Applying CRM to Serve the Poor

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Paper presented at the 1st Parahyangan International Accounting and Business Conference.Bandung, 13-15 February 2008

APPLYING CAUSE-RELATED MARKETING TO SERVE THE POOR:

A CASE STUDY OF PT. UNILEVER INDONESIA

Sabrina Oktoria SihombingBusiness SchoolUniversity of Pelita Harapan

Abstract

One objective of the Millennium Development Goals (MDG) in the twenty-

one century is to reduce poverty. It is aimed to halve the number of poorpeople in the year 2015. Poverty has many dimensions. It does not only

related to lower income, but also related to other factors such as lack of

access to basic services, insecurity, illiteracy, powerlessness, vulnerabilityto violence, and lack of representation and freedom.

In order to achieve the objective of MDG, the development andimplementation strategies that related to social problems and specifically to

poverty problems are needed. Working together between three principal

components is crucial to achieve the MDG objectives. Those threecomponents are: government, society, and private companies. Private

companies play important role in reducing poverty. This is because they

have abilities in managerial, organizational, and technology to improve the

lives of the poor. In other words, they can create jobs, produces affordableproducts and services, transfer technology, and support for behavior

change.

Cause-Related Marketing (CRM) is a marketing technique that can

demonstrate corporate social responsibility (CSR). In relating with poverty

reduction, CAUSE-RELATED MARKETING can be applied by companiesto achieve business objectives and help the poor at the same. This research

describes the implementation of Lifebuoy Berbagi Sehat (Lifebuoy Sharing

Health), a cause-related marketing program developed by PT. Unilever

Indonesia.

Introduction

One objective of the Millennium Development Goals (MDG) in the twenty-one century is

to reduce poverty. It is aimed to halve the number of poor people in the year 2015. In

detail, the reduction from 29 to 14.5 per cent would reduce the number of poor people from

1.2 billion in 1990 to 890 million in 2015 (World Bank PovertyNet, 2004a).

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Poverty has many dimensions (Lodge, 2002; Demery & Walton, 1998). It does not only

related to lower income, but also related to other factors such as lack of access to basic

services, insecurity, illiteracy, powerlessness, vulnerability to violence, and lack of

representation and freedom.In order to achieve the objective of MDG, the development and implementation

strategies that related to social problems and specifically to poverty problems are needed.

One fundamental scheme is by providing safe drinking water and adequate sanitation that

will help the poor from many diseases (World Bank, 2004a)

Working together between three principal components is crucial to achieve the MDG

objectives. Those three components are: government, society, and private companies

(McCawley, 2001). Private companies play important role in reducing poverty. This is

because they have abilities in managerial, organizational, and technology to improve the

lives of the poor. In other words, they can create jobs, produces affordable products and

services, transfer technology, and support for behavior change (Weir, 2004; Lodge, 2002).

A marketing program developed by PT. Unilever Indonesia inspired this research. In

detail, this research was inspired by the cause-related marketing program, called Lifebuoy

Berbagi Sehat (Lifebuoy Health Sharing). The program was developed to serve the poor by

providing better sanitation. The fund was raised by sales promotion program, that is, every

Rp 10,- for every purchase of Lifebuoy soap sold from July to August 2004. Furthermore,

this research was also based on the understanding that poverty is a call for everyone to act

as written in the World Bank Poverty Net homepage (2004b) as follows:

So poverty is a call to action -- for the poor and the wealthy alike -- a call

to change the world so that many more may have enough to eat, adequate

shelter, access to education and health, protection from violence, and a

voice in what happens in their communities.

The main objective of this research is to understand the application of cause-related

marketing, that is, Lifebuoy Berbagi Sehat to serve the poor. Thus, the research questions

are:

1. Does the application of the cause-related marketing program, called Lifebuoy

Berbagi Sehat, can serve the poor?

2. How does PT. Unilever Indonesia implement the program?

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Literature Review

Sanitation and PovertyPoor people live in unhealthy condition. The unhealthy condition then often causes the

poor get sick easily (Kompas, 2003a). When the poor are in the unhealthy condition, then

they cannot have jobs or doing something to have money. In short, the condition of the

poor can be described in a cycle as in picture 1.

