Chinmoy Bandyopadhyay and Subhasis Ray
Social entrepreneurs (SEs) address sustainability-related challenges by adopting appropriate revenue-generating business models. However, combining sustainability and business-related aspects poses unique challenges for them. While these challenges are well documented, research has not adequately described the role of marketing in achieving sustainable development goals through social entrepreneurship. In this chapter, we discuss how marketing is important for social enterprises, what challenges it poses, and how they are addressed. Using information from past literature on social enterprise marketing, we present a summary model on the strategies that social enterprises adopt to counter these challenges. The chapter adds to the discussion on sustainable development and social enterprise marketing by illustrating that SEs (a) attract market attention by pairing up social-ecological impact stories with high-quality offerings; (b) try to empower, educate, and engage their stakeholders to make their own choice; and (c) maintain transparency by sharing details of their business. Our findings thus contribute to the discussion on how marketing and social entrepreneurial business models can help in achieving sustainable development goals.
Keywords: social entrepreneurship; marketing; sustainable development
Introduction
The 17 Sustainable Development Goals (SDGs) are set to tackle the pressing social and environmental challenges of our world by 2030. While governmental efforts to address developmental challenges in a country are expected and well recognized, it is now clear that other stakeholders like business and nonprofit organizations need to come forward to address the SDGs.1-3 However, many such approaches are often short-lived and rarely succeed in achieving the desired results.4,5 This is partly because many development projects rely on donor-dependent and time-bound grants or donations. Reliance on such external funding also limits the scalability (growth potential) of the solution. For example, a donor-funded project to provide solar-powered machines to village artisans often fails to consider maintenance and servicing of such machines beyond the life of the project. Such machines, once damaged, lie unused due to lack of (affordable) spare parts. Moreover, the recipient community loses trust in such interventions, making future projects unviable in such a region. Hence, organizations are increasingly shifting from nonprofit approaches to financially self-sufficient approaches.6 Researchers have pointed out that many unresolved social and environmental issues present business opportunities for entrepreneurs to create both shareholder and sustainable value. According to them, businesses should address sustainability concerns profitably, rather than treating them as legal requirements.7-9 However, business organizations are still treating sustainability initiatives as a way to hide their unsustainable business practices and to build a positive image among stakeholders. At the same time, those who tried their hands in combining business and SDGs failed largely because of their superficial and cherry-picking approach.10-12
Social entrepreneurs (SEs) are the organizations that bring social and business objectives together in their business model.13-15 Unlike commercial organizations that typically focus on profitability, sales growth, and shareholder benefits, SEs go beyond economic returns and aim to create social and environmental values.16,17 Past research has emphasized the role of SEs in addressing social issues such as unemployment and poverty as well as environmental issues like air pollution and waste disposal.18-20 In the context of the example of solar-powered machines explained earlier, an SE may build an affordable subscription model for supplying such machines to rural artisans. Artisans pay a monthly subscription to use the solar-powered machines for their work. Such a model allows the SE to generate long-term working capital to provide for machine maintenance while ensuring community members’ understanding that they are responsible and accountable for safeguarding and maintaining their assets.
SEs combine competing institutional logics–social and economic–and continuously balance between their profit and purpose components.21,22 In our example, the SE cannot charge too low a subscription for renting out machines in order to be helpful to the artisans and go bankrupt in the process. On the other hand, if the subscription rate is too high, not many villagers will be interested, putting the entire business model at risk. This tension creates challenges for SEs while marketing such products and services.
Marketing is mainly defined as the creation of consumer value by addressing their functional and emotional needs.23 However, following only the mainstream marketing approaches cannot guarantee effectiveness on both sustainability and business fronts. According to the hypothetical example presented in this chapter, SEs need to do two things: (1) market their machines as useful, functional, and low cost and (2) promote the use of renewable solar power as an alternative to fossil fuel–based power generation. This marketing challenge poses a threat to the continued survival of SEs in the marketplace. Although existing literature adequately captures this issue, what has been ignored is how SEs address these issues.24 We attempt to fill this gap by documenting how SEs manage the trade-offs and survive in the marketplace. This is important because similar kinds of moral dilemmas are also found in other areas like marketing of ecotourism25,26 or sustainable fashion marketing.27,28 Therefore, the discussion on the duality between market and sustainability needs and how they are addressed in SEs is both timely and relevant.
