwide who strongly support TOMS and their mission. Also, individuals, celebrities, and companies in over

25 countries have been known for participating in TOMS’ #withoutshoes campaign by speaking out about the cause and sharing pictures on their Instagram accounts (Murphy, Laczniak,

Prothero, 2013). Some popular campaign participants include: Charlize Theron, Allison Brie, the

Dallas Cowboys Cheerleaders, Nordstrom, Microsoft, Google, and AOL (Murphy, Laczniak,

Prothero, 2013). Each year the campaign grows stronger, and in 2015, hundreds of thousands of social media users participated on Instagram, setting a record-high donation amount of

265,000 pairs of shoes given to kids in need (Couch, 2015).

The Impact of Social Media Marketing

Using social media as an inexpensive advertising alternative has allowed TOMS to develop an understanding of online consumer behavior, gain insights from current and prospective customers, and enhance their brand’s communication strategy (Roncha and

Radclyffe-Thomas, 2016). TOMS also uses social media to engage with consumers in hopes that their brand’s message and mission impacts users to support their cause. In addition to using TOMS SHOES: CAUSE MARKETING EDWARDS 9

Instagram, they use Facebook, Twitter, YouTube, blogs, and viral videos to promote their cause and One Day Without Shoes campaign, to educate people about current events within the company, and to inform the public about its Shoe Drops (Murphy, Laczniak, Prothero, 2013).

Most importantly, TOMS relies on its consumers to market the company themselves by creating and posting their own online content involving their experiences and involvement with TOMS

(Murphy, Laczniak, Prothero, 2013). Social media, particularly Instagram, has helped TOMS

build value for their brand, as well as establish a brand community (Roncha & Radclyffe-

Thomas, 2016). The following chart illustrates the process of TOMS’ efforts in utilizing

Instagram to create a loyal brand community:

(Roncha & Radclyffe-Thomas, 2016, Pg. 311. Journal Of Fashion Marketing & Management TOMS SHOES: CAUSE MARKETING EDWARDS 10

Mycoskie told USA Today, “By leveraging Instagram, we can really make this a participatory event globally. This isn’t just about advocacy and giving based on your buying. It’s about real giving for giving’s sake” (Couch, 2015). TOMS’ strong social media presence has aided in leveraging the brand and creating a community of loyal supporters.

Customer Based Brand Equity Model

The concept behind the Customer Based Brand Equity (CBBE) model is that in order to build a strong brand, you must “shape how customers think and feel about your product, and you have to build the right type of experiences around your brand” (Keller, 2013). In doing so, customers will then have “specific, positive thoughts, feelings, beliefs, opinions, and perceptions about your brand” (Keller, 2013). When your company achieves strong brand equity, your customers will most likely become loyalists and brand advocates. The following model illustrates a pyramid containing the four steps a brand needs to follow in order to build brand equity:

TOMS SHOES: CAUSE MARKETING EDWARDS 11

The CBBE model can be used to explain TOMS’ source of brand equity in many ways. For example, the first step in the CBBE model is to create a brand identity and raise awareness among consumers. In 2006, TOMS successfully completed this step by introducing and establishing itself as the first One for One shoe brand that vows to donate a pair of shoes for every pair purchased. TOMS aimed to raise awareness for their cause and goal, which is to try and supply every child in need with a pair of shoes. The second step in the CBBE model is to communicate what the brand means to consumers in forms of performance and imagery.

TOMS accomplished this step by providing quality products, fulfilling their promise of donating shoes, and by leveraging social media to establish a likeable and trusting brand personality to get their message across. The third step in the model involves the consumer’s response to the brand in terms of judgment and feelings. Consumers have always responded positively to

TOMS’ mission and philanthropic efforts, including their One Day Without Shoes Instagram campaign that encouraged participation in support of their cause. When people help promote

TOMS’ campaign and buy their shoes, they feel good about themselves knowing that their purchase helps support a cause and provides a child in need with a new pair of shoes. The last step in the CBBE model involves brand resonance, which is the hardest to achieve because this is when the customer creates a loyal bond with the brand. TOMS has achieved a loyal brand community of consumers and supporters who purchase their shoes, actively spread the word about their brand through word of mouth, and help market the brand on social media by posting content and sharing their experiences. Without having built a relationship with its consumers, it would not have been possible for TOMS to develop brand loyalists, as well as achieve the level of brand equity that it has earned today. TOMS SHOES: CAUSE MARKETING EDWARDS 12

What Made TOMS A Success?