Picture 1. The Poverty Cycle

Source: adapted fromArgadiredja (2003)

Asia is one of region in the world that facing water crisis. In detail, one of three Asians

lacks access to safe drinking water. Not only that, one of two people lacks of access to

health sanitation. Furthermore, water crisis has pushed the poor to pay 10 times higher of

clean water (Kompas, 2004, 2003b; Provencher, 2001).

Safe water and sanitation projects are crucial to reduce poverty (WBSCD, 2004). The

projects can prevent disease resulted from unsafe water and inadequate sanitation, for

instance, diarrhea. Diarrhea is one of the deadliest childhood diseases in the world.

Moreover, diarrhea is responsible for the death of over 3 millions children a year (Bern et

al., 1992 cited by Curts et al., 2001). In short, the increase of clean water supply and

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The characteristic

of poor people:

Bad sanitation,inadequateconsumption,inadequate shelter,etc

Causes:

Lack of money

Uneducated

etc

Unhealthy

conditions:

Sick

Lack ofnutrion

Lot of

Results:

Lower income

No jobs

Unhealthyconditions (notbeing able tosee doctors)


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adequate sanitation can improve health, and improve health means the increase of human

quality (Kedaulatan Rakyat, 2004; World Bank, 2001).

Cause-Related Marketing

Cause-related marketing is defined as a commercial activity by which business with a

product, service or image to market builds a relationship with a cause or a number of

causes for mutual benefit (Adkins, 1999, p.11). Cause-related marketing is conducted by

corporates when they donating a percentage of revenues to a specific cause based on the

revenue occurring during the announced period of support (Kotler & Keller, 2006, p.22).

According to Varadarajan and Menon (1988), cause-related marketing is a distinct from

other types of marketing activities. This is because cause-related marketing allows

corporation to benefit from their philantrophic investments by combining charitable

constributions with innovative marketing techniques (Ross, Patterson, & Stutts, 1992).

Cause-related marketing is known as the win-win-win scenario. This is because, the

charity or cause and business win and where the benefits go to consumer and other

stakeholder (Pracejus, Olsen, & Brown, 2005; Adkins, 1999). In other words, mutual

benefit is the bases of the activities.

Cause-related marketing is the way that marketers can meet corporate social

responsibility (CSR) and business objectives at the same time (Mason, cited by BITC,

2003). Furthermore, cause-related marketing can bring the words and vision of the

corporate to life; to demonstrate the values through action, to walk the talk and to ensure

that all internal audiences and partners buy into and feel part of that vision, believe it and

believe in it (Adkins, 1999, p.32).

The benefits of cause-related marketing are significant. Those benefits are: enhancing

the corporate image, enhancing brand image, increasing customer loyalty, building

emotional engagement of the customer, boosting staff motivation and retention, and

increasing sales (Curtis, 2002; Adkins, 1999)

Cause-related marketing can be applied in several forms such as advertising,

sponsorship, public relations, direct marketing, and sales promotion (Adkins, 1999).

However,cause-related marketing is often applied in the form of sales promotion, that is,

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donations to causes is triggered by purchase. Many companies in Indonesia applied cause-

related marketing activities when Tsunami attacked several parts of Indonesia on 26

December 2004. The table above shows the name of the company and their donation,

which related to their sales on specific time. Another example is a program calledLifebuoy Berbagi Sehat. This program was launched by PT. Unilever Indonesia which

the company donated Rp 10, - from every purchase of Lifebuoy in July Augustus 2004.

The donation was planned to hygiene education and build health sanitation.

Table 1. List of the Companys Program to Help Tsunami Victims

Company (source) Product / Service Program Period

Tropical

PT. Telkom

Sania & Fortune

PT. Pertamina

PT. Bank InternasionalIndonesia

PT. Goodyear Indonesia

PT. Laneige Indonesia

Honda, FIF, WOM

Vegetable Oil

Telecommunication

Vegetable Oil

Engine Oil Pertamina

Banking

Tyres

Cosmetics

Honda: motor cycleFIF & WOM: creditcompany

Donation Rp 50 from

every purchase ofTropical oils.

