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Paper presented at the 1st Parahyangan International Accounting and Business Conference.

1 Bandung, 13-15 February 2008 APPLYING CAUSE-RELATED MARKETING TO SERVE THE POOR: A CASE STUDY OF PT. UNILEVER INDONESIA Sabrina Oktoria Sihombing Business School University of Pelita Harapan Abstract One objective of the Millennium Development Goals (MDG) in the twentyone century is to reduce poverty. It is aimed to halve the number of poor people 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, 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. Working together between three principal components is crucial to achieve the MDG objectives. Those three components 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 affordable products 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 companies to 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).

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 2 Bandung, 13-15 February 2008 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?

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 3 Bandung, 13-15 February 2008

Literature Review Sanitation and Poverty Poor 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
The characteristic of poor people: Bad sanitation, inadequate consumption, inadequate shelter, etc Causes: Lack of money Uneducated etc Source: adapted fromArgadiredja (2003)

Unhealthy conditions: Sick Lack of nutrion Lot of childrens

Results: Lower income No jobs Unhealthy conditions (not being able to see doctors)

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

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 4 Bandung, 13-15 February 2008 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,

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 5 Bandung, 13-15 February 2008 donations to causes is triggered by purchase. Many companies in Indonesia applied causerelated 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 called Lifebuoy 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) Tropical Product / Service Vegetable Oil Program Donation Rp 50 from every purchase of Tropical oils. Donation Rp 1000 from every payment of Rp 100.000 and above. Donation Rp 150 from every purchase of Sania and Fortune oils. Donation Rp 100 / litre from every purchase of engine oil Pertamina Every Rp 5000 that debited from consumers credit card will be added with the same amount by the bank as donations. All sales from Goodyear tires and service fee as donations. Ten percent of sales Donation Rp 300.000 from every purchase of Honda motor cycle Period NA

PT. Telkom

Telecommunication

January 2005

Sania & Fortune

Vegetable Oil

NA

PT. Pertamina

Engine Oil Pertamina

January 2005

PT. Bank Indonesia

Internasional

Banking

NA

PT. Goodyear Indonesia

Tyres

15 January 2005

PT. Laneige Indonesia Honda, FIF, WOM

Cosmetics Honda: motor cycle FIF & WOM: credit company

17 31 January 2005 NA 31 January 2005

Sources: Advertisments appeared in Kompas (2005) NA= not available

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 6 Bandung, 13-15 February 2008

Research Proposition Based on the literature review on causal related marketing and poverty, then the research proposition 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

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 7 Bandung, 13-15 February 2008 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. The researcher 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 Interview Person Brand Manager & Brand Officer PT. Unilever Indonesia PT. Unilever Indonesia Foundation (ULI Foundation) Coallition for Healthy Indoneisa (Koalisi untuk Indonesia Sehat, KuIS) Coallition for Healthy West Java (Koalisi untuk Jawa Barat Sehat, KuJBS) Location Jakarta Jakarta Jakarta

Bandung

Document (Documents, Newspapers, site)

web KuJBS officer Bandung

Direct Observation

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.

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 8 Bandung, 13-15 February 2008 Findings Unilever and Corporate Social Responsibility Unilever is a company that believes that corporate social responsibility is important. As one of 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 use and 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

