Doing well by doing good | Outlook Business
Home  /  Strategy  /  Trend  / Doing well by doing good | AUG 22 , 2014

Soumik Kar

Trend

Doing well by doing good
Companies are increasingly hopping on to the cause-related marketing bandwagon to bump up their businesses

Krishna Gopalan

In a new light: School children in Thesgora village MP, check germs under a UV light as part of a brand promotion

It is just past noon on a hot summer day in Thesgora village, central India, but surprisingly, the classroom in the local government primary school is in complete darkness. The windows and door are shut tight and inside, some 40 students shield their eyes from the intense light of a powerful torch. The beam travels across each student’s hands and as it zooms in on 10-year-old Sheetal, she joyfully exclaims, “Kitanu nahin hai (There are no germs).” A moment later, the windows are opened and the oppressive heat pours in with a vengeance.  

Thesgora is about an hour’s drive from Chhindwara in Madhya Pradesh. It seems no different from any other village in India. Around 1,500 people live on both sides of a single, straight road and four kirana stores cater to the locals’ basic needs. But Thesgora is different — it has the dubious distinction of having one of the highest rates of diarrhoea among children worldwide. Two million children below five years die every year across the world from diarrhoea and pneumonia. In Thesgora, 36% of children under 12 have been affected with the same. But those numbers have been improving in the past two years. Where villagers seemed unaware of the extent of the problem earlier, they now speak of the need for maintaining hygiene and adopting clean habits.

Once a week, a woman volunteer accompanied by four young men visits homes in the village and speaks to families about the need to wash their hands with soap on five different occasions every day (such as before eating and after using the toilet). The conversation is light-hearted and playful, especially when speaking with children. They conduct quizzes and hand out stickers with caricatures of kitanu (germs) to winners. Hindustan Unilever (HUL), India’s largest consumer products company, runs the entire exercise — its Lifebuoy brand is subtly present on all posters and stickers but never directly mentioned. The focus, instead, is on conveying a simple but powerful message — washing your hands goes a long way in ensuring basic sanitation and hygiene. 

“The more good we do for society, the more good it does for our business. Our social mission has been integrated into our business model,” says Samir Singh, global brand VP, Lifebuoy, at HUL. The Thesgora mission is part of a global initiative — Lifebuoy Help a Child Reach 5 — that has reached out to 180 million people in 16 countries. At Thesgora itself, HUL says diarrhoea levels dropped from 36% to 5% since the hand-washing programme was launched in 2012. 

There’s been a positive impact on the brand as well. Gyanchand Sahu, who owns the largest kirana store in Thesgora, says he sells four boxes (320 units) of Lifebuoy every month. “A year ago, we sold barely 40 units a month. Now, customers ask for Lifebuoy by name,” says the 35-year-old, pointing behind him to an empty shelf where the soap is usually stocked. Later in the day, Sahu will go to Chhindwara and bring back at least two boxes for restocking. “This will also sell out very fast and I will need to get fresh stock soon,” he says.

Welcome to the world of cause-related marketing (CRM), where doing good often translates into great sales. Increasingly, Indian companies are finding that promoting a strong social message — such as sanitation, nutrition, education or women’s empowerment — helps their own business fortunes. 

The term CRM was first used in 1983 in connection with an American Express initiative (indeed, the company holds the copyright on the term). Over a three-month period, the well-known credit card company set aside 1 cent from every card transaction and $1 every time someone applied for a new card; this money was donated to the Statue of Liberty Restoration Project. By the time the campaign ended, the restoration fund was richer by $1.7 million, Amex’s usage was up 27% and there was a 17% increase in new users. There was also a loud and heated debate on the ethical aspects of CRM — after all, it essentially involves a brand piggybacking on a noble cause to up its own sales. But a whole new way of reaching out to consumers had been discovered and brand managers across the globe jumped at the idea. Globally, cause-related marketing spend crossed $1.78 billion in 2013 and is projected to hit $1.84 billion this year. The story in India is still very small but it’s also picking up steam.

Promotions with a purpose

Why are companies turning to CRM? For starters, it’s a great way of standing out in the clutter, especially given the increasing influence of socially aware and active consumers. Marketing experts also believe that associating with a good cause helps build customer loyalty and brand credibility. 

A 2013 study by Cone Communications found that, given comparable quality and price, a compelling 91% of consumers around the world are likely to switch brands to one associated with a good cause, while another study by Nielsen last year revealed that half of consumers worldwide would be willing to reward companies that give back to society by paying more for their goods and services.

