TOMS – START SOMETHING THAT MATTERS
Sustainability of “Buy One, Give One” Business Model
When executed effectively, there is no doubt that the BOGO model is a winner in marketing, as evidenced by TOMS. Research has established that people draw their motivation to help upon feeling that they are connected to those who are in need of help. Connecting with an individual is easier compared to an abstract action. The model has a smart psychological element that connects the recipient to the donor. Drawing from the number of companies that have imitated the model and the fact that Bain Capital, a private equity company, paid for a 50 percent stake of TOMS amounting to $300 million during the last summer in 2015, it is clear that BOGO model is profitable for businesses.[1] The model encourages the greatest buying leading to the greatest giving. A critical impact of the model is felt on the ground. Giving away products for free maximizes a positive impact. In the case of TOMS, consumers buy the story besides buying the products. The story of TOMS not inspires but also captivates consumers. Critics have raised some issues linked to unintended harmful consequences of implementing the model, especially the undermining of local producers.[2] However, the model can be modified to avert these negative effects and ensure the sustainability of the business in the long-run. For instance, TOMS started selling coffee and used every pound of the product sold to donate clean water to the local communities. Through this incentive, the company is able to sustain local jobs because the water is provided to the communities where the coffee is grown.
There is no doubt that the buy-one-give-one (BOGO) business model adopted by TOMS has a great potential to improve the success of the company in the future. By capitalizing on the desire of consumers to engage in corporate social responsibility or participate in social good in areas that affect their lives, TOMS is able to address endemic social issues. The real impact made by the company is determined by its ability to ensure that the plan addresses the root problem of the social issue identified sustainably. By implementation of the model will make a great difference for the business. Gefen observed, “The mark of an impactful social enterprise is a coordinated effort to address the roots of social responsibility or the main causes of social issues.” In this respect, it will be important for TOMS to go beyond the donation of shoes to the needy children in the advancing countries.[3] The BOGO model provided TOMS with the initial platform to be recognized as a social enterprise in the market. However, the model should be used as a stepping stone to raise the bar of social responsibility to appeal to more consumers. The fact that the company took steps to enter into partnerships with other companies to bolster its social responsibility after publicly recognizing that it is behind the eight ball means that it intends to sustain its support to the impoverished communities over time. The partnerships will play a critical part in ensuring that the public health changes in the affected communities are sustainable. To appeal to its target consumers in the long-run, TOMS is expected to further collaborate with the public health officials in a bid to enhance the local health programs. Continuous engagement with the local construction firms in the efforts to minimize the spread of human waste by building communal latrines will also play a significant part in helping in the reduction of cases of hookworms and foot-related illnesses. Don't use plagiarised sources.Get your custom essay just from $11/page
How TOMS Story Appeals to Customers, Employees, Business Partners, and the Media
Since TOMS began implementing the BOGO model, it has provided pairs of shoes totaling 35 million to impoverished children in more than 70 developing countries worldwide.[4] According to TOMS, each child from a disadvantaged community will continue to receive a pair of shoes for every TOMS shoe purchased. The incentive has greatly appealed to many shoe consumers in the wearable global market. TOMS has been successful in acquiring its most passionate consumers. The target audience incorporates all persons who relate to the charitable cause. To appeal to a broader audience, TOMS has further invested in other business segments and employed the BOGO model. The business introduced eyewear in 2011.[5] TOMS twisted the BOGO principle in marketing its eyewear product. Instead of donating one eyewear product for every one sold, the company stated that it would be using part of the profit made from each pair of glasses sold to restore or save a person’s eyesight in an advancing country. Since the program was initialized, the company has reported that it has helped over 275,000 persons restore their sights[6]. Through the TOMS Community Guidebook, TOMS has managed to convince its target consumers to support the TOMS Tribe. The tribe members are provided with the opportunity to interact with each other and the company both online and in person. The One Day Without Shoe is one of the events organized by the company with the intention of sharing its charity idea with the consumers. In the event, people are invited to walk barefoot for that particular day.
TOMS has not only appealed to only customers, but also partners and employees. The firm has acquired partners and talents from marquee companies, including Nordstrom, Deloitte, and AOL.[7] There is a need to note that besides the paycheck, employees also need a purpose when working for organizations. The more a company has a purpose and a mission, the more it attracts the outsiders. In this respect, TOMS shares its brand’s story with its employees and partners to convince them the need to work together. Through its story, TOMS encourages a sense of community that invites employees and partners to join the course.
TOMS business offers more than trendy and comfortable shoes. Since the company’s early days, the power of the story behind the starting of the business has remained to be the most critical factor that has attracted not only the consumers, partners, and employees, but also the media. In his book, Mycoskie noted, “Human minds rely on stories and story architecture as the primary roadmap for understanding, making sense of, remembering, and planning our lives – as well as the countless experiences and narratives we encounter along the way.”[8] From Mycoskie’s observation, this ancient impulse has been employed by smart, future-oriented firms in myriad ways to tell stories that have attracted the media. The companies use varied media platforms to share the stories. TOMS has acknowledged the power of the media, especially the digital and social media in conveying its story. In the recent past, people focus on creating blogs, commenting on Facebook, channel surfing, and following their Twitter feeds rather than watching and listening to TV and radio stations. TOMS continues to partner with media companies to deliver its story to its targets. The firm partnered with AT&T in 2009 to create a commercial that successfully ran throughout 2009.[9] Many people commented and tweeted about the awareness-creating commercial which marketed both AT&T and TOMS.
