THE BOGO MODEL: A COMPARATIVE CASE STUDY Master Thesis Student: Pam van Wanrooij (367501) Coach: Dr. Pamala Wiepking Co-reader: Dr. Lonneke Roza Master: Global Business & Sustainability Date: 20 June 2017 Preface The copyright of the master thesis rests with the author. The author is responsible for its contents. RSM is only responsible for the educational coaching and cannot be held liable for the content. 2 | P a g e Acknowledgements This master thesis marks the end of my time as a student at the Erasmus University in Rotterdam. It has been hard work for the last couple of months in order to deliver a satisfactory piece of work. This would not have been possible without the help of a lot of people and I would like to take the opportunity to thank them here. First of all, I would like to thank my coach Pamala Wiepking who has been a great help right from the start. Not only did she provide me with advice, adequate feedback and guidance throughout the process, she also encouraged me to get the best out of myself and this experience. Because of her persistence in asking me questions, I was able to keep improving the quality of my research. The same goes for my co-reader, Lonneker Roza, who I would like to thank for giving me feedback and offering new insights when I needed it. Second, I would like to thank all the people that contributed to this thesis in any way. By offering me new insights, providing me with information and checking my work. In particular, I would like to thank the employees of Waka Waka and my interviewee who was involved with Waka Waka in the past. I would also like to thank my former high school teacher who made the effort to check my work for any grammar mistakes. I appreciate all of the time you took to be of help. Lastly, I would like to express a word of gratitude to my friends and family for their support throughout the process. Even though this thesis did not always bring out the best in me, none of you ever stopped believing I would pull it off, thank you for that. I hope you enjoy reading my work! Pam van Wanrooij 20 June 2017 Rotterdam 3 | P a g e Executive Summary Purpose This thesis was written in order to fill a gap in literature with regard to a quite recent invention: the Buy-One-Give-One model. It will serve as a starting point for a more in-depth research agenda on the subject. First introduced by TOMS Shoes as the One-for-One movement®, the BOGO model has grown in popularity over the past decade. Many have tried to imitate TOMS’ success, but only a few have come close (Marquis & Park, 2014). Research on the subject is limited and thus far scholars have placed the BOGO concept into three different business-related research domains: cause-related marketing (Rothstein, 2014; Solomon, 2015), corporate philanthropy (Bansal, 2012; Rollins, 2016; Rothstein, 2014) and social entrepreneurship (Hand, 2011; Jannuzzi, 2012; Joy, 2016; Marquis & Park, 2014; Sánchez-Hernández, 2015). The BOGO concept has been praised by those who believe in its potential to create social value. On the other hand, it has been heavily criticized for not being able to address the root cause of complex social problems. In order to find out how effective these BOGO models are for the three most relevant stakeholders (firms, non-profits and beneficiaries) and under what circumstances they thrive the following research question was formulated: What makes a BOGO model effective from the perspective of firms, non-profits and beneficiaries? Additionally, the following sub-question was formulated in order to define a best practice to inform relevant actors on how to implement a BOGO model that will benefit society most, taking into consideration the circumstances under which they operate. What is the best practice to implement a BOGO model for each of the three stakeholders (firms, non- profits and beneficiaries)? Approach The literature review looks at the limited information available on the BOGO concept as well as at the three overarching subjects that have been identified: cause-related marketing, corporate philanthropy and social entrepreneurship. Based on the findings of the literature review, indicators of effectiveness were identified for the three most relevant stakeholders involved. Subsequently, based on the three different donation formats as identified by Marquis and Park (2014) three different cases were selected. The donation format represents the way in which the ‘Give One’ part of the model comes about. The first selected case is Waka Waka in which a similar product is donated. The second case is Warby Parker in which a percentage of the sales or profit is donated. The third case is TOMS Shoes which uses a combination of both approaches by donating similar products as well as a percentage of the sales or profit. By using an exploratory comparative case study, three BOGO approaches as implemented by the companies were studied in depth. By means of inductive reasoning, the answer to the two research 4 | P a g e questions was obtained. The analysis was largely based on secondary data, complemented by primary data in the case of Waka Waka. Findings Waka Waka works with their own Waka Waka foundation in order to create an impact through their ‘Share the Sun’ initiative. By distributing solar devices they aim to provide light and energy to people without access to the electricity grid. Warby Parker is an eyewear company, that focuses on being a successful fashion brand. Their social mission is not at the core of the organization, nevertheless they claim to have made a considerable impact through their ‘Buy a Pair, Give a Pair’ approach in collaboration with the social enterprise VisionSpring. TOMS Shoes, the initiator of the One-for-One movement™, started their BOGO strategy with the donation of shoes, but is now involved in the gift of sight, water, safe birth and kindness in collaboration with over 100 Giving Partners. The case analyses revealed that the BOGO models of Waka Waka and TOMS Shoes seem to be most effective in increasing sales through their explicit marketing. All three BOGO strategies seem to be equally effective in obtaining HR benefits for the firms. The BOGO models of Waka Waka and Warby Parker seem to be most beneficial to the non-profits by offering the benefit of highest increased funding. The BOGO model of TOMS seems to be most beneficial to the non-profit partners due to the explicit marketing of their Giving Partners, thereby creating increased awareness of the non-profit and cause. The BOGO models of Waka Waka and Warby Parker seem to be most effective for the end beneficiaries. Arguably this is because of their clear focus on two distinct problems they aim to solve: vision impairment and energy poverty. TOMS Shoes impact is harder to measure, partly due to their broad offering and divergent areas of impact. Transparency is a critical point in all three cases and needs considerable improvement in order to verify that the impact reported is actually realized. Contribution This research contributes to academic literature by exploring a relatively new concept and relating it to the academic research domains of cause-related marketing, corporate philanthropy and social entrepreneurship. Additionally, this thesis has practical relevance by providing a best practice with regard to the implementation of a BOGO model that is most effective for the business, non-profit and beneficiaries. Recommendations Future research should specifically focus on primary data collection in order to investigate the effectiveness of BOGO models. Two important indicators of effectiveness that need additional attention are HR benefits of BOGO and organizational learning between the non-profit and the company. Moreover, in order to improve knowledge from the perspective of non-profits and beneficiaries as this still lags behind, further research should focus on these stakeholders in more depth 5 | P a g e Table of Contents Preface ................................................................................................................................................ 2 Acknowledgements ............................................................................................................................. 3 Executive Summary ............................................................................................................................ 4 Introduction ......................................................................................................................................... 7 Relevance .......................................................................................................................................... 12 Literature Review .............................................................................................................................. 14 The Buy-One-Give-One Model ............................................................................................ 14 Cause-Related Marketing ...................................................................................................... 19 Corporate Philanthropy ......................................................................................................... 24 Social Entrepreneurship ........................................................................................................ 29 Concluding Remarks ............................................................................................................. 32 Methodology ....................................................................................................................................