Here, it’s important to distinguish between CRM and CSR. Although both involve corporate involvement in socially important issues, CRM activity is done with an eye on the bottomline, while CSR is purely philanthropic — handouts to NGOs are donations and grants under CSR, while they are expenses under CRM. Importantly, it is the company and not the consumer that bears the cost of the cause, although the unspoken assumption is that the cause will attract more customers and higher sales will offset the hit on margins. 

“CSR has always remained a marginal pursuit for companies and was restricted to a small mention in the annual report. CRM, on the contrary, has taken off in a bigger way as brands see an opportunity in linking themselves to social causes. It allows them to take a very clear position, which is associated with a strong cause. The expectation here is that it will increase sales,” says Santosh Desai, an ad industry veteran and CEO and MD, Futurebrands.

For proof, look no further than Tata Tea’s iconic Jaago re campaign. While the brand was launched in 1983, it was this campaign — which started in 2007 — that triggered explosive growth in sales. Jaago re took up social activism, allowing the company to connect with issues such as voter registration, corruption and women’s rights. “In a category like tea, there is inertia at the consumers’ end and it is very important to be disruptive,” says Vikram Grover, head, marketing, South Asia, Tata Global Beverages. So far, the brand has spent ₹100 crore on the Jaago re campaign and another ₹75 crore on plain vanilla brand communication. Tata Global has several tea brands, including Gold, Chakra Gold, Agni and Kanan Devan, and the campaign, says Grover, brought them under one umbrella. Tea drinkers certainly seem to have woken up. Currently, Tata Global accounts for 22% of the ₹12,000-crore branded tea market, ahead of HUL’s 19.6%. Compare that with before the campaign’s launch: in 2007, HUL was the market leader with 21.5%, while Tata Global was the No.2 player with 18.7% market share. “We were volume leaders in tea. Now, we are also the value leaders,” Grover adds. 

If Tata Tea can be considered the poster child of CRM in India, it also points to the two factors that determine the success of a CRM campaign — the choice of cause and the duration of the association. For the past seven years, the brand has stayed true to its Jaago re tagline, revisiting social causes time and again, tweaking them slightly to keep with the current mood — women’s safety and the need to vote being the most recent and topical. “We caught the trend very early in the day. Activism, we thought, had come of age,” says Grover. In many ways, though, Tata Tea isn’t the norm as it has embraced a general, catchall cause. Most brands usually select CRM causes that resonate with their product categories. 

 Woman power

Chand Begum looks blank when you ask her how old she is. She thinks hard and guesses she must be in her early to mid-40s. The mother of 10 has never been to school and until a year ago, was too busy trying to make ends meet to care — her husband is a casual labourer and his income is erratic at best. Now, Begum, a resident of Firozpur Jhirka village in Haryana, a two-hour drive from bustling Gurgaon, speaks passionately about how Coca-Cola India has changed her life. Thanks to the soft drink giant’s 5by20 initiative, which aims to economically empower 5 million women entrepreneurs by 2020, people like Begum now earn at least ₹4,500 a month. “Some of my children are employed, but I contribute the most to running the house,” she says, embarrassed but proud. 

From the time 5by20 was rolled out in September 2010, it has already benefited 30,000 women in India, Nepal and Sri Lanka, of which 20,000 are from India alone. “Globally, by end 2013, we had already empowered 550,000 women,” says Sonu Grover, director, strategic initiatives, Coca-Cola India and Southwest Asia. 

The initiative has proved a win-win for both Coke as well as its women entrepreneurs. According to Grover, the company reaches out to 2.2 million of the 8.5 million FMCG outlets in India. “In many cases, expanding that has run into infrastructural hurdles, with power shortage being the biggest one,” she explains. Keeping this in mind, the company’s technicians came up with eKOcool, a solar-operated cooler that costs ₹35,000. Coke distributes the cooler among selected rural women, who then sell its soft drinks from their small village stores. A village like Firozpur Jhirka is a perfect target since it never has more than five hours of power a day. Begum sells at least one crate of 24 bottles every day. “So far, I’ve earned ₹55,000 from this business,” says the woman who was doing odd jobs such as supplying ice before becoming a Coca-Cola retailer.

“The benefits have ranged from providing employment to women to entering untapped markets and increased sales for us,” says Grover. So far, Coca-Cola India has supplied over 1,000 coolers across West Bengal, Andhra Pradesh, Uttar Pradesh and Haryana — and seen a five-fold increase in sales from these markets. The plan, says Grover, is to cross 5,000 coolers in the next three to four years.

Causes involving women and children are popular with most consumer products companies and with good reason. The received wisdom is that women account for 75-85% of all purchase decisions, so reaching out in positive ways to this influential group through issues that resonate with them personally or with their families almost always works. It certainly has for Horlicks. In 2012, the milk additive brand kicked off Ahaar abhiyan as a pilot project in West Bengal: each time a consumer buys a Horlicks bottle priced at over ₹100, the company contributes ₹1 towards tackling child malnutrition.