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 9 Bandung, 13-15 February 2008 The Brantas river is polluted with industrial and community waste. The water is unsafe to drink and poses a health threat to those living along its bank. Therefore, PT. Unilever Indonesia developed a project called Clean Brantas (Brantas Bersih) as Unilever commitment to be part of the solution to the environment. The programs include sanitation system, greening, waste management, riverbank development, income generation, and healthy lifestyle. Unilevers ultimate goal of the project is for the model of the Village Adoption Program to promoted and replicated simultaneously to other industries along Brantas river. In relating with health issues, PT. UI uses the Lifebuoy brand in order to address health problems and social challenges. Lifebuoy campaigns focus on the importance of cleanliness. In specific, washing hands is one important message that is campaigned by Lifebuoy in order to reduce the incidence of diarrhea significantly, one of the main causes of mortality in Indonesian children. Lifebuoy and Cause-Related Marketing One inspired Lifebuoy program is known as Lifebuoy Berbagi Sehat (Lifebuoy Health Sharing). The program is an implementation of cause-related marketing activities, In the specific, the program was sales promotion type approach where a percentage of the product price is donated to charity. In short, donations to a cause are triggered by consumer purchase. The donation was intended to a social mission in health education.Specifically, the program focuses on building sanitary facilities and socialization on hygiene. The theme on hygiene was chosen because many people in Indonesia suffering from diarrhea. One cause of diarrhea is unhealthy environment sucha as lack of sanitary facilities and clean water. The main theme of the program is health education. However, health improvement is linkage with a healthy environment. In specific, the program focuses on sanitation and water supply as crucial factors that related to health education. One theme in health education is the importance of cleanliness, that is, wahing hands. Washing hands can reduce the incidence of diarrhea significantly. Diarrhea can be transmitted by several factors such as dirty hands, flies, and inadequate sanitation. All of the transmission can be blocked by changes in hygiene attitude and behavior. Improved sanitation can also contribute to preventing transmission. In short, PT. UI believes that the

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 10 Bandung, 13-15 February 2008 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 Fund Lifebuoy Sharing Health PT. UI donated Rp 10,- for every purchase Lifebuoy soap in July Augustus 2004 * Hygiene behavior * Improved sanitation infrastructures * Mothers * Children * Advertising (television*, magazines, radios, newspapers**) * Hygiene education in primary school (school visit) * Coallition for Healthy Indonesia * Coallition for Healthy West Java * Indonesian Doctor Organization * Care International Indonesia

Main objectives

Primary target Channels of communication

Partners

* : Picture 2 Picture 2. Advertising on electronic media

** : Picture 3

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 11 Bandung, 13-15 February 2008

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

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 12 Bandung, 13-15 February 2008 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 of community 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 Comitte 2. Follow up plan 1 6 Months:

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 13 Bandung, 13-15 February 2008 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
1 PKS Team preparation (KuJBS) Technical Assistance (prepared by KuIS) * health & communication training * visit and monitoring activities * yearly evaluation

2 Appreciative Community Participation (for the trainers)

Socialization activities about PKS Making yearly report (KuJBS) 13

Villages assessment: discovery

PKS declaration (ceremonial)

Making threemonths report (KuJBS)

12

6 Appreciative Community Participation (Level: RW) Training to develop skills for PKS village committee

Monthly documen- 11 tation by PKS village committee and KuJBS

Action program (Proposal)

Health promotion activities

Coordination with public health service

10 Family behavior and public health service monitoring (for giving award)

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 14 Bandung, 13-15 February 2008

Note: PKS = Family Health Education KuIS = Coallition for Healty Indonesia KuJBS = 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 Condition of MCKs. No water source MCKs (on the left) made to serve the RWs provided. (housing in the distance).

Outdoor MCK

One MCK founded already had a SPAL

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

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 social mission to help Indonesian people to live healty by increasing awareness on the importance of 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 so successful, it motivates the government to finance 4,600 additional latrines. 2. Thank you programme presented to the loyal consumers. Lifebuoy built two sanitary facilities in every 10 elementary schools in Yogyakarta and Surakarta. 3. Lifebuoy sponsored competition for journalists on handwashing write-up to help improve Indonesias health lifestyle. 4. Education programme at 120 schools in Yogyakarta, 288 in Purbalingga, 24 in Purwakarta to cascade healthy lifestyle and importance to wash hands involving 100,000 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 interactive learning. 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

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 16 Bandung, 13-15 February 2008 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.

Paper presented at the 1st Parahyangan International Accounting and Business Conference. 17 Bandung, 13-15 February 2008 References

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