Up and Out of Poverty

7/6/2009 - In his long and fruitful career, Kellogg Professor Philip Kotler has brought the tools of marketing to bear on a wide range of topics, including healthcare, nonprofits, the arts and tourism.

But none of these issues has had the scope and complexity of his most recent concern: the plight of the world’s poor, an issue he calls “disgraceful.”

“We have not been fighting poverty the right way,” said Kotler, whose book, Up and Out of Poverty: The Social Marketing Solution, hit bookstores in June. “We’ve been throwing money at (poverty), and the money is often wasted.”

Up and Out of Poverty, co-authored by social marketing innovator Nancy R. Lee, comes fast on the heels of another book, Chaotics: The Business of Managing and Marketing in the Age of Turbulence, that Kotler published this spring. Both books emphasize that the ongoing recession and hyper-competitive economy call for creative and thoughtful solutions to business and social problems.

Kotler, who has written dozens of books on marketing in addition to his classic textbook Marketing Management, envisions a future in which business executives solve social problems by finding profit-making solutions.

“‘Social enterprise firms’ run businesses to serve a social purpose,” Kotler, the S.C. Johnson & Son Professor of International Marketing, told students in a recent talk at Kellogg.

An example of this approach might be, “‘I’m a soybean farmer, but my larger purpose is to find ways to reduce world hunger,’” Kotler said. “The new orientation would be to consider a larger context in the lives we lead.”

In a similar vein, businesses can re-evaluate their take on the poor and see them as an attractive market, Kotler said. He notes in his book that the world’s “extreme and moderate poor have buying power equal to $8 billion per day. The poor want so many goods that the problem of global overcapacity and recession should be reframed as the problem of under-consumption.”

The book profiles more than 14 success stories — for example, the distribution of insecticide-treated bed nets to prevent malaria, or of condoms to prevent the spread of HIV/AIDS — as applications of social-marketing thinking to understand and motivate better life choices.

Kotler and Lee assess each proposed path to poverty reduction, including traditional large-scale foreign aid, improved education and job training, economic development and microfinance. They show how to apply advanced marketing strategies and techniques, including segmentation, targeting, and positioning, to put into place the conditions poor people need to escape poverty. Case studies illustrate how these techniques can promote health, education, community building, personal motivation, and other positive outcomes.

Kotler and Lee also offer the first complete, marketing-informed methodology for addressing specific poverty-related problems and assessing the results.

Kotler noted that the global recession has only worsened the problem of global poverty. In 2000, the World Bank and the United Nations set a goal of cutting the poverty rate in half by 2015. “They’re not going to make it,” Kotler said. “People have been laid off and are conserving and spending less. That means less demand, production, and employment.

“It’s disgraceful how extensive (poverty) has been historically and today,” Kotler added. “You have pockets of poverty that have their own sustaining dynamics.”

But Kotler draws hope from recent public-health campaigns that have led to municipal bans on tobacco smoking and the elimination of soft drinks and junk food from many school lunch programs.

“Marketing has worked so well in the commercial sector,” Kotler noted. “It leads us to think, ‘What kinds of incentives, appeals and disincentives can be put together as a mix to convince people that they can gain value from changing their behavior?’”