Last year, the brand extended the initiative to Tamil Nadu and between the states, claims to have impacted the lives of nearly 18,000 children, having raised ₹1.4 crore for the cause. It works with two NGOs — Care India and Save The Children — to handle deployment of funds. “It was possible for us to make a direct contribution to the cause but since this was something new, we were not sure if the initiative would succeed. So, we started off in a small way. But the model is extremely scalable,” says Jayant Singh, executive vice-president (marketing), GlaxoSmithKline Consumer Healthcare, which owns the Horlicks brand.

About three months before the campaign was launched, GSK conducted a pilot in over 11,000 general trade stores in West Bengal, in addition to 12 hyperstores in Kolkata. “There was a 14% lift in sales in the state. This confirmed a clear opportunity and a business proposition,” says Singh. The choice of states was deliberate — West Bengal and Tamil Nadu are among Horlicks’ biggest markets, where it has over 75% market share. Horlicks’ share of the ₹4,500-crore malted foods drink market has grown from 59% in 2008 to 64% in 2013. How much of that is on account of the CRM exercise is difficult to determine but Singh confirms that the two states where the campaign has been rolled out have seen higher volumes. 

Similarly, Google India has found that combining women empowerment and its core business of the internet is a winning proposition. Last November, the company launched the Helping Women Get Online project in Bhilwara, Rajasthan. The initiative works with Sewa Kendras to teach young girls and women in the 13-18 year age group who have smartphones the basics of using the internet for information and entertainment. “There are at least 2 million households in India with internet connections that women have never used. This was low-hanging fruit,” says Sandeep Menon, head of marketing, Google India. He adds that nearly 110,000 women in Bhilwara have already become internet-savvy as a result of this initiative. “Over the next three to four months, we will enter Maharashtra, Tamil Nadu and Uttar Pradesh as well,” he adds.

The challenge here lays in monetising the initiative, which is the biggest marketing outreach programme undertaken by Google in India so far. Although Google does not push its own case while educating the girls, there’s a very high probability that users will adopt its multiple services such as email, search engine, browser, YouTube etc. Getting people online means capturing their user profiles, which Google can use to pitch to advertisers. “There are 140 million smartphone users in India and that number is only increasing. Targeting women is a clear demographic opportunity for us,” says Menon.

 Pick your cause

There’s also a clear opportunity in targeting education in India and many brands opt for CRM projects around that, whether or not it relates to their product and core brand values. The results are usually positive, given how big an issue education is in the country. One of the first companies to hitch its wagon to the education trend was Procter & Gamble, which launched Project Shiksha back in 2005.

Since then, it has raised over ₹22 crore for the cause, has reached out to almost 300,000 children and has been involved in building and supporting 140 schools across the country. Madhura Kapdi, general manager, resource mobilisation, CRY (the NGO that handles Project Shiksha for P&G), explains that the objective was two-fold. “It was to help business meet volume targets via the cause appealing to consumers, as well as to make a tangible difference by educating underprivileged children,” she says. At P&G, the impact was not so much in market share, since the initiative was at the company level, rather than for any one brand. But, sources say, overall sales increased five times, pointing to the effectiveness of the campaign.

Insurance company Aviva India is also a votary of education as an effective CRM subject. In 2008, the company launched its ‘Street to School’ initiative, which helps children get off the streets by giving them an education and training. The thought behind this global programme is “education is insurance”, says Rishi Pipariya, director, marketing and direct sales, Aviva India Life Insurance.

In India, the company has partnered with CRY and Save The Children to facilitate education for underprivileged children and has increased its spend on the programme to almost 25% of overall marketing spend. “We were a mid-sized player and wanted to be in a niche segment. The child space looked interesting since no company was really targeting young parents. Today, the child-related proposition brings in over half our sales, from 15-20% in 2008,” Pipariya says.

At Marico, too, focus on education has paid off in spades. For the past two years, the Mumbai-based FMCG company has run only a CRM campaign for its Nihar Naturals Shanti Amla brand of hair oil. The methodology is simple — 2% of the sales proceeds go towards funding the education of underprivileged children. All advertising and communication for the brand centres on the initiative — brand ambassador Vidya Balan’s TV commercials speak of the social cause — and the usual, ‘healthier hair’ message is almost given the go-by. 

Sameer Satpathy, chief marketing officer, Marico, explains the insight for taking the CRM route: “Women across strata in society are hugely invested in the education of children.” Over 36,000 children in 10 states benefited in the first year of the programme and the aim now is to reach a total 50,000 by June 2015.

