The business case for cause-related marketing

AURORA: The new big idea in the corporate world is purpose-related marketing. How does RB fit into this new conceptual environment?
SHAHZEB MAHMOOD: This is driven by younger people; they are much more aware of the state of the world because information is everywhere and it travels fast. One has to be careful, because half the time we do not know the authenticity of the information floating around us. This is the way the world is, and we have to learn to deal with it. It is in this context, that more and more people are demanding that organisations, be they local or international conglomerates or family-owned businesses, demonstrate responsibility. When you exist in this ecosystem, you have a responsibility towards it and this concept is becoming embedded in the way organisations work across the world. Organisations now genuinely believe that they need to make efforts to be positive members of the community and this trend is irreversible.

A: In Pakistan, how does it translate practically?
SM: Social responsibility should not be looked at only through the lens of a broader philosophical conversation; it is a business case and RB as an organisation believes it is the right thing to do from a business standpoint as well. We work across multiple categories; we are in pest control, health and hygiene. Take pest control for example; we believe we have to keep on looking for new formulations for Mortein to help people control insects in ways that are harm-free. In the last four or five years, we have consistently come out with new formulations. We pioneered insect-repellent LED boards in Brazil and in a few test markets in Pakistan. These boards do not require spray or the dispersal of an insecticide. We have not yet converted this into large-scale commercial usage, but it is something we are committed to. On a broader spectrum, we recently launched an initiative with Hum TV, called ‘Hoga Saaf Pakistan’. In Pakistan, although there are lots of good things happening, there are also plenty of untapped opportunities as well as problems. One of them is health and hygiene, which unfortunately is not top-of-mind for a lot of people in the government or civil society, and we want to change this. In Pakistan, about 55,000 children die every year of diarrhoea, yet it is a disease which should be easily treatable and should not occur in the first place. According to the World Health Organisation (WHO), there are three root causes for the occurrence of diarrhoea. Firstly, lack of personal hygiene; secondly, poor water sanitation and thirdly, open defecation. In Pakistan, about 20 million people do not have access to toilets. According to our research, about 30 to 35% of the population do not wash their hands every time they relieve themselves. These are real issues because half the time people do not realise that they are putting their children at risk. We have launched this programme aggressively and we are already in 200 villages.

We believe that the lynchpins of ‘Hoga Saaf Pakistan’ are the women and children. If we can get them to be our ambassadors and embrace this, then we will see a very different reality

A: How is this programme run?
SM: Firstly, we believe that women’s empowerment is key to creating positive change. We have recruited women from within the villages who are looking for ways to earn a livelihood and willing to commit time to this cause. At our end, we are committed to creating an economic opportunity for them that is sustainable and not based on three or six months. We have identified these women and put together a basket of nutritional and personal care goods, including soaps, salt and nutrient replacements and food such as healthy biscuits and cereals. These women then sell these baskets within their communities. They educate women and conduct classes with the help of the local schools and at the end of the day, they end up earning between Rs 15,000 to 18,000, depending on how productive and successful they are.

A: Is this run throughout Pakistan?
SM: We are working in conjunction with Plan International; an international NGO that operates in Pakistan. Our ambition is to take the programme to at least 1,000 villages by 2020. It could go to a lot more if we bring more partners on board, which is what we are trying to do.

A: What is the selection criteria used to identify a village?
SM: Plan International helps us with the village identification. We have also selected three districts in conjunction with the government. We work with the government and Plan International to identify where diarrhoea is most endemic. Our first village was Dhori, near Sargodha; until 2014, there had been a 26 to 28% occurrence of diarrhoea in children under the age of five, then this went up to about 57%. We decided that this was a village where the data was available and we went in. That is the criteria; we look at the numbers, obviously sometimes they are not fully captured, so we work with estimates from multiple sources.

A: In terms of the basket of goods, are these RB products?
SM: No, ‘Hoga Saaf Pakistan’ is reaching out to multiple organisations. National Foods was the first company to sign on and they are an active part of this programme. Searle is part of this and so is GSK and we are carrying this conversation forward; we are still in the early stages.