Other Examples of Giving-Based Businesses
TOMS is recognized as the pioneer for the BOGO model, also known as ‘one for one,’ which has gained popularity since it was first implemented. The company has reported a great success of the model upon used in other business segments. TOMS expanded its product range to apparel, eyewear, and bags and used the BOGO model to provide safe birth, eyesight, and water services.[10] A remarkable success in these segments has attracted other companies, which have also adopted the BOGO strategy with the intention of winning customer loyalty and purchasing. Warby Parker donates a pair of glasses to persons in need for every pair sold at the firm. According to VisionSpring, Warby Parker’s partner, and the World Health Organization, the company has the potential to heighten its productivity by 25 percent by donating a pair of glasses to the needy in the developing countries.[11] An ultimate increase of 20 percent to the monthly income will likely be realized.[12] Warby Parker’s program “Buy a Pair, Give a Pair” is identical to the shoe initiative initially adopted by TOMS. Through its program, Warby Parker encourages people in the developing markets to avail glasses to its consumers at affordable prices as well as train them to provide basic eye examinations to customers. Since Warby Parker began the program in 2010, the company has donated over 3 million pairs of glasses.[13]
FIGS is another business that has effectively implemented the one for one model. The company produces functional and comfortable medical apparel meant for medical professionals. FIGS apparel products are made up of durable, antimicrobial, and wrinkle-resistant fabrics. The firm gives one healthcare provider a set of scrubs for each sold. The company has issued over 75,000 sets to healthcare providers across 34 countries.[14] Roma Boots, a Romania-based firm founded in 2010 by Samuel Bistrian, also employs the BOGO model. The motivation for creating the company can be linked to the driving factor that informed the TOMS story. Bistrian noticed that children in Romania walked in the rain and traveled through the snow wearing improper shoes. Having met the founder of TOMS, Blake Mycoskie, and having observed the situation in his home country, Bistrian was inspired to create FIGS. The company gives one pair of boots to needy families and children worldwide for each sold. Moreover, the business donates 10 percent of its proceeds to educational initiatives and resources across the world.[15] Bombas also gives one pair of socks to persons in need for every pair sold at the company. SoapBox deals in bathroom products, including bar soap, liquid hand soap, and body wash. The company also donates a bar of soap to an individual in need for each product vended both online and in-store. Other businesses that have adopted the one for one strategy include WeWood, a producer of wooden watches, Kutoa, a producer of health bars, Project 7, a producer of gummies and chewing gum, BetterWorldBooks, sells used and new books, and State, sells backpacks.
Consideration of One for One Incentive when Making a Purchase
A survey conducted in the U.S. involving 420 consumers showed that people expect more accountability, action, and responsibility from companies.[16] In this regard, consumers have become conscious when shopping as they tend to focus on products sold by firms that share their values. I must admit that I am part of these conscious consumers. I am aware of the impact my buying decision has on the environment around me. I like to consider myself as a health and environment-conscious consumer. In this respect, the concept of BOGO is one of the critical factors that inform my purchases. The idea of buy one give one influence on how I choose to shop and perceive brands. I tend to see my buying decision as one of the numerous ways I support something I care about. In the case of firms that have adopted the one for one model championed by TOMS, I feel that they create a sense of community, and therefore, attract my attention. In turn, I express my solidarity with these firms either through buying their products or commenting positively about them on their social platforms.
Last year, I bought two pairs of TOMS shoes. My purchase decision was informed by two key factors. First, TOMS shares my views and values when it comes to the issue of poverty. The company agrees with me that poverty is a growing problem in the developing world. Since the problem is systemic and cannot be solved by only giving donations, I consent to the company’s position that the issue needs to be addressed by focusing on the root causes. Improving issues such as healthcare, access to education, and poverty require reconstruction of political systems and structures, power, and governance rather than giving handouts of arbitrary goods. Through buying from TOMS, I believe that I will be encouraging the company to foster partnerships with other firms and government authorities to empower and educate the local communities on how to tackle poverty. Secondly, I was motivated by the fact that TOMS was committed to solving the problem. When I was buying the shoes, I not only looked at how comfortable and trendy the shoes were, but also how the products affirmed my values and beliefs. I hold that it is the responsibility of every person to eradicate poverty. By giving needy children a pair of shoes for every one bought, I think that the company has taken the first step to help in reducing poverty. By successfully implementing the BOGO strategy, TOMS has influenced other firms which are increasingly donating their products to the disadvantaged, especially in the developing countries. When shopping, I am persuaded by companies that believe to be part of the solution rather than the problem of buying their products. I am encouraged to pick products from firms that have shown efforts to foster sustainable livelihoods. The type of product is key when choosing to purchase items marketed through buy-one-give-one. Tangible products are more appropriate for firms that employ the BOGO strategy. Consumer products such as clothing and jewelry are easy-to-understand and touchable items that people can use to express their personal values. The simplicity and authenticity of the message and the mission statements of business using the BOGO model tend to have a word-of-mouth effect since they spark natural social conversations. Mostly, it is through these consumer talks both on the ground and online that I am influenced to purchase certain products. I am particularly attracted to conversations involving giving back to society, social responsibility, and environmentally-friendly business practices. I develop the interest in buying from firms that are associated with the three concepts I have identified. In a nutshell, when shopping, I tend to seek products produced by firms with purpose-driven brands. I mostly purchase from brands that support my values, beliefs, and priorities.
