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B1G1 Virus and the Cause Marketing Paradox

Presidio Marketing | Tuesday April 19th, 2011 | 7 Comments

This post is part of a blogging series by marketing students at the Presidio Graduate School’s MBA program. You can follow along here.

By Gomathi Sadhasivan

There is a rapidly spreading virus called B1G1 (no relation to the H1N1) and far from being alarmed by its spread, people are willingly getting infected in droves.  I am referring to Buy One Give One (B1G1 or BOGO) which involves customers paying a premium on a product so that the company may conduct philanthropy on the customer’s behalf.   In the case of B1G1, the product or service donated is typically in the same category as the original purchase that helps fund the donation.  For example – a pair of shoes donated for every pair purchased.

This example brings to mind TOMS, the footwear company that is the poster child for B1G1.  B1G1 is a specific case under the umbrella category of cause marketing or social marketing.  The latter term is not to be confused with social media marketing, although social media can be an effective channel to market products or brands that are involved with social marketing.  Cause marketing has made partners of fashion and AIDS charities (Gap and BONO’s Project RED), fashion and water donations (Giorgio Armani’s Acqua for Life & the UNICEF Tap Project), beverage industry and water donations(ETHOS Water by Starbucks), and cosmetics and cancer (Avon Crusade “pink ribbon” products to support cure for cancer research) to name just a few.

As a consumer, I feel pretty virtuous when I purchase a product that allows me to indirectly have a positive impact elsewhere.  It might even motivate me to shop more if my indulgence could save/help someone.  This sentiment is captured in TOMS’ mission –“Using the purchasing power of individuals to benefit the greater good is what we’re all about.”   As Martha Stewart would say, “It’s a good thing!”

But is it really? A recent study conducted by Aradhna Krishna at the University of Michigan examines the “cause marketing paradox” which relates cause marketing to reduced donations, overall.   The author differentiates between egoistic giving, where the purchaser derives the primary benefit and altruistic giving where the charitable donation accrues no tangible benefit to the donor.  The study says that the altruistic giving not only provides the donor with a higher level of happiness, but also generates a greater amount in charitable donations than the egoistic giving that occurs with cause marketing.

There seems to be higher potential for a diversity of causes being supported when individuals do the giving as opposed to a corporation that aggregates funds and diverts to a chosen cause.  So, why do we succumb to the B1G1 virus?  We are, in effect, simply sub-contracting the corporation to conduct the philanthropy instead of contributing directly to a cause.  Ultimately, the spread of B1G1 could be ascribed to convenience for the customer and a successful business model for the company.  In macroeconomic terms, cause marketing could just be termed as bundling with a “feel-good” name that works for the shopper and the company!


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  • http://www.causemarketingforum.com David Hessekiel

    Don’t despair that cause marketing causes a decrease in individual consumer donations — the evidence just isn’t there. Actually read Professor Krishna’s research paper and you’ll find that her research does not support this general conclusion. To learn more, please take a look at my analysis at http://3bl.me/ppk6hv

  • http://www.b1g1.com Paul Dunn

    WOW! Interesting to read there’s a B1G1 virus, particularly when you’re company is called Buy1GIVE1, your website is http://www.b1g1.com and you own the B1G1 trademark in the US.

    The B1G1 ‘virus’ will, we hope, really accelerate soon when we officially open in the US with some true world firsts in the giving space which we’re very excited about.

    And in our case, it’s not about cause marketing or a successful business model for the company. It’s about doing two things: creating a world that’s full of giving and making giving a habit. That’s how we create a happier world.

    In the meantime, check out what B1G1 is meaning to lots of SMEs and Worthy Causes around the world right now at http://www.b1g1.com. And help the virus spread.

  • Facebook User

    Three points.

    First, TOMS is a better example social entrepreneurship than it is cause marketing. Cause marketing is partnership between a nonprofit and for-profit, not a for-profit that chooses to operate like a nonprofit or vice versa.

    Second, the study out of Michigan is bogus and and David Hessekiel above does a good job explaining why. Also, here’s my take.

    http://selfishgiving.com/cause-practices/cause-marketing-selfishness-good

    Third, there is other research out there, most recently from the Cone Cause Evolution Study, that shows cause marketing does not diminish giving in other areas, especially among moms and Millennials. TOMS is actually a great example of corporate giving that probably inspires donors to give more.

    Joe
    @joewaters

    • http://www.do-good-lab.org/ Kathrin Jansen

      Here is a great article that explains why TOMS is not a good example for social entrepreneurship: http://goodintents.org/in-kind-donations/toms-shoes

      Compared to other social entrepreneurs, TOMS doesn’t provide a sustainable solution to a problem, it gives handouts or more precisely “footouts”.

      Kathrin
      @kathrinjansen

      • http://www.causemarketing.com Paul Jones

        Katherine:

        I don’t reject your assertion that TOMS is not sustainable. But I do wonder why it isn’t.

        Or to put my question another way; What would make TOMS sustainable?

        Warm regards,
        Paul

        • http://www.do-good-lab.org/ Kathrin Jansen

          There are some ideas in the article I posted:
          For example, if they would produce their shoes in the countries they donate. This would create jobs and an income for people in developing countries.

          Kathrin

  • http://www.breathehr.com/ Jonathan Richards

    Found your piece while browsing around the subject of corporate generosity as i’m writing our company Giving policy.  We at http://www.breatheHR.com are new to the B1G1 world but i wanted to say that we don’t pass this onto our clients.  Most of the B1G1 companies I have spoken to say the same. We are doing the giving and it is taken from profits not the client.  We will pass on the ‘credit’ it to the client – every new account generates a donation through B1G1.  I want us to give and feel good about giving which B1G1 does perfectly.