Donation Rp 1000from every payment ofRp 100.000 and above.

Donation Rp 150 fromevery purchase ofSania and Fortune oils.

Donation Rp 100 / litrefrom every purchase of

engine oil Pertamina

Every Rp 5000 thatdebited fromconsumers credit cardwill be added with thesame amount by thebank as donations.

All sales fromGoodyear tires andservice fee asdonations.

Ten percent of sales

Donation Rp 300.000from every purchase ofHonda motor cycle

NA

January 2005

NA

January 2005

NA

15 January 2005

17 31 January 2005

NA 31 January 2005

Sources: Advertisments appeared in Kompas (2005)

NA= not available

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Research Proposition

Based on the literature review on causal related marketing and poverty, then the researchproposition is as follows:

Cause-related marketing program gives contribution to serve the poor.

Methodology

Qualitative approach.

Case study. A case study was applied in this research. There were three reasons why a case

study was considered as an appropriate research strategy in this research. First, this

research questions are Does the application of the cause-related marketing program, called

Lifebuoy Sharing Health, can serve the poor? and How does PT. Unilever Indonesia

implement the program? The how question is more explanatory and likely to lead the use

of case study (Yin, 2003).

Second, the case study is also preferred when the research focus on contemporary

events but no control over behavioral events (Yin, 2003). Furthermore, the case study can

be used to portrait the organization (Westgren & Zering, 1998). The method can give

richness of detail (Yin, 2003).

Third, the case study has a unique strength. That is, it is able to deal with a variety of

evidence such as documents, interviews, and observations (see Table 3). This unique

strength far exceeds that in other research strategies such as experiments and surveys. With

the data triangulation, the problem of construct validity can be reduced. This is because of

the multiple sources of evidence providing multiple measures of the same phenomenon

(Yin, 2003).

There were two main principles applied in collecting data for this research. First, this

research used multiple sources of evidence. Those sources were from documents,

interviews, and observation. The application of sources of collecting data is follows. This

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research reviewed documents such as program planning, program reports, and materials

from the Internet. This research also used interview to gather data. The semi-structure inter

view was considered as an appropriate method since the method provides more flexible in

term of topic discussion but at the same time it still maintain control over the topic. Theresearcher had a field visit during the case study, that is, direct observation in Bandung.

Direct observation is a technique that can support additional information about the topic

being studied (Tellis, 1997). Second, this research created a case study database by using

case study notes.

Table 3. Data Collection

Activity Person Location

Interview

Document(Documents,Newspapers, website)

Direct Observation

- Brand Manager &Brand Officer PT.Unilever Indonesia

- PT. Unilever IndonesiaFoundation (ULIFoundation)

- Coallition for HealthyIndoneisa (Koalisiuntuk Indonesia Sehat,KuIS)

- Coallition for Healthy

West Java (Koalisiuntuk Jawa BaratSehat, KuJBS)

KuJBS officer

Jakarta

Jakarta

Jakarta

Bandung

Bandung

Analysis data for case study. All data were analyzed through several stages. First, making a

code of the data. Then, explorations of data within each code. The next step was

summarizing data. Finally, a reflection on data within each category.

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Findings

Unilever and Corporate Social Responsibility

Unilever is a company that believes that corporate social responsibility is important. As oneof the worlds leading company, all members of Unilever believe that business is part of

society, not outside it. In other words, business has a responsibility not just to make profits

for its shareholders, but also to create a long-term sustainable business for its shareholders.

According to FitzGerald (BITC, 2004), corporate purpose and a code of business

principles guide the way all members of Unilever to achieve the business goals. The

corporate purpose is meeting the everyday needs of people everywhere and also playing

the highest standards of corporate behavior towards our employees, consumers and the

societies and world in which we live.

PT. Unilever Indonesia and Corporate Social Responsibility

PT. Unilever Indonesia (PT. UI) has been operating in Indonesia since 1933. The company

produces a range of products such as soaps, shampoos, tea, ice cream and others. PT. UI

applies and demonstrates the corporate purpose by engaged in four major themes: SME

development, a clean campaign, sustainable fishing, and sustainable public health

education (Pranatadjaja, 2004). Furthermore, PT. UI set up the PT. ULI Peduli Foundation

in 2000, to implement corporate social responsibility.

