Paper Topic: TOMS Shoes and Cause-Related Marketing

Walking around campus you will see tons of people, both male and female, wearing simple canvas shoes with very little detail. They come in multiple colors, but really don’t have much to them other than that. These shoes are called TOMS, and although they might appear simple, there is an intricate story behind them. These shoes also gave me in the inspiration for my paper. For each pair of TOMS purchased in stores or on the TOMS website, one pair is given to a child in need. Since it began, the company has given 10,000 pairs of shoes to children in Argentina and 50,000 pairs to children in South Africa. The motto of the company is “one for one”. For at least part of my paper, I would like to focus on the TOMS business model.

TOMS engages in what is called cause-related marketing. In the case of TOMS shoes, the cause came first and the product was secondary, in the sense that the product idea was created out of one person’s desire to support a cause. I’m sure that there are other products on the market that were created based on a similar mentality, and I would like to look into these companies and their product offerings more in depth. More common, however, are already established companies that decide to associate their name with and give a portion of their profits to a cause. One of the most common examples of this is when companies turn their product packaging pink, signifying that they provide funding for breast cancer research and support.

Another route that would be interesting to explore involves corporate social responsibility in general, and how it affects a customer’s view of a product. For instance, if a company prides itself on being “green” and their attempts at helping the environment are widely publicized, will that better encourage customers to buy products made by that company? People like to feel good about their decisions, and buying something attached to a cause is an easy way to achieve this.

This topic is interesting to me because I see great value in volunteering for non-profit organizations, or providing some kind of monetary support to them. Monetary support does not only come in the form of donations; it can also come from purchasing those products that are connected to a cause. I made the connection between cause-related marketing and customer experiences because I realized that I am the type of consumer to give in to cause-related marketing, and I know there are many people out there who feel the same. When I am faced with a wall of similar products, it makes my decision much easier to see that one is connected to a cause, because that will then become a factor in my purchasing decision. It makes me feel good, so why not? At the same time, I know that there are people out there who do not feel the same way, so in my paper I would also like to explore how much cause-related marketing affects purchasing decisions. From my initial research, it seems that connecting a product to a cause has a very positive affect on sales, so it might be hard to find people who disagree that cause-related marketing is a good thing.

I found a great article on TOMS shoes in Business Week. To see the article, follow this link:

http://www.businessweek.com/smallbiz/content/jan2009/sb20090123_264702.htm?chan=smallbiz_smallbiz+index+page_top+small+business+stories

The article talks about Blake Mycoskie, the entrepreneurial mind behind TOMS. Mycoskie always had a passion for travel, and even finished third on Amazing Race. He launched the company with $300,000 of his own money, and with the help of some major national retailers, sold 10,000 pairs in the first year. Since launch, estimated revenue for TOMS is $4.6 million. In his buy one, give one away model, the purchase of a pair of shoes for $40 provides enough money to create another pair and turn some profit, so basically, the company sustains itself.

I also found a number of articles discussing cause-related marketing in general. I will only post one link because I found several; some focused on opinions on the topic, and some defining what cause-related marketing is and the many ways that companies engage in it. Click the following link for an example:

http://www.businessweek.com/the_thread/brandnewday/archives/2007/07/most_cause_mark.html

This article discusses a 2007 survey that found that “2/3 of Americans consider a company’s business practices when deciding what to buy”, and also found that “87% of U.S. consumers would switch from one brand to another if the other brand was associated with a good cause.” The author of this article shows some skepticism as to the accuracy of these figures. Regardless of the numbers, the survey shows that people want to help, and buying products that support a cause is one way to do so.

I felt good just reading about TOMS, so I’ll take that as proof that this is a good topic for my paper. I don’t own a pair yet because it was just recently that I became aware of the cause - but now it’s next on my list of things to buy. I have also started looking into participating in a TOMS Shoe Drop in Argentina. If anyone is interested in joining me, please let me know!

How I Feel About Whole Foods and Central Market

After reading the Whole Foods and Central Market articles, I realized even more that I am not a high-end, organic grocery store type of person. Maybe I’m just bitter because I’m a college student on a limited budget and I can’t afford much when I shop at these stores, but mostly I think it comes down to an intimidation factor. Stores like H-E-B and Randall’s carry brands that I am familiar with because I grew up grocery shopping with my mother in similar grocery store settings. When I step into Whole Foods or Central Market, suddenly my simple box of whole wheat pasta turns into Whole Wheat Organic Pasta Enriched with Bran and Wheat Fiber (I made that up), or “the life's work of an Italian "authentic food artisan" named Gino Girolomoni”. Without someone behind me telling me what the added benefits of such products are, and why these benefits are worth the added cost, I can’t say that I’d make the decision to purchase them. I was impressed to hear, however, that Central Market has an in-store foodie whose job is to walk around in the store all day to talk with customers about their cooking and eating habits and to give on-the-spot samples. It sounds like this woman would be the perfect person to stand behind me and tell me why I should buy the pasta with the crazy ingredients, but in my few attempts to maneuver the Central Market aisles I have not encountered such an employee.

I bet I could research some of the fancy products that are sold at Whole Foods and Central Market and could be convinced of their value to my health and well-being, but that brings me to another factor that makes shopping at these stores difficult for me – time. If I stumble upon information or hear from someone else that a certain product sold only at a Whole Foods or Central Market is superior to a product sold at H-E-B or Randall’s, I might toy with the idea of going to try that product, but in the end I probably wouldn’t go to the store and buy it. Again, maybe this is just because I am a college student with so many competing responsibilities, but I don’t have time to go pick up a couple of things at Whole Foods or Central Market and then finish my shopping trip at another grocery store that carries my everyday items. In this regard, it is nice that Central Market is owned by H-E-B, because some Central Market products have made their way into H-E-B stores. If I am convinced of a Central Market-esque product that I have to buy, there’s a chance I could find it on my one-stop weekly grocery shopping trip.