The rest of the chapter proceeds as follows. First, we turn to SE marketing literature to understand the dilemma they face while taking marketing decisions and executing them. The subsequent section presents a model demonstrating the strategies to address these dilemmas. The final section summarizes the key points of this chapter.
Social Enterprise Marketing Challenges
SEs require marketing to promote both their products and the socioenvironmental aspects of their mission. Hence, marketing carries great importance for SEs.29,30 For instance, many SEs address environmental issues by upcycling waste into marketable products. Therefore, the survival of SEs appears to reside in their capability to adopt a marketing strategy that can generate sales revenue. However, SEs faces a dilemma between remaining mission-consistent and being professional, market driven, and competent. Some SEs think marketing activities go against the values of SEs and are intrusive and exploitative, which dissuades them from pursuing marketing activities wholeheartedly.31,32 At the same time, too much involvement in marketing can also cause mission drift or might position them as businesslike or commercial among stakeholders.33 Moreover, the existence of social and business goals in SEs poses challenges when they market their offerings to consumers. Some consumers display higher interest on aspects such as quality, price, and delivery of the products/services rather than on the social and environmental benefits espoused via marketing initiatives. Others tend to favor SEs as they see them reflecting, and in alignment with, their own worldview. SEs, therefore, find it difficult to decide which aspect to highlight and communicate more to the target audience.34,35 In the subsequent sections, we will outline the dilemmas faced by the SEs while pursuing their marketing activities.
To Shout Out or to Whisper
The first challenge is related to the adoption of marketing activities in SEs. Marketing activities are often misunderstood and half-heartedly adopted by SEs, which often leads to suboptimal results out of the marketing activities. They do not see the need to market their offerings too much, as they think they have carefully and responsibly produced offerings that should sell themselves. They expect consumers to find/reach them to purchase their products. In addition, some SEs prefer keeping a low profile and seldom market themselves as “too successful” to avoid funders’ scrutiny. Funding agencies may not be willing to provide additional second-round funding to organizations that seem to do well by themselves. SEs would exclude themselves from rigorous marketing activities based on the assumption that they would be commercialized and thus might become unacceptable to the general public.36,37 However, marketing communication to both market and non-market stakeholders is fundamental to SEs’ survival.38
To Be Seen as Professional or Idealistic
SEs often lack the resources needed for running their operations–be it financial resources or human resources. SEs often find themselves caught between the need to be seen as professional/competent and a socially beneficial entity when communicating to customers, investors, and employees.39 Certification or logo, depicting the social or environmental impact of SEs, often positively influences the purchase decision of consumers.40,41 Some consumers purchase products of SEs mainly to contribute to social and environmental welfare. They consider it as an opportunity to make a change in the life of the impoverished and the needy through a purchase.42,43 Therefore, SEs highlight they are certified, signaling to consumers they are a fully functioning and social value–creating enterprise.41 However, some SEs tend to hide the social and environmental aspects of their mission because exhibiting those aspects often creates an impression that the offerings are of poor quality.44,45 Moreover, highlighting sustainability aspects, while it can attract prosocial-ecological consumers, cannot guarantee consumer loyalty or repeat purchase.46 Lee, Zailani, and Rahman47 show how customers appreciate products made by the prison inmates and yet their purchase or repeat purchase decisions are based on the quality or the performance of the product.
In addition, SEs often find it difficult to motivate the employees to appreciate the organizational objectives. This gives rise to tension and conflicting mindsets and objectives among various stakeholder groups within the organization and associated external entities the organization deals with in the course of business.48,49 The tension between these groups may influence an SE’s performance negatively. Battilana and Dorado50 reported a case of a microfinance organization, where the conflict between two groups—one driven by financial and profit-maximization considerations and the other subscribing to altruistic, socially conscious aspects of the organizational goals—created problems. Without clear communication, it will be difficult for SEs to attract and retain current employees and attract new talent.
Finally, funders or investors need to be assured that they will get their money back within the stipulated timeframe for repaying the amount funded. In addition, there are impact investors who look beyond the business plan and model and evaluate SEs by their social impact model.