A: Is the concept of partnering with different companies a new one?
SM: Yes, it has not been done this way before in the sense that every organisation has its own CSR programme. I believe this is a huge business opportunity. There are multiple forums where the industry comes together to lobby with the government for tax reforms or different business opportunities. Similarly, this is an opportunity for the industry to come together and rather than all of us doing bits and pieces on our own, synergise and optimise them so that we can get a much bigger bang for our buck. Personally, I am very excited.

A: Where does the bang for the buck come in here?
SM: Let's take a village in Punjab where sanitation is poor and people are not hygiene-conscious. Let's assume that RB, P&G and Unilever get together and decide to work together. Here is an opportunity for us to educate people about handwashing, teach them about kitchen hygiene and how to cook food in a way that is healthy, teach them about how to purify their water, teach them about hygiene in the house and how to clean toilets and floors. We are competitors, but that is step two. Take any country in the world; when people become health and hygiene-conscious, businesses benefit – there is absolutely no doubt about this. People are not going to manufacture soap at home. If they decide to wash their hands more frequently, they will go and buy the soap. If they understand the importance of drinking pure water, they will not boil water at home all the time; eventually they may prefer to have access to filtered water. Wherever there is a common effort to raise people’s awareness and their standard of living, businesses benefit.

My reach out to my peers in the industry is: let’s not do this because we want Pakistan to prosper or want to feel good about ourselves. Let’s do this for business reasons, because if we are able to uplift people, the business impact is proven time and time again. In the last 20 years, the FMCG industry has done well, year-on-year. This tells me two things; one, there is tremendous opportunity because people want to improve their standard of living and are willing to invest in this; secondly, there are many more people out there who need this kind of awareness. The latest census figures have put the population at 208 million, and the penetration levels of many categories remain 30 to 40%, so the first stage of this change is to get people to wash their hands and once they do, then we can have our good old commercial fight about which brand and so on – but that is the second stage.

A: Once the programme ends in a village, what guarantee is there that the people will continue to invest in buying more soap – for example?
SM: Our assessments are based on data gathered during the pilot phase of the project. We went to 40 villages and aggregated the results. We found that before we went in, the incidence of diarrhoea was on average between 25 and 30%. Based on observations and Q&A, people said they use soap on average one and a half times a day. The incidence of people boiling water before drinking was under 25 to 30%. Post our intervention, after three months – and again according to aggregated results – the incidence of new cases of diarrhoea dropped by about 30%; after six months, it dropped by about two thirds and the number of people who wash their hands with soap more three times a day, increased by about 60%. The number of people boiling water was nearly 100% after they were shown how simple it is to do. So firstly, it is a question of people being made aware and then of affordability. In my view, having visited many of these villages, people do spend on discretionary items. Once we make them aware, they will be willing to buy a larger bar of soap. People generally find ways to prioritise. Nearly everyone in a village has access to TV. They have access to durable goods, such as deep freezers and fridges; sales have been going up year-on-year in the last 10 years. I think it is a bit of an urban myth to think that only small sizes sell in rural areas and that people do not have the money to invest in large quantities.

We want to drive four actions. We want people to wash their hands, be careful about the water they drink and think about how they interact with their children in terms of health and hygiene. In the household, we want people to use toilets and keep them clean. We want them to eat hygienic food that is cooked properly and keep their floors clean and prevent flies from coming inside.

A: Old habits die hard; a deep freezer can be a status symbol, but if washing your hands is not inculcated, they may choose to save on soap.
SM: This is why we are going after the children. To persuade an adult whose habits are set is difficult. Firstly, our belief is that the women must take a lead role. Unfortunately, in Pakistan, women are not as empowered culturally and economically as they should be and we are trying to change this. We are empowering them economically so that they can be in a position to insist that this is something the household should do differently. Secondly, when children are taught the right thing to do, it is embedded in them. With children, in Pakistan, there is a massive opportunity and this is why we are working with TCF. We have suggested to the government that these habits should be part of the curriculum. We believe that the lynchpins of ‘Hoga Saaf Pakistan’ are the women and children. If we can get them to be our ambassadors and embrace this, then we will see a very different reality. ‘Hoga Saaf Pakistan’ is about three things; about us as individuals, our homes and our neighbourhood. As an individual, I can change my habits and how I approach my and my family’s health and hygiene. As a household, I have absolute control over what I do; I can make choices and prioritise. The neighbourhood is where the community has to start acting. These are the three pillars to make Pakistan cleaner, healthier and more hygienic. We want to drive four actions. We want people to wash their hands, be careful about the water they drink and think about how they interact with their children in terms of health and hygiene. In the household, we want people to use toilets and keep them clean. We want them to eat hygienic food that is cooked properly and keep their floors clean and prevent flies from coming inside. The neighbourhood is perhaps the most difficult to tackle, but we believe that without this component we cannot create change. We want people to take ownership of their neighbourhood and work together to access clean drinking water, avoid litter and prevent sewerage from spilling over.