PT. UI believes that as a business, the company depends on a healthy environment. One

important part in an environment is water. The need of water for the company can be

described as follows:

We need water to produce our products and the consumer needs clean water to useand consume them. No water: no washing, no cooking, no tea. Its simple as that.

PT. UI addressed the water and environment issue by launch a project Clean Brantas(Brantas Bersih) in August 2001. The program was developed as a community-based

program by involving community as a key stakeholder in planning and implementation.

Box 4. Clean River Program

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development of sanitation infrastructures do not and will not by itself improve health.

Thus, in order to get maximum benefits out of improved and development of sanitation

infrastructures, people need to be supported with hygiene education. Box 5 provides the

key features of the program.

Box 5. Key Features of Lifebuoy Health Sharing

Name of the program Lifebuoy Sharing Health

Fund PT. UI donated Rp 10,- for everypurchase Lifebuoy soap inJuly Augustus 2004

Main objectives * Hygiene behavior * Improved sanitation

infrastructures

Primary target * Mothers* Children

Channels of communication * Advertising (television*, maga-zines, radios, newspapers**)

* Hygiene education in primaryschool (school visit)

Partners * Coallition for Healthy Indonesia* Coallition for Healthy West Java

* Indonesian Doctor Organization* Care International Indonesia

* : Picture 2 ** : Picture 3

Picture 2. Advertising on electronic media

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Picture 3. Advertising on print media

The project is mainly being implemented in two phases. The first phase was focus on

areas identification. The second phase is the implementation of the project. In this phase,

Coallition for Healthy Indonesia (KuIS) and its partner is in charge to implement the

project.

Phase 1. PT. UI identified two provinces that have high rate of diarrhea: West Java and

Makassar. The high rate of diarrhea was based on Indonesia Health data (2002-2003). The

data was a national survey data, which conducted by BPS, health department, BKKBN, and

an independent survey organization from the United State. Furthermore, to shape the

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information, a baseline survey was conducted in six villages in West Java to understand

people behavior in handwashing and demographic profiles of each village.

Phase 2. PT. UI aims that the project is sustanaible. Therefore, the participation ofcommunity in the project is the pre-requisite for sustaining any achievement. In

implementing the project, especially in building sanitation infrastructures, the real decision

on building the infrastructures is made on community level. It is hoped that the decision

reflects their aspiration and needs regarding sanitation facilities.

In West Java, the Lifebuoy Sharing Health project is implemented under the project

called Health Family Education (Pendidikan Keluarga Sehat). The project is focus on

hygiene practices and health-related practices such as water and sanitation.

Under the project, each village had to form a village implementation team or village

committee. The committee or team was expected to serve as a focal point for community

participation in planning, implementing, and managing the project activities. Furthermore,

the village committee had to prepare an action plan proposal to indicate the needs for

sanitation. KuIS and its partner, KuJBS, have responsible to train the village committee

skill in order to develop them as catalyst of the program. Therefore, the village committee

can have ability in influencing and empower the community. Picture 4 shows the

implementation activities chart.

The training activities include hygiene and sanitation education, training in planning and

implementation of water supply and sanitation facilities. Money collection, which called as

arisan, will be exposed in the community. The main reason is to empower the community

to build sanitation facilities. In other words, it is hoped that the number of septic tank or

other infrastructures can be increased as a result of community participation. Achievement

of the project is based on indicators as shown in Box 6.

