Question

Chapter 4 - Review Zooming In : TOMS Shoes Integrates For-Profit Entrepreneurship With Bleeding-Heart Philanthropy

1) Do you remember the proverb declaring that if you give a man a fish, you feed him for a day; if you teach him how to fish, you feed him for a lifetime? Do you agree with critics who apply this proverb to TOMS’ charity model? Why or why not.

2) Beyond judging the charity work of TOMS, think about how its message and appeal have captured so much buy-in from young people. When you write business messages, how can you alter your writing to engage audiences of various ages or at various education levels?

Answer 1

TOMS shoes has a unique business model "one-for-one", where the company donates a pair of shoes for purchase of each pair of shoes. The company integrates for-profit entrepreneurship with philanthropy. TOMS shoes saves sales and marketing cost by tapping into consumer's word of mouth and excellent social media engagement. The value proposition for the consumer is that the consumer feels cool by wearing TOMS shoes and feels generous by donating a pair of shoes. TOMS shoes donates shoes in around 70 developing countries to people who cant afford shoes. TOMS shoes has tied up with number of NGOs around the world to donate and distribute the shoes.

Answer 1: The donation of shoes and generous business model of TOMS help it to engage in effective social media with around 3.5 million followers. This is greatly reduce the cusotmer acquisition cost. Recently, TOMS shoes has expanded one-for-one to products like sale of eyewears. However, in case of eyewears, TOMS shoes will donate the profit generated to restore the eyesight of people in developing countries.

Now, the proverb has a deep meaning where, instead of donating and providing free of cost things, one should try to educate or upskill people who are needy and make them capable of earning themselves. However, this proverb is not fit in TOMS shoes context. This proverb is apt for NGOs which are donating essential utilities to the people in need. TOMS shoes donates shoes and it is not as essential as food or water. Therefore, by donating a pair of shoes, it will not create any moral hazard. Also, in case of eyewear, TOMS shoes helps to restore the eyesight of people and it can be aptly said that TOMS shoes is teaching people how to catch fish so that people are capable to earn themselves.

2. TOMS shoes value proposition for its customer is to look cool and generous. Customers feel proud by ordering TOMS products as a part of his money is going for charity. This creates a personal engagement of customer with TOMS and helps to retain customers. TOMS has created active engagement on social media and young people in age bracket of 18-35 are the target customers of TOMS. Therefore, TOMs use social media as its communication channel to communicate with its customers.