What I haven’t revealed thus far in this blog is that I do find myself at Whole Foods and Central Market a few times a month, but my purpose is never to grocery shop. Sometimes if I am in need of a quick, healthy and tasty meal I will visit the prepared food section at either one of the stores. What I have found is that certain items are quite affordable when compared to my other options. For example, I can build my own sandwich at Whole Foods for $7, which is probably pretty close to what I would pay for a sandwich from somewhere like Jimmy John’s. The difference is that a Jimmy John’s sandwich is not piled high with roasted red peppers, field greens, and portabella mushrooms. Not to mention, I enjoy the experience I have when I visit this section in these stores, especially at Whole Foods. Not only are the visual displays appealing, but each section has assigned employees to help ease me in my decisions.

It’s funny to me because the prepared food sections of these stores are just as intimidating as the grocery aisles because there are so many options and everything looks and smells so good. I also realize that the bread, roasted peppers, mushrooms and field greens that make up my sandwich are available for me to purchase in the store so I can make my favorite sandwich at home, but the thought of actually purchasing these items has never crossed my mind. The problem lies in the fact that I am in no way a cook or a foodie, and that there is a certain level of appreciation that one must have for the items sold in these stores that I just don’t have. Both of these articles seem to play up the “foodie” as their most frequent customer, whereas I am the type to let the foodies come up with the recipes and create them for me.

After piecing my thoughts together, I realize that what this comes down to is an issue of segmentation. An article I found online describes the Whole Foods shopper: “College educated, and post undergraduate degree-holders, are key. Upper income is a key demographic as well. Additionally, ethical consumers, "greens" and health conscious shoppers.” Where I stand currently in my life, I do not fit this mold, but it will be interesting to see if my opinions change after I settle into my post-graduate life and my career. Although the attention that Whole Foods and Central Market pay to customer experience might not be enough to draw me in just yet, I do appreciate the efforts that these stores make to offer customers a unique experience each time they shop.

Drowning in a sea of choices

I found this idea of “paradox of choice” not only interesting, but eye-opening. Barry Schwartz explains that in order to maximize welfare, individual freedom must be maximized as well. In the marketplace, this idea of increased freedom translates into an increased number of choices. Rather than freedom increasing, what actually happens is that we grow preoccupied by the many choices that we are faced with in our everyday lives, resulting in an effect that actually negates individual freedom.

Before watching this podcast I would have said that it is a good thing to have a lot of choices. Relating back to our discussion of generation Y, if we all want to be unique and we all want to be individuals, an ample amount of choice aids us in the pursuit of this goal. This podcast, however, reveals that choices are a good thing, but only up to a point. I started to think of more ways in which high levels of choice hinder me as a consumer, in addition to what Barry Schwartz describes as a preoccupation with whether or not the right decision was made. I spend so much time in the grocery store sifting through my choices, and subsequently wonder how my time could have been better spent elsewhere. Therefore, not only am I thinking about whether or not I made the right decisions when I leave the store, but I am conflicted by the amount of time I spent making what potentially could be a bad decision.

My experience leads me to see an important implication for marketers from a new perspective; customer loyalty. As a consumer, I question my decisions much less when I know that I can trust a certain product to never let me down. Not only that, but the time it takes me to shop decreases when I can specifically pinpoint what I want. I can be looking at a wall of product choices, but because of repeated positive experiences with a product, I only see one. In a competitive marketplace the number of choices will remain the same, so companies must take strides toward making our decisions easier.

The example of employees being presented with choices of funds to be matched by their employers is very interesting. Prior to listening to this podcast, I would have found it hard to believe that a decision that has a potentially high payoff could be suspended for fear of the wrong choice. I was reminded of a course I took in consumer behavior that focused predominantly on the difference in consumer’s thought processes depending on whether they are making a low-involvement or high-involvement decision. Decisions that are low-involvement are made with a great deal of reliance on the subconscious, using nodes or associations formed within the brain to decide quickly. However, those decisions that are high-involvement take a great deal more thought and research to convince a consumer that they are making the correct purchasing decision. In most cases, high-involvement decisions involve those items or choices that require a large investment or are categorized as high-risk. If this concept presented the whole picture, the employee would simply do his or her research and make the decision they felt was best. The podcast added a new dimension to my understanding of this concept, in that it is not always that simple. In the end there is always some amount of regret and wonder as to whether or not one of the other choices would have yielded a more positive result.

Whenever I shop on the new Amazon.com I feel like I am a victim of the paradox of choice. Vendors from around the world list their products on Amazon, making the selection in a given product category seem almost endless. My most recent encounter with this was over Winter break when I received a gift card to the website from my grandparents. Forces behind the paradox of choice were strong before I even logged onto the website because I knew what I was going to be faced with. I wanted to order a pair of earrings because I had recently lost one in a set similar to them, which seemed like an obvious choice. I found the perfect item to buy, but when faced with so many other competing choices, the decision suddenly grew far more complex.

I ended up buying the earrings, but I am still in a stage where I think about that decision. When I stumble upon a book or a movie (or anything for that matter) that I really want but didn’t think about at the time I purchased the earrings, it brings me back to that decision.