Clubinho Preto: Children Growing Up with Racial Diversity

Clubinho Preto: Crianças Crescendo com Diversidade Racial

ABSTRACT

The case shows the difficulties faced by a social business to become financially viable. Talita Peixoto is an African-Brazilian woman enterprising for the first time. Together with her husband, she created Clubinho Preto, a Brazilian subscription club for children that delivered boxes with books, clothing, and accessories to educate children in a positive Afrocentric culture. After two years, they are struggling financially. Looking for alternatives, Talita planned to expand her business by adding schools as clients. Her business partners opposed the idea, believing that not every manager would truly commit to the racial cause. Talita needed the money, but not at any cost. How can she transform her purpose into a product? To answer this question, it is necessary to align purpose, value creation, and a business model. This case can be taught in executive training programs and undergraduate classes on marketing and consumer behavior, social entrepreneurship, and business purposes. We invite teachers and students to include the discussion on diversity, equity, and inclusion in all these disciplines.

Keywords:
marketing; purpose; DE&I; social entrepreneurship; positive Afrocentric culture

RESUMO

O caso mostra as dificuldades enfrentadas por um negócio social para se tornar financeiramente viável. Talita Peixoto é uma afro-brasileira empreendendo pela primeira vez. Junto com o marido, ela criou o Clubinho Preto, um clube brasileiro de assinatura para crianças que entrega caixas com livros, roupas e acessórios para educar as crianças em uma cultura afrocêntrica positiva. Depois de dois anos, eles estão lutando financeiramente. Na busca por alternativas, Talita planejava adicionar escolas aos seus clientes. Seus parceiros de negócios se opuseram à ideia, acreditando que nem todo diretor escolar estaria verdadeiramente comprometido com a causa racial. Talita precisava do dinheiro, mas não a qualquer custo. Como ela pode viabilizar seu propósito em um produto? Para responder a essa pergunta, é necessário alinhar propósito, criação de valor e modelo de negócios. Este caso pode ser ensinado em programas de treinamento de executivos e aulas de graduação em marketing e comportamento do consumidor, empreendedorismo social e fins comerciais. Convidamos professores e alunos a incluir a discussão sobre diversidade, equidade e inclusão em todas essas disciplinas.

Palavras-chave:
marketing; propósito; DE&I; empreendedorismo social; cultura afrocêntrica positiva

In 2021, with the end of the lockdown imposed by the COVID-19 pandemic, Talita Peixoto had already returned to her usual rush. She left a face-to-face class as a business professor and entered a virtual meeting of her research group with fellow doctoral students. Then she taught an undergraduate class, checked her cell phone messages and emails between appointments, and hurried to pick up her son from daycare in the late afternoon. Finally, she arrived home in a residential neighborhood in Rio de Janeiro and bathed and fed her four-year-old son, Thales. Her husband, Marcos Machado, came home later. He works as an engineer for an oil and gas company. After dinner, they put Thales to bed and sat in front of the computer to work on the company they had created together in 2020, Clubinho Preto. They talk about their doubts and beliefs:

Talita: Profit is pretty much the same. I hoped that with the end of the pandemic, our business would grow strongly.

Marcos: The business has a strong potential for sure.

Talita: I know. We are not the only parents desiring to transform their surroundings and provide a culturally richer childhood for our kids.

Marcos: And we are offering a pretty good product. None of our competitors are presenting an Afro-cultural universe designed especially for kids.

Talita and Marcos are African-Brazilians. They invested their time and energy in Clubinho Preto, a subscription club for children, families, and educators. The name means ‘Little Black Club’ in Portuguese. The content is anti-racist and Afro-referenced to represent blackness positively, with black people as protagonists and the appreciation of Afro-Brazilian culture and history. Every month subscribers receive a box with a book and a surprise, which may be an outfit with African prints or a toy of African representation. The experience of an affectionate education helps them grow feel safer. Their mission is to help change society into being more respectful of differences and diversity.

The couple was happy with what they had achieved so far. They felt they were making a difference in children’s lives and gaining visibility among parents. This initiative had already gained repercussions in magazine articles, websites, and television within a short time. It so happens that there was a pent-up demand for the proposal they were offering, which made them excited. Still, they were having difficulties making their business financially viable and Talita shared her concerns with Marcos: “Our customer base grew, and the brand is better known, but the business makes no profit, revenues are just enough to pay the bills. I am worried. This business is my dream, you know that. I don’t want black kids to go through the same racist situations we had to face. But how long are we going to stay in this financial struggle? Is this business viable at all? Will we have to abandon our dream?

CLUBINHO PRETO

In March 2020, the World Health Organization (WHO) declared a COVID-19 pandemic. Beginning in mid-March, Brazilians were instructed to stay in their homes to prevent the spread of the virus. Talita, a black woman, mother, and undergraduate teacher, also changed her routine due to the pandemic. Her life was restricted to the environment of the house with her husband and young son.

