07 Jan 2002  Research & Ideas

How Marketing Can Reduce Worldwide Poverty

Marketing to the world's poorest customers? There's no contradiction, say HBS professor V. Kasturi "Kash" Rangan and research associate Arthur McCaffrey. In fact, the marketing profession can play a huge role in alleviating global poverty.

 

On the face of it, social marketing is a cinch.

Here's one scenario. You as a marketer want people who are living in poverty to take better care of their health. So, given your profession, what do you do? You can persuade them—through public service announcements, colorful leaflets, and on-the-ground advocacy—to go get a free eye exam or a blood pressure check-up. Easy. Your basic principles of sales and promotion will carry the day.

If your charge is minimizing smoking or drug use, well, your job becomes rather more complicated. Still, your experience in sales and promotion may give you some insights, à la the "Just Say No" campaign.

But let's say your goals are a good deal more ambitious. You care about benefiting society as a whole. You want to help people stuck in grinding poverty. You want to know what villagers think about a dam proposal for their valley. Or that loan to spur agriculture. Or the supermarket going up in the inner city. What can a marketing background say to you when your goal is not to sell Coca-Cola, but to offer a better existence to people on the edge?

That's the puzzle facing HBS professor V. Kasturi "Kash" Rangan and research associate Arthur McCaffrey. It's also one they are passionate about and determined to solve. As they write in a new working paper that they're preparing for an academic journal, there are more than three billion people in the world who may be classified as poor. What does the marketing profession have to say to them?

Rangan, head of the HBS faculty marketing unit, has been wrestling with the limits of social marketing for a decade. McCaffrey was so impressed by a talk Rangan gave several years ago on "marketing to the poorest customers" that he campaigned to work alongside him. They readily admit that they're no pioneers. James D. Wolfensohn, president of the World Bank, for example, has advocated a variation of social marketing, and it's a common—though they believe often ill-applied—topic in development.

But together the two are pushing the envelope of what social marketing can do about world poverty. They want to move social marketing beyond mere sales and promotion. They insist that eliminating poverty requires all the complex skills the marketing profession can bring to bear.

In this interview with HBS Working Knowledge senior editor Martha Lagace, they describe why and how.

Lagace: How can marketers help the world's poor?

Rangan: They can bring a marketing process to think through how the allocation of resources happens.

We need the voice of all stakeholders. Some of the stakeholders don't seem to have a voice because we don't seek their voice. Some of them, even if they have a voice, don't have proper advocacy.

Many times, it's not clear that the right people are speaking on their behalf. The marketing process requires us to flesh out the voice of the customer and get the process going. Once you get the process going, we can resolve this dilemma of how you get at the societal benefit while at the same time taking care of the individual. That in essence is what we're trying to get at.

McCaffrey: In a standard marketing situation, there's usually somebody who pays for it—such as a corporate employer who hires marketing to manage the exchange process. How does marketing link the producer, the seller, and then the consumer? That's a standard paradigm in advanced Western societies.

Some of the stakeholders don't seem to have a voice because we don't seek their voice.
— Kash Rangan

The kind of model Kash is talking about cuts across a lot of national and international boundaries. We have to confront situations where we don't have that standard exchange paradigm at work.

In addition to talking about the voice of customers and being practical advocates for customers, we're also talking about how you represent the interest of stakeholders. So we're drawing upon literature and ideas and other disciplines. We're looking at identity politics, political science, and social policy. We are trying to learn from other interdisciplinary approaches and asking, "How do we rationally and legitimately represent the interests of all the respective stakeholders in an inclusive, not exclusive, way?"

Q: How would you tap into the voice of the under-represented?

Rangan: "Market" by itself, the word, the connotation, is a little biased toward saying, "I am marketing an idea to you," or "I'm marketing a product that is really top down."

But really, marketing is the wrong word for this. We're not marketing anything to the poor. We're not convincing them that they should move away from this place so we can build a dam. It's not propaganda. It's not communication and persuasion.

Here, when we talk about marketing, it's really a process of saying, "I have identified that you have a stake in the matter. If you don't understand the societal benefit, I'm not going to come and railroad you into submission. All I want to do is ensure that in the process, you being one of the affected, being one of the stakeholders, have your voice articulated. In the end you might not get everything you desire. But I come to you, I talk to you, I find out. The technique I might use will differ from culture to culture. There are all kinds of marketing techniques. We don't have to use the paper-pencil method. There's the projective technique; there is story telling.

Then once you put that stuff together, somebody has to step in and represent the interest on behalf of these consumers and say, "Look, these people really care a lot about this stuff and you've got to do something."

All we're saying is, we need a process. That process, in fact, I'm more or less convinced is not led by the marketer. Once you say "marketer," I think the message doesn't stick. People say, "My God, you want to have a marketing person?" That person could be a social worker; it could be an economist or a development person.

McCaffrey: Because the exchange paradigms support the traditional marketing notion of selling, we argued very strongly in our working paper that we need a new paradigm to support this extended notion of social marketing that Kash is promoting. He is really trying to push the envelope and say, "When we tried to create poverty intervention programs in third world countries, the exchange paradigms don't work because these people aren't even at baseline level. They don't have basic necessities of housing, sanitation, healthcare, and whatever."