Meanwhile, the brand has managed to clock some seriously good growth numbers over the same period. From a ₹112-crore brand in FY12, Nihar Naturals Shanti Amla has grown to ₹185 crore by the following year and had sales of ₹252 crore in FY14. “Associating with a good cause makes for very good business, apart from making ethical sense,” says Satpathy. The growth in sales has been accompanied by a surge in market share as well. The brand currently has a 30% volume share of the ₹1,320-crore amla hair oil market, up from 18.6% in 2012 and 25.4% the following year — that’s faster than the 7% growth registered by the category as a whole. 

In the public eye

Where CRM helps established brands grow even faster, it has also proved useful in helping a newcomer stand out. In the US, Toms Shoes has stood out ever since its 2006 launch because of its promise to donate one pair of shoes to a poor child for every pair bought by customers. In the past eight years, the company has given away more than 10 million pairs of new shoes and has expanded its One for One programme to include the company’s new lines of products — eyewear (restoring sight to over 200,000 people) and coffee (donating a week of clean water for every bag of coffee purchased). “Toms is a great example of a start-up that has grown significantly using CRM,” says John Pracejus, associate professor, Alberta School of Business at Canada’s University of Alberta, who has authored papers on the subject. “Today, it is hard to imagine Toms Shoes without the CRM campaign.”

In India, too, when regional cellular operator Aircel decided to go national in 2008, it took the CRM route to increase brand recall and association in markets dominated by large players such as Airtel, Vodafone and Idea. Its cause of choice: tigers. The Save Our Tigers campaign broke in 2008 even as Indian cricket captain Mahendra Singh Dhoni was signed on as brand ambassador. “The tiger campaign helped us get noticed and to eventually create a series of on-ground activities, such as contests and merchandise,” says Anupam Vasudev, chief marketing officer, Aircel.

A tie-up with NDTV, involving celebrities such as Amitabh Bachchan and raising ₹11 crore from donors such as a Hemendra Kothari, Uday Kotak and Bachchan, as well as companies such as Mahindra, TCS and Shell India, helped raise awareness that there are just 1,411 tigers left in India. The efforts also helped raise awareness of Brand Aircel and its subscriber base grew from 16 million in December 2008 to 72 million currently, making it the sixth-largest cellular operator in India. The tiger campaign is now in its third season and Vasudev says it is a key part of the company’s communication mix.

Another company that turned to the environment for its CRM initiative is MakeMyTrip. In 2010, the travel website started the Responsible Traveller initiative to “sensitise Indian travellers to the ecological impact of our activities,” says Mohit Gupta, chief business and marketing officer, MakeMyTrip. Under this initiative, the company calculates the carbon footprint for each trip on the payments page and offers travellers the opportunity to offset it by making a donation — starting at ₹44 for domestic flights and ₹220 for international flights — to plant trees.

The afforestation activity is conducted by Seva Mandir through the GiveIndia platform and MakeMyTrip sends e-mail updates to donors on the status of plantation. “From an effectiveness standpoint, the real measure is the number of travellers opting to make this donation to offset their carbon credits. So far, over 90,000 customers have donated over ₹80 lakh, leading to the planting of over 500,000 trees,” adds Gupta.

CRM is almost always controversy-free and usually proves a win-win for all involved — companies reach out to customers who are happy to have participated in doing good and the cause itself is benefited. But that doesn’t mean there is no criticism of the concept. Often, there is scepticism about the company’s motives (especially when the cause isn’t related to the brand’s main line of business), so the campaign runs the risk of being dismissed as a gimmick. 

More than a decade ago, HUL and Colgate-Palmolive came together to partner with the Kerala government for a hand-washing promotion, ‘Health in your hands’, similar to what is currently playing out with Lifebuoy. There was so much resistance — especially to the idea that Kerala, which has some of the best health indicators in India, needed such a programme — that the state government ultimately backed out after a couple of years. 

For companies to prove their sincerity, there is a need to take a long-term view of cause-related marketing projects. You can’t turn your back on it even if the results (in terms of sales) aren’t as expected. And that is easier said than done. “Like any other communication activity, CRM will also be determined by return on investment. If it doesn’t work out, companies will go back to using film stars,” says Desai. So, what’s the prognosis for CRM activities? They will continue, especially in crowded categories. But, Desai adds, “The ₹1 or ₹2 that a firm contributes for a cause will have to give incremental returns for the brand. If that doesn’t happen, they will be quick to look elsewhere.” 

Here's your chance to read the latest issue of Outlook Business for free! Download the Outlook ​Magazines app now. Available on Play Store and App Store
On Stands Now