What a Social Business Model Can Teach Marketers

As we note in our Targeting Markets tutorial, to be considered a qualified target market, customers must meet five criteria: 1) have a need; 2) are eligible to buy; 3) can afford to buy; 4) have authority to buy; and 5) can be reachable by the marketer. Depending on the product or service, a big problem exists when potential customers have needs for a product (criterion #1) but lack the financial ability to afford the purchase (criterion #3). Of course, we frequently see this with very high-end products, such as luxury goods, which are often not an option for the majority of consumers due to the perceived high price. But, we also see this problem among low-income consumers seeking to satisfy basic needs such as food, clothing and health care.

While many businesses that market basic products will steer clear of trying to figure out ways to address the needs of low-income consumers, others are addressing these consumers by engaging in socially responsible activities. For example, in 2014 we saw how a candy company’s social responsibility strategy was helping it enhance the value of its brand.

Yet, making a company look good is not the only potential benefit from being socially responsible. As discussed in this Harvard Business Review story, organizations in France are forming “social businesses” to address issues with economically isolated consumers. The social businesses have three major characteristic: 1) they provide solutions to important social issues; 2) they run a sustainable operation; and 3) they reinvestment profits back into the social business. The story provides insight into how various social businesses work. What is most intriguing is that these businesses are not all about providing low-cost, low-end products. In fact, the way these social businesses operate, many are providing very good quality products at low prices. How they are able to do this, including the relationships that need to be forged among different participants in the distribution channel, is a key takeaway from this story.

Another issue brought up that should also attract marketers’ attention is how the social business model can lead to innovative ideas that can be applied to other markets. Several examples are discussed including how automobile company Renault learned that using computer driving games can help boost car sales among younger French drivers.