We're making the important distinction of replacing the exchange paradigm with an intervention paradigm, where we say we're intervening to change lives, not to change consumer choices.

Rangan: Four billion people are outside the exchange network. But it's not as though these folks have nothing to do with marketing. Somebody is approaching them. Somebody might approach a poor subsistence farmer in Uganda to say, "We want to give you some agricultural aid. We want to give you a loan."

There again, why is advocacy important? Because even in that case, what we find is that they have already decided what's good for the farmer. They already decided that what's good for the farmer is these kinds of implements, these kinds of equipment, this kind of loan. In fact, the farmer may say, "Given everything else, that's not exactly the kind of output that is going to enhance my life. I want security and food for the family first, before I become this terrific entrepreneur."

There's a lot of dissatisfaction because nobody is trying to tap into what is it that these consumers really want. Why not? Because these consumers don't pay anybody. Somebody else pays on their behalf. The government gives them food stamps. Somebody affords them healthcare. But money really comes from a third party though the services are delivered to these customers. Therefore, we don't talk to them because we make the mistake of assuming that the donors know what the beneficiaries want.

Q: Is there much openness to your idea among, say, governments?

Rangan: Not as much as we would like. What I'm finding is that the people in government and NGOs are a little lukewarm to the idea because it has business intonations to it. If we went out there and said, "Look, this is an equity thing. This is a social class thing. We've got to allocate resources from the rich to the poor," it would perhaps be better received.

We are just talking about a process. Our argument is not "Rob the rich to pay the poor." Because we are attempting to create societal value, but allocating costs and benefits at a disaggregate level, the quality of the conversation between stakeholders and its resolution is very important, and we cannot have a reasonable conversation without the voice of all stakeholders being adequately represented.

I have come to the conclusion that even using the word "marketing" is a little bit of a variance. It's a stumbling block. When you say marketing, automatically people think it's propaganda. You're selling. In fact, there is some resistance even within the marketing profession, because a big slice of that community is hung up on the exchange paradigm where products are exchanged for payments. Well, that is true only for about two billion of the world's six billion people.

Government officials, public policy makers, non-governmental organizations, non-profits, program managers, project managers, policy officers, could all benefit from the concept we are advocating. We're not asking them to hire Madison Avenue experts to go do their "social marketing." Just bring the principle into managing poverty alleviation programs.

McCaffrey: The typical model you get is a hierarchical, top-down model where big corporate organizations, governments, and international companies cook the deal up together, and then other stakeholders are consulted much later downstream, if at all. But the lack of consultation early on with all stakeholders eventually blows up in their faces because the accumulation of resentment, antagonism, and anti-project intervention by other agencies eventually causes problems.

Our latest thinking is, you have to have a model that is more of a simultaneous parallel processing model, where customer interests are consulted and represented, a priori from the outset. By building that kind of buy-in and representation, you're actually going to guarantee more accountability and more long-term success of the project down the road.

Social Marketing at Work

by Martha Lagace

What does "social marketing" mean in practice?

For starters, it means giving the poor a voice, say Rangan and McCaffrey. Marketers should help empower the poor by doing what they always do: gauging customer needs and desires, right from the very beginning of a project. Too often, the poor are ignored at the planning stages of social programs that are ostensibly designed to help them, while the needs and desires of the "upstream" donors take precedence.

In their new working paper, Voice and Advocacy: Marketing's Role in Addressing the Poor as Customers, Rangan and McCaffrey offer a number of examples of how marketing could have stepped in to give aid recipients a voice to be reckoned with and to mediate between funders and the poor.

Zimbabwe's CAMPFIRE program is one example. CAMPFIRE, an acronym for Communal Areas Management Program for Indigenous Resources, began in 1989 to empower local communities and give them a say in their development. In practice this meant local communities could sell licenses to trophy hunters (the program's largest source of income), lead nature tourism, and harvest and sell natural products such as crocodile eggs and timber.

A grant to CAMPFIRE from the U.S. Agency for International Development, or USAID, ran into trouble, however. The funders wanted the wildlife to be protected. Said one U.S. lawmaker whom Rangan and McCaffrey quote, "There should be no use of [U.S.] taxpayer money to promote trophy hunting."

The CAMPFIRE people, meanwhile, believed that Zimbabwe's wildlife would be better protected and their own local communities would develop if wildlife were systematically managed through programmed killing and repopulating. When the community viewed the wildlife and their habitat as assets, they became creative in using them as a revenue source and managing their long-term value. It made sense to give licenses to kill only a select number of bull elephants every year (at the appropriate price) while zealously protecting the younger flock. Moreover, such an approach eliminated the costs of policing, because community members took on the responsibility of guarding their crown jewels.

To Rangan and McCaffrey, this basic value clash between USAID and CAMPFIRE illustrates a "disconnect" painfully common in humanitarian programs between the values of upstream donors and the people on the ground.

So were the CAMPFIRE communities beneficiaries or customers? Customers, say the HBS researchers. Like all customers, their point of view, values and identity needed to be evaluated and understood.

Arthur McCaffrey is a research associate at Harvard Business School.

Related articles and cases:
Do Better at Doing Good
Harvard Business Review, May 1996

United States Agency for International Development (USAID): Campfire Program in Zimbabwe." Harvard Business School Case 599-090.