To Disrupt or to Play to the Gallery
The third marketing challenge relates to new product innovations and shaping consumer behavior. SEs create innovative solutions for both sustainability challenges and consumer problems. However, the majority of these radical offerings are ahead of their time and therefore do not have a readily available market. Such products are less known and mostly ignored by consumers51,52; for instance, shopping bags made out of waste materials are a relatively new concept for consumers and may attract fewer buyers because of the lack of visibility or awareness about such a product in the market. The survival and growth of SEs depend, on one hand, on the acceptance and support from external stakeholders who own the required resources, and, on the other, they have to remain true to their radical or disruptive values to create the intended difference in the society.53 Therefore, SEs often take a call on whether to remain completely innovation-driven or capitulate to market signals or diktats like a regular business.
To Be a Mass or Niche Brand
This challenge refers to the issue of scaling up the sales of a socially innovative and responsible product. SEs often look to differentiate themselves through their cause and the nature of their products. However, in this process of differentiating, they often find themselves in a niche kind of positioning. Consequently, only those consumers who identify with the mission of the SE purchase their products.54 It then becomes a challenge for SEs to come out of that niche in order to attract mainstream consumers. As SEs have a mandate to create a positive social impact on a large scale, they are expected to reach more and more people. However, SEs often do not endorse push marketing approach, which makes it more difficult for them to scale and become a mass marketer.
To Walk Alone or Walk Together
The next marketing challenge is one of partnerships for distribution and cobranding for better brand visibility. Building relationships with key stakeholders is integral in diffusing the innovative solutions that SEs offer.55 Given the absence of internal marketing skills and a lack of financial and human resources, many SEs rely upon partnerships with other organizations. Such partnerships could be with leading retailers for better market reach or even cobranding with established market players. Such partnerships provide SEs legitimacy, credibility, and trust in a market where they are unknown entities. However, SE networking processes are different from other kinds of business relationships or networking in the sense that they often do not partner with those who are not aligned sufficiently with their social and environmental values.
To understand how SEs address these marketing dilemmas and promote their offerings and cause, we turn to the existing work on SE marketing, and based on our review we present the following summary model.
Summary Model: Toward Combining Business and Sustainability Aspects
As discussed in this chapter, SEs have to showcase their social impact to justify their existence. Some authors argue that SEs are already differentiated and branded in the sense that they are doing good to the society. The only thing they have to do is to communicate their social welfare aspect. Positioning the social welfare elements in the mind of the potential customers can be one option. However, as mentioned earlier, some customers are not that interested in the social welfare aspect. Rather, they are more concerned about the attributes and quality of the offerings. In the following model, we depict how SEs deal with the trade-offs ingrained in their marketing activities (Figure 8.1).
Figure 8.1 Summary model: strategies to address social enterprise marketing challenges
Source: Developed by the authors based on literature review on social enterprise marketing.
Consumer Advocacy Marketing
SEs try to be professional in their approach and provide quality products to remain in the marketplace while keeping sustainability as their guiding framework.46 The value-laden nature of SEs often gives rise to challenges related to trust and credibility. Although there are consumers who can pay premium prices for the SE offerings, they are skeptical about the claims made by the SEs. Therefore, SEs continuously endeavor to prove the authenticity of their offerings to the consumers by providing information about raw materials and their producers and production processes. Some even invite consumers to see the rigorous production process and spread the word about SE offerings. Such a peer-to-peer marketing approach appears to work and sends out a credible message to consumers.56 Engaging consumers in the production process and spreading the message through word-of-mouth help customers recognize the link between marketing and the SE’s mission. Such collaboration or co-creation lowers skepticism among SEs and their clientele.57
Customized Marketing Communication
SEs use different marketing communication methods for customers, employees, producers, and investors. As discussed previously, different consumers respond differently to SE offerings. For some, product-related issues are far more important than the underlying sustainability issues. Others want to contribute to sustainability movements through purchases. However, in between these two groups, some consumers support the mission of the SEs but do not want to compromise with the quality of products. Therefore, the success of an SE's marketing campaign rests largely on its capability to formulate and convey messages that signal its worthiness to these different consumer groups.24 For example, SEs with sustainable fashion products emphasize their ethical and “look and feel” aspects, or a combination of both, while targeting different types of consumers.27
For impact investors, SEs showcase the difference they make to the life of the beneficiaries or the quality of the environment. When it comes to traditional investors, SEs show their competence as a business entity that is socially and environmentally responsible.58
