US-based TOMS Shoes created an out-of-the-box solution to its objective of helping people even while running a for-profit business. The company founded on the principle that it would give away one shoe to a poor child for free, for every shoe it sold. This case study looks at how TOMS Shoes made a cause the center of its activities, even as the cause itself contributed to its revenues and profitability. And how it used social media for marketing.

Blake Mycoskie created what can arguably be called a unique business model that combines both for-profit and not-for-profit philosophies. A native of Texas in the US and a serial entrepreneur, Mycoskie was travelling in Argentina in 2006, when he noticed poor children having to grow up without shoes, and facing a lot of hardship in the process. Deeply moved, Mycoskie returned home and founded TOMS Shoes, a company that made and sold, um, shoes of course. But with a twist.

For every pair of TOMS shoes sold, the company would donate one pair to a child in need. This revolutionary concept was called "One for One", and Mycoskie ensured poor children in different parts of the world got the benefit of its business. What made it work even better is the fact that a buyer, typically a young adult looking for an affordable yet cool pair of shoes, would feel good in the knowledge that his purchase has actually helped a poor child get a much-needed shoe for free. The business model worked perfectly, because the cost of the free shoe was built into the price of the one that is sold, making a seemingly charitable effort also contribute to its profitability.

So far, the company's website states that it has provided more than 35 million pairs of shoes to children in 70 countries across the world, and this includes India as well. As long as people continue to purchase TOMS shoes, children in need will receive a pair in return. The shoes that the company designs and sells are based on the Argentine alpargata design. In later years, Mycoskie expanded the One for One model to other products as well. In 2011, the company introduced eyewear. It followed a similar principle for eyewear as its shoes, but again with a twist. Instead of donating a pair of glasses for every pair sold, TOMS would use part of the profit from that sale to save or restore the eyesight of a person in developing countries. So far, the company website states, TOMS Eyewear has helped restore sight to more than 275,000 people. Further on, the concept was extended to other product categories as well.

Mycoskie followed the same principle for his book as well - Start Something That Matters. The cover of the book states: "With every book you purchase, a new book will be provided to a child in need."

While cause-related marketing is followed by many companies, at TOMS the philanthropic component is critical to the success of the for-profit business. The TOMS business model and its heavy focus on marketing and use of social media is innovative and unique.

Using Social Media to Tell the Story of TOMS

TOMS offers more than a comfortable and trendy pair of shoes. It is about status and a story to tell. Mycoskie realized the power of the TOMS story since the early days of the company and has focused on it ever since. It's very clear when you go to the TOMS website, that there is a strong presence of social media links, such as Facebook, Twitter, YouTube, Pinterest, Instagram and Google Plus. Also, it has created a blog to share stories and educate others about TOMS's activities. Mycoskie realized the power of social media, which is less costly in comparison to the traditional advertising and fits better with his business model. On top of that, many TOMS fans and consumers create their own digital content about their experiences with TOMS products and TOMS initiatives, allowing them to do much of the marketing for the company and spread the story.

The Future of TOMS

TOMS is no longer just a shoe company, it has expanded into other areas using its "One for One" business model. A for-profit business with a philanthropic component. The company is also actively looking for people to help them do this by offering grants to people with like-minded ideas. It is expanding into many categories, including apparels, accessories and tech as well as expanding geographically. To keep the business model sustainable, it is of paramount importance to keep innovating and designing new products that appeal to worldwide consumers. On top of that, TOMS should closely monitor compliance of its activities and keep the promise of One for One. TOMS's success in using social media in spreading its story and reaching a vast audience could be equally risky to its reputation and the whole business model in case of compliance and ethical issues as well as improper management of social media.

What business-level strategy does Tom's seem to be pursuing? Why?

What corporate-level strategies is Tom's pursuing? Why?

How do these strategies create value for the organization? For the customers?