Disrupt Poverty, Make a Profit: The Case for the Social Marketing Model
Despite witnessing industry after industry being disrupted by new tech-enabled models, overall macroeconomic trends tell a distressing story. Consumption among the world’s rich and middle class is at its limit, and the foreign aid approach of the world’s largest NGOs to helping developing economies are largely ineffective in alleviating poverty. In their paper “Marketing’s Lost Frontier: The Poor”, authors Ravi Achrol and Philip Kotler argue that the Social Marketing Model has the power to kill both birds with one stone, and their ideas call for techniques that are familiar to today’s innovation professionals.
An Argument for a New Approach
Achrol and Kotler frame their appeal by pointing out that traditional markets which are designed for middle-class and rich consumers have become effectively a zero-sum game because they’ve reached their consumption limit. As a result, growth only happens in the midst of a bubble which is destined to pop.
Meanwhile, the “majority of the peoples of this world have been left behind by the economic miracle of the 20th Century.” The traditional approach of many NGOs has come up short, failing to lift the majority (71%) of the world out of poverty. To wit, the United Nations’ Millennium Development Goals have set ambitious targets for the world without providing the critical analysis of the victories and failures of past programs necessary for success. The authors go on to point out that while globalization has helped to create wealth for some developing nations, the results have been uneven, with the majority of progress coming from China.
The Attractiveness of Social Marketing as a Solution
The solution, say Achrol and Kotler, lies within the principles of the Social Marketing Model. Reminding us that the underlying purpose of marketing is “not about profit, but about understanding human needs,” it can be used to design superior solutions. Further, they argue that by shifting from a customer driven approach to a beneficiary driven approach, practitioners can create win-win propositions for all stakeholders.
The process in social marketing involves 7 steps, which examine the following areas:
- Understanding the needs and motivations of the poor consumer from a socio-psychological perspective and then mapping them.
- Developing new value propositions and products from the “ground up” which target the specific needs of the target segments
- Creating effective branding, sales channel, and pricing strategies that take into account these consumers specific behaviors and limitations
Keys to Success:
The arguments and evidence that the authors present is nothing new. The argument for markets as a vehicle for poverty alleviation is as old as the theory of capitalism, and the construct of the Social Marketing Model was first developed in the 1970s. Indeed, social welfare was a major driver of free trade legislation, promising that a “rising tide shall raise all boats”. But the authors do so in the context of new developments, evidence, and technology that lend credence to their arguments.
In particular, I feel that 2 of the author’s arguments, in addition to 2 more of my own that the paper did not mention, are compelling reasons to believe that we have moved beyond a tipping point which will see real change in terms of economic growth for those outside the traditional marketing target demographic.
Limited Growth Opportunities
Companies are beginning to understand that they are fighting ever harder for smaller pieces of the pie, and many are actively searching for long-term growth opportunities outside of their traditional customer base. Many non-profits are becoming aware of the limitations of their programs, and want to explore how to apply a responsive, marketing approach to designing their solutions and increasing effectiveness.
Distributed Production/ Technology
The authors put forward a clever idea of Distributed Production as a way of solving infrastructure and supply chain problems of developing nations. But the real key in this example was that technology is now at a point which has enabled this kind of production to be done so in a profitable manner.
As we move forward, advancements in (and the affordability of) communications, frugal innovations, digital and production technologies, and the internet of things will continue to unlock new opportunities and business models that were previously out of reach, creating employment opportunities in addition to new businesses.
Consumer-Driven Demand for ‘Triple Bottom Line’ Businesses
This concept wasn’t discussed by Achrol and Kotler, but I think there’s ample evidence that consumers from the middle-class and rich sectors of the market are voting, in ever increasing numbers, with their money to buy from companies that show regard for sustainable and socially conscious business practices. In response, visionary CEOs like Pol Polman of Unilever have undertaken programs to empower poorer consumers and workers in an attempt to design winning propositions that will create mutually beneficial growth.
NGOs have softened their views on business as well. Long seen as exploitative, many socially conscious business professionals are entering the ranks of the non-profit world in an attempt to use their skills for something other than the pursuit of profit.
Advancement in User-Centered Design/Design Thinking Methodologies
Although they didn’t explicitly mention it, the article gives several examples of what it refers to as “Ground Up” solutions, which echo the principles found in User Centered Design and Design Thinking. Truly successful products, value propositions, and business models can only be created when companies start from scratch and study the specific needs and consumption patterns of customer groups which have been previously largely ignored.
Thankfully, the past decade has seen an incredible advancement in IP and development of tools that enable innovators to prototype and develop products and models more rapidly and effectively than ever before. With smart planning, enabled by new technology, the promise of marketing to shape the economic future of an inclusive market may finally be in the cards.