During recruitment, SEs look for people with skill and sensitivity to the cause they are propagating. However, it is challenging to attract skilled professionals to work for SEs given that SEs are usually of small size and the pay offered is lower compared to other purely commercial entities. Therefore, SEs time and again revise their communication strategies and hiring policies to attract skilled professionals to work with them as either full-time employees or volunteers. Communicating to potential employees a well-articulated set of benefits and highlighting that SEs offer a platform and opportunity to do something for a community, the society, as well as the environment will attract socially conscious and committed professionals to opt for working in SEs.59
Shaping Market through Consumer Education
SEs are often activists at heart but do not necessarily want that to be communicated to the stakeholders who mostly look for only product features and quality. Although they want to stand out in the market as an entity adhering to the values and principles of sustainable or responsible business, they do not want to be perceived as antagonistic to the key tenets of business. Consumer education is often a common strategy adopted by them: role of sustainability, how the SE is actually making a difference, and what it means to be a responsible consumer. Another problem is to get the consumers to buy sustainable products instead of existing products. This happens mainly because customers are psychologically attuned to keep buying only regular products and are generally disinclined to know how sustainable products taste, look, and feel. For example, consumers who are used to commercially produced, sugar-added honey may not know how natural honey looks or tastes and may even find the taste awkward. One way to deal with this issue is to educate consumers about authentic products. SEs repeatedly communicate the sustainability aspects to persuade their stakeholders to put in extra efforts.60
Mainstreaming through a Background Story
Today, customers have less time and interest in knowing the technical details about sustainability and the products and initiatives built around those technicalities. The social or environmental benefits are generally intangible and can be felt only in the long term, but consumers look for only individual-level, short-term solutions. Any promotional campaign or literature propagating the social and environmental impact that an SE wants to create has to be appealing, short, and relevant.59 Convincing the target clientele about the impact of social and environmental problems, especially at an individual level, is no easy task. Thus, making these broader aspects personally relevant takes special skills and smart marketing communication efforts. SEs achieve this by convincing consumers that they can make a difference in someone’s life or do their bit to save the environment by buying its line of products. For example, SEs selling bags made out of recycled plastic talk of how the product protects the environment and that it reduces pollution, consumes fewer natural resources, and lowers the potential of natural disasters and that all of these ultimately only benefit the customer.
Value-Oriented Networking
SEs look for partners who share the same values in regard to social and environmental welfare. As like-minded people with prosocial-ecological values are often scattered and hard to track, SEs actively use online communities and social media to reach them.61
Summary
Achieving SDGs will require multiparty, multisystem approaches. SEs play an important role by combining sustainable products and services with a viable business model. In doing so, they face specific marketing challenges related to communication, product quality, consumer behavior, partnerships, and scaling. This chapter aimed to highlight the tensions that SEs face while promoting their cause, the range of sustainable products they offer, and their ultimate goal of convincing potential customers that buying their products is good not only for them but also for the society and environment. We attempted to come up with possible solutions to this conundrum by asking what kind of SE marketing approach has the best chance to effectively emphasize and convince potential consumers about the sustainability-related aspects of their product offerings during marketing campaigns. After discussing the challenges, we presented a summary model, grounded in the literature related to SE marketing. Generally, consumers of SE products do not want to compromise on product quality and may be willing to even pay more. On the other hand, SEs do not want to compromise on the safety of the environment and the well-being of the society. Therefore, SEs have to balance between the present need of the consumers and the long-term needs of both the society and the environment. They achieve this goal by finding a middle ground, which entails educating customers, adopting professional marketing techniques, and creating customized communication for various stakeholders.
As sustainable consumerism is increasingly becoming a norm and many organizations are planning to create green products and services, the challenges and learnings from SE marketing will be helpful to both academicians and business owners. This chapter calls managers and entrepreneurs dealing with sustainability-related products and services to rethink their marketing strategy, keeping in mind the need to accord importance to both sustainability and market needs in business development plans.
Questions
1. What differentiates social enterprise marketing from traditional marketing approaches?
2. Thinking as a social entrepreneur or senior executive, how would you resolve the moral tensions ingrained in social enterprise marketing? Suggest the best course of option.
3. In your opinion, how can social enterprises mainstream their background (social-ecological) stories?
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