A: Are you working on any product innovations for this project?
SM: We have developed a soap called Hope and we are using this in our programme. It has a slightly different formulation; people here are used to buying toilet soaps that produce a lot of lather, because it gives them the feeling they are using something that is good for their skin. We have tried to find a balance; Hope produces more lather and at the same time, it is superior in terms of killing germs. In Nigeria, we are testing a powder version of Harpic. In many countries, including India, Nigeria and Pakistan, ceramic toilets are too expensive and people use pits and one of the outcomes of this is the smell. The powder kills the smell and significantly suppresses the germ aspect. It is not ready for commercial use, but we have some great results.

A: On a larger scale will RB introduce new brands and categories into this market?
SM: Over the next two to three years, we are thinking of introducing at least two new categories. However, unfortunately there are limitations we have to contend with. RB has a very big healthcare portfolio, but unfortunately policy making in the health industry is not optimal. We have to consistently engage with the government through the Overseas Investors Chamber of Commerce and Industry (OICCI), the Pharma Bureau and national bodies such as the Pakistan Medical Association.

A: What are these limitations?
SM: The government has to get the industry regulations and oversight working again. It has to find a way to balance the regulations while ensuring the industry grows and this is still missing. We have made a number of representations to the government and to be fair, they realise this is an area that needs improvement. Unfortunately the actions needed to bring about those changes have been slower than they should be.

A: Is this is a factor that is preventing RB from introducing other products?
SM: Absolutely, and not only for RB; about 12 or 15 pharmaceutical multinationals have left Pakistan because they did not find the commercial space viable enough to operate in. Pricing is often quoted as a reason but the reality is that it is impossible to provide quality healthcare unless the business too has a way of making money. That is how it is. I am absolutely not saying that an organisation should be allowed to exploit or be exorbitant, but there must be a viable business model. Unless Pakistan has the right kind of framework to establish this, we will continue to struggle in the healthcare domain.

A: RB has a list of ‘power brands’. What are those?
SM: We have ‘power brands’ and ‘power markets’. The ‘power brands’ are a portfolio of 19 RB brands which are making the biggest impact globally. Of these, six are in Pakistan. ‘Power markets’ is the recognition that a country has the right combination of economic potential, size of business and size of opportunity in terms of our different categories. Pakistan is close to being recognised as a ‘power market’.

A: How realistic is this?
SM: Pakistan has all the markings of a country which should be on the top five list of any FMCG. It has a big population and more importantly, a young population. Pakistan has a consumer history that shows that people are willing to invest in making their lives better. In the last 20 years, consumer goods have never had a bad year and for every metric we have, Pakistan is check, check and check. Unfortunately, for a number of years, Pakistan lacked a secure environment and there was uncertainty in terms of investing. Thankfully this seems to be somewhat under control. Having more consistent economic policies is a second major factor and there has been improvement in the last four or five years. However, we are flagging in terms of exports; our balance of payments is not where it should be. There are red flags that need to be addressed by the government. At the same time, there are a lot of positives going for Pakistan, which is why there is a lot of activity. In the last two years our industry has made investments of over a billion and half dollars. People see Pakistan as a tremendous opportunity and Pakistan has to promote this story in a better and bigger way.

Shahzeb Mahmood was in conversation with Mariam Ali Baig. For feedback, email aurora@dawn.com