Bain Capital LLC Acquisition of a 50% Stake in TOMS
I find the acquisition to be a strategic move by TOMS to expand more rapidly. The company will use the capital pumped in by Bain Capital LLC to grow to higher limits compared to the levels it would reach when operating on its own. Bain also brings operational expertise to oversee the growth of the retail brands and expansion of other business segments, such as Dunkin, Michaels, and Canada Goose. From my perspective, I see Bain as a strong strategic partner company that shares TOMS vision. Bain is fully aligned with the One for One model. In this respect, TOMS averts the effects the traditional business thinking that purpose and profit are counterintuitive. There are doubts that Bain’s interest is to make a profit. This would make it difficult for TOMS to retain its social mission. However, these fears are not founded on facts or Bain’s confirmation. Drawing from the existing reports, Bain has expressed its commitment towards expanding the scale of the TOMS social mission. The principal at Bain Capital, Ryan Cotton, was quoted saying, “As a firm and as individuals, we are strongly aligned with the principles of the One for One movement and its contribution to the global community.”[17] Bain has the potential to help TOMS realize its vision for the future. In the acquisition, Mycoskie is set to retain position as the holder of a 50% stake as the new CEO takes charge of the day-to-day operations. Mycoskie will have plenty of time to focus on expanding new categories. A glance at the trademarks and domains developed by TOMS shows a myriad of products and services that are yet to be fully explored. The acquisition has provided Mycoskie an opportunity to consider other potential segments, including wearable technology, news services, cocoa, hotel services, ticketing, student loans, credit cards, luggage, tea, water and wine, and bicycles. Following TOMS success in marketing canvas shoes that were considered to be relatively boring, I am certain that Bain’s input will spearhead the company’s efforts to infuse purpose into student loans and credit cards, which are also regarded as “boring” products.
Bibliography
Cox, Toby. “How Corporate Social Responsibility Influences Buying Decisions.” Clutch (2019).
Dupre, Elyse. “Four Lessons from TOMS’ One for One Strategy.” Campaign, (2015).
Gefen, Matt. “The Potential and Failures of the Buy-One Give-One Model.” Babbleon (2017).
Janzer, Cinnamon. & Weistein, Lauren. The Buy-One-Give-One Model Might Make you feel Good, but it Doesn’t Make the World Better.” Fast Company, (2015).
Naeini, Arezou. “A Shoe for a Shoe, And a Smile.” Business Today, (2015).
Trofeo, Levante. “Buy One Give One: How these 5 Companies are Giving Back.” CEO Magazine (2018).
Westaway, Kyle. “Bain’s 50% Stake in Toms Shoes Shows Faith in Socially-Minded Business.” The Guardian. (2014).
[1] Gefen, Matt. “The Potential and Failures of the Buy-One Give-One Model.” Babbleon (2017).
[2] Janzer, Cinnamon. & Weistein, Lauren. The Buy-One-Give-One Model Might Make you Feel Good, But it Doesn’t Make the World Better.” Fast Company (2015).
[3] Gefen, Matt. “The Potential and Failures of the Buy-One Give-One Model.” Babbleon (2017).
[4] Naeini, Arezou. “A Shoe for a Shoe, And a Smile.” Business Today, (2015).
[7] Dupre, Elyse. “Four Lessons from TOMS’ One for One Strategy.” Campaign, (2015).
[8] Naeini, Arezou. “A Shoe for a Shoe, And a Smile.” Business Today, (2015).
[10] Janzer, Cinnamon. & Weistein, Lauren. The Buy-One-Give-One Model Might Make you Feel Good, But it Doesn’t Make the World Better.” Fast Company, (2015).
[11] Trofeo, Levante. “Buy One Give One: How these 5 Companies are Giving Back.” CEO Magazine (2018).
[16] Cox, Toby. “How Corporate Social Responsibility Influences Buying Decisions.” Clutch (2019).
[17] Westaway, Kyle. “Bain’s 50% Stake in Toms Shoes Shows Faith in Socially-Minded Business.” The Guardian. (2014).