Box 6. Achievement Indicators

1 3 Months:

1. At least 15 people are involved in Village Comitte2. Follow up plan

1 6 Months:

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1. Awareness of healthy life (15%)2. Follow-up implementation in every village

1 8 Montsh:

1. Awareness of healthy life (20%)

2. Diarrhea cases reduction (10%)3. 2 septic tank and SPAL* that developed or rebuild in

every village

1 10 Months:

1. Awareness of healthy life (30%)2. Diarrhea cases reduction (15%)3. Total of septic tank and SPAL* that developed or rebuild

is 36

* : Sarana Penyaluran Air Limbah (dump water installation)

Picture 4. PKS Activities Chart

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1 PKS Team preparation Technical Assistance

(KuJBS) (prepared by KuIS)

* health & communication

training

2 Appreciative Community * visit and monitoring

Participation activities

(for the trainers) * yearly evaluation

3 Socialization activities

about PKS

Making yearly 13

4 Villages assessment: report (KuJBS)

discovery

Making three- 12

5 PKS declaration months report

(ceremonial) (KuJBS)

6 Appreciative Community Monthly documen- 11

Participation (Level: RW) tation by PKSTraining to develop village committee

skills for PKS and KuJBS

7 Action program village committee

(Proposal)

8 Health promotion 9 Coordination with 10 Family behavior

activities public health service and public health

service monitoring

(for giving award)


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Note: PKS = Family Health EducationKuIS = Coallition for Healty IndonesiaKuJBS = Coallition for Healthy West Java

Project Locations

There are six village districts (dusun) in West Java that were selected because of its high

rates diarrhea and sanitation condition (picture 5). Those villages are Mekarmukti, Citapen,

Pataruman, Cipatik, Situwangi, and Marunti.

Picture 5. Project location

The location of one of RW targeted. The

MCKs (on the left) made to serve the RWs(housing in the distance).

Condition of MCKs. No water source

provided.

Outdoor MCK One MCK founded already had a SPAL

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Outdoor MCK Outdoor MCK on the side path way

The Lifebuoy Health Sharing received Top Citizen Brand from SWA magazine in 2005.This is because the brand and the program was considered as the brand which have socialmission to help Indonesian people to live healty by increasing awareness on the importanceof health and hygiene.

During 2006, Lifebuoy Health Sharing has done activations like :

1. 1,000 latrines. In cooperation with local authorities and society health centre,Lifebuoy subsidised the sale of 1,000 latrines to the people. This programme was sosuccessful, it motivates the government to finance 4,600 additional latrines.

2. Thank you programme presented to the loyal consumers. Lifebuoy built twosanitary facilities in every 10 elementary schools in Yogyakarta and Surakarta.

3. Lifebuoy sponsored competition for journalists on handwashing write-up to helpimprove Indonesias health lifestyle.

4. Education programme at 120 schools in Yogyakarta, 288 in Purbalingga, 24 inPurwakarta to cascade healthy lifestyle and importance to wash hands involving100,000 students and mothers.

5. Education seminar on healthy life for elementary school teachers in Indonesia.These teachers learn how to develop healthy habit using games and interactivelearning.

Based on description and explanation before, this research attempts to answer the

research hypothesis Cause-related marketing program gives contribution to serve the

poor. Though the yes-no answer can not be given because of the project still in progress

up to 2005, but based on explanation about the program shows that the program aims to

serve some areas in Indonesia that have high rates of diarrhea. To serve those areas, the

health education is given and infrastructure will be built. In short, the project is aimed to

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encourage the communities so that they have hygiene behavior and can empower their

selves to build infrastructures specific to their conditions.

Lessons Learned

1. Involving local social and cultural elite such as teachers, Imams, opinion leaders, to

generate enthusiasm and help spread the message.

2. Community participation is encouraged in every phase of the project.

3. Empowerment, which is, increasing people abilities for self-help and encouraging

them to take greater role in the village development.

4. Involving local NGO as partner in impelementing the project.

5. Training for all field workers. The training aims to make the community aware of

hygiene and sanitation needs.

Recommendations

Although the Lifebuoy Health Sharing program still in progress, the recommendation was

based on researcher observation. To increase the effectiveness of Lifebuoy Health Sharing

program, one main factor should receive consideration, that is, better schedule in order to

achieve the target on time.

Conclusions

Lifebuoy Sharing Health is a cause-related marketing program that demonstrates

corporate responsibility while business objective can also be achieved. Hygiene behavior is

main objective of the program. Hygiene behavior can help the poor to live in healthy

conditions. Because behavioral change is essential, hygiene and sanitation programs

require long-term commitment. Moreover, efforts from the company, government, and also

society are needed.

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