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January 18 - January 23, 2020
Socio-cultural transformation sees consumers as human beings who should be empowered to move up the Maslow pyramid. It is more relevant to companies not only at the product level but also at the business model level. By utilizing the power of collaboration, it can lower cost and create higher impact.
Figure 7.1 Three Stages of Addressing Social Issues in Marketing
THREE STEPS TO TRANSFORMATION
Identify Socio-Cultural Challenges
Figure 7.2 Three Steps of Creating Socio-Cultural Transformation
In mature markets, wellness is the one popular social cause that many companies are addressing.
Wellness itself is a broad theme that includes several sub-themes such as malnutrition, imbalanced diet, obesity, and unfitness; various kinds of disease and epidemics; natural disaster and refugees; personal and work safety; and many others.
Education is also one of the most popular themes. While wellness themes are generally selected by food and beverage, grocery retail, and pharmaceutical companies, education themes are often selected by services companies.
Social justice is another popular theme and includes fair trade, employment diversity, and empowerment of women.
Privacy is another issue. The rise of consumer-centricity, especially the one-to-one marketing in the last few years, spurs the use of data mining tools.
This is a dilemma in Marketing 3.0: as consumers are increasingly networked, they have no personal space.
Select Target Constituents
There are typically three types of constituents. Gender and age groups such as women, youth, and the elderly are the first. Women are often underestimated for their potential. In the book Don’t Think Pink, the authors point out that a large number of women not only contribute half of the household income and own businesses but also act as purchasing agents in the home and in the office.
Women also hold the decision making power when it comes to important issues such as food and fitness. These two issues are the major roots of many social problems related to health care. Moreover, consumer empowerment will work better for women than for men.
Targeting the oldest and the youngest members of the society —the baby boomers and Gen Y—will give companies an opportunity to make an impact as well.
The second type of constituent is the middle-class group. Persons in the middle class are not poor but have limited resources.
The third type of constituent are minority groups. This segment includes certain races, religious believers, and the disabled who lack empowerment in society.
Offer Transformational Solution
solve social challenges by creating jobs (65 percent), developing breakthrough innovation (43 percent), and making products or services that provide solutions to the issues (41 percent).
Human-Centered Design.30 It views solutions through three lenses: desirability (how deep is the need for the solution), feasibility (how possible is it to execute technically and organizationally), and viability (how promising is it from a financial perspective). Companies can adopt this open-source approach by conducting a three-phase process: hear, create, and deliver.
Remember that companies are not expected to do the transformation alone. They have to collaborate with one another and with the stakeholders. In fact, they must collaborate with their competitors.
CHAPTER EIGHT Creating Emerging Market Entrepreneurs FROM PYRAMID TO DIAMOND, FROM AID TO ENTREPRENEURSHIP
The pyramid must be reshaped into a diamond. In other words, more people at the bottom of the pyramid should have higher purchasing power and therefore move to the middle level. The bottom of the pyramid will shrink and the middle will fatten.
THREE ENABLING FORCES AND FOUR REQUIREMENTS
The first force is increased access among the poor to information and communication technology infrastructure.
The next force is the blend of excess supply, underconsumption in mature markets, and hypercompetition at the top and middle of the pyramid. It stimulates companies to look for other growth markets.
The final force is government policy to discourage people from migrating to overcrowded urban areas. Urban growth will put heavy pressure on the urban infrastructure. Investment in the rural areas, on the other hand, will increase the quality of life of the rural people and help slow migration.
All three forces help deliver a huge underserved market. Ease of information access makes it easier to promote products and educate the market. And governments will want to support and facilitate any companies that would like to invest in rural development.
However, to ensure that the disruptive innovation truly reduces poverty, Michael Chu put forward four requirements:17 1. Its scale should be huge to reach the billions who are in poverty. 2. Solutions must be enduring and last over generations. 3. Solutions must be truly effective and make a difference. 4. All this must happen efficiently.
THE MEANING OF SOCIAL BUSINESS ENTERPRISE
Social business enterprise (SBE) is a term coined by Muhammad Yunus to describe a company that is making money while impacting the society in which it operates. It is neither an NGO nor a philanthropic foundation. An SBE is built with a social purpose in mind right from the beginning. But it is also possible to transform an established company into an SBE. The basic factor determining whether a company is dubbed an SBE will be whether the social goal remains its primary business objective and is clearly reflected in its decisions.
There are three measures of the success of an SBE in relation to strengthening the economic foundation of the society.
Stretches Disposable Income
An SBE stretches disposable income by providing goods and services at lower prices.
Expands Disposable Income
An SBE expands disposable income by providing goods and services not previously available for the bottom of the pyramid.
Increases Disposable Income
An SBE increases disposable income by growing the economic activity of the underserved society.
Market Education SBEs must educate the underserved market continuously, not only on product benefits but also on how to increase their quality of life as related to the SBE’s business.
Linkage with Local Communities and the Informal Leaders
Partnership with the Government and NGOs
MARKETING FOR POVERTY ALLEVIATION
Table 8.2 The Marketing Model of an SBE No Elements of Marketing Social Business Enterprise Business Model 1 Segmentation Bottom of the Pyramid 2 Targeting High Volume Communities 3 Positioning Social Business Enterprise 4 Differentiation Social Entrepreneurship 5 Marketing Mix • Product Products not Currently Accessible for Low-Income Customers • Price Affordable • Promotion Word-of-Mouth • Place Community Distribution 6 Selling Sales Force of Social Entrepreneurs 7 Brand Iconic 8 Service No-Frills 9 Process Low-Cost
Segmentation and Targeting
However, an SBE can view the market creatively by understanding the variance in attitudes of low-income consumers. Modifying the VALS system, low-income consumers can be classified into four segments30:
1. Believers Believers are conservative consumers with strong beliefs in traditional moral values.