TOMS has evolved into a successful, internationally recognized brand by donating more than 10 million pairs of shoes to those in need, and by making “change-making” easy and affordable (Converse, 2014). Over 500 retailers around the world are currently offering TOMS products and the company is earning more than $300 million in revenue, all while continuing to deliver on its promise to donate a pair of shoes for every pair sold (Mycoskie, 2016). The success of TOMS is due in part by how they implemented cause marketing programs and social media marketing to help leverage their brand and connect with consumers. Mycoskie explains that TOMS’ One for One initiative has made a huge impact by spreading awareness and reaching over 64% of consumers, two-thirds of which explained that they have bought products from TOMS because of the causes it supports (Kleinberg, 2014).

For TOMS, cause marketing seems to work because of the brand’s authenticity, distinctiveness, and desirability (Kleinberg, 2014). TOMS’ use of social media and cause marketing tactics can be viewed as the most critical factors that fueled their success. They were responsible for reaching a large audience through social media with an inexpensive marketing budget (Naeini, Dutt, Angus, Mardirossian, Bonfanti, 2015). Their social media followers formed an active brand community and “acted as brand storytellers”, marketing the brand with their own content (Naeini, Dutt, Angus, Mardirossian, Bonfanti, 2015).

Most importantly, TOMS can be viewed as a success because of their positive impact on the world and the people who are benefiting from and are being affected by TOMS’ business, products, and philanthropy. TOMS’ success with their One for One business model inspired many other businesses to create their own companies based on the same strategy. Also, TOMS’ TOMS SHOES: CAUSE MARKETING EDWARDS 13 accomplishments have earned them positive and respectable recognition from fellow companies and prominent figures. For example, in 2009, Secretary of State Hilary Clinton awarded TOMS with the Award for Corporate Excellence, which recognized TOMS for its

“commitment to corporate social responsibility, innovation, exemplary practices, and democratic values worldwide” (Murphy, Laczniak, Prothero, 2013).

The Future of TOMS

After a successful ten-year journey, Mycoskie’s one-for-one model based company has given away over 60 million pairs of shoes and has expanded into other categories using the same business model: bags, eyewear, and coffee (Lebowitz, 2016). As a for-profit business with philanthropic elements, Mycoskie stresses the importance of TOMS “continuing to innovate and design new products in order to appeal to worldwide consumers and to keep the business model sustainable” (Naeini, Dutt, Angus, Mardirossian, Bonfanti, 2015). TOMS should also

“closely monitor compliance of its activities and keep the promise of One for One” (Naeini,

Dutt, Angus, Mardirossian, Bonfanti, 2015).

When asked if he would ever consider changing the way his company is run, Mycoskie explained that the one-for-one model will never change and “will always be a part of TOMS”

(Lebowitz, 2016). With its effective business model, impactful cause marketing programs, and its successful implementation of social media tactics, TOMS seems to have a bright future ahead of itself. TOMS has created a successful business backed by a passionate fan base of consumers who will continue to advocate for the brand and support its cause.

TOMS SHOES: CAUSE MARKETING EDWARDS 14

Discussion Questions

1. Founder Blake Mycoskie mentioned that the One for One model “will always be a part of TOMS.” With that being said, do you think that the One for One business model will prove to be successful for TOMS in the long run? 2. How has social media, more specifically Instagram, played a role in the brand development and promotion of TOMS? 3. How have consumers contributed in building TOMS’ brand equity?

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