The social isolation, the days with her husband and son, and the crisis that hit the world made Talita reflect upon her challenges as a mother. As a kid, her childhood was surrounded by white culture, and she grew up trying to understand why she was considered an ugly kid and why she didn’t see herself in the (white) dolls she played with. Talita and her husband wanted a different childhood experience for their son, wanting him to grow up with black people as references in an Afro-centered culture. They tried strengthening his black roots with toys, books, and clothes to identify with and feel represented. They created a business to bring this content to their son and other black Brazilian children. Thus, Clubinho Preto was born.

Clubinho Preto follows what the African proverb says: it created its village to convey Afrocentric education to children. Talita became the CEO, and the ‘village’ includes Marcos as chief operating officer. In addition, they invited two professional black women to manage the marketing and technology department - Katiúcha Watuze is the chief marketing officer, and Thais Viana is the chief technology officer.

RACISM IN BRAZIL

Racism is ingrained in Brazil. In the country, race is more determined by physical appearance than ancestry. There is a diversity of phenotypes throughout the country, with it experiencing a high level of inequality when looking at demographics. Blacks and browns are at the bottom of every social indicator, such as income, employment, and education.

The idea of racial hierarchy infiltrates families, contesting the myth of Brazilian racial democracy. This myth brought the concept of racial egalitarianism while leading to the internalization of hierarchies that privilege whiteness. History downplayed the violent and exploitative slavery practices and portrayed harmonious race relations in Brazil. Although slavery ended in 1889, it was only in the 21st century that people started acknowledging the underestimated violent racism in Brazilian society.

The team knows that Clubinho Preto penetrates the intimacy of families. Family is the primary agent of socialization in a child’s life and the first one to reproduce the dominant racial hierarchy. Clubinho Preto contributes to this process. Stories for children can shift racist lenses, placing non-white people inside adventurous environments and situations that traditionally belong to white characters. Clubinho Preto proposes to agents of socialization a way to resist racism.

PRODUCTS AND REVENUES

Clubinho Preto presented its consumers with two types of monthly subscriptions and two single purchase options on the website. The monthly subscriptions were ‘Playing and Learning’ and ‘Solidary Clubinho.’ In the ‘Solidary’ option, the subscriber worked as a sponsor for vulnerable children assisted by social projects. Furthermore, there were one-time purchase options: ‘Gift Box’ and ‘Welcome Box.’

Boxes contents (Figure A1) and prices:

Figure A1
Books, toys, and other things make up the Clubinho Preto box.

• Playing and Learning: a box with one book and one surprise + guidance letter to families + online meeting with authors through a Telegram app community. The monthly price was R$ 49.90 + freight costs for the subscriber.

• Solidary Subscription: paid in the name of a child assisted by a social project. The kid received a box with one book and one surprise + a guidance letter to families. The monthly price was R$ 49.90 + freight costs for the subscriber.

• Gift Box: a box commonly purchased as a birthday gift with three items, including books, toys, clothes, accessories, etc. + a happy birthday letter. The price was R$ 99.90 + freight costs for the consumer.

• Welcome Box: a box to welcome babies into the world. The box contained five items, including books, toys, clothes, accessories, etc. + a welcome letter. The price was R$ 159.90 + freight costs for the consumer.

Clubinho Preto’s revenues came mainly from its subscriptions. In November 2021, almost two years after Clubinho Preto was created, its monthly sales reached R$ 6,000.00 with a net return of approximately 30%. ‘Solidary’ subscriptions represented 5% to 10% of total revenues. Talita had no floating capital or partners to ensure the monthly operation. All the money from sales was used to produce the boxes for the following month.

All the products that came in the boxes were from black entrepreneurs supporting the ‘black money’ movement. Different from the origin of the term in English, which means the funds earned through illegal activities, the term was resignified in Brazil as the money that circulates among black people. Talita and Marcos wanted Clubinho Preto to boost other businesses by having an all-black supply chain. Talita wished for high-quality standards for the business. She curated the content that went to each child. For her, “Each child is a child.” Before Clubinho Preto’s subscription agreement was signed, there was a questionnaire that had to be answered with information about the child’s personality and preferences.

DISTRIBUTION

Marcos was responsible for planning the logistics and the delivery operation. He contracted a motorcycle courier company to deliver in Rio de Janeiro and Niterói, a neighboring city to Rio. They were limited to these two cities due to freight costs.

Marcos knew Clubinho needed more subscriptions to be profitable, and for him, the answer was to expand sales to other states. But logistics in Brazil are difficult and expensive because of the country’s continental dimensions, which could be seen as both a problem and an opportunity. Brazil is the largest nation in Latin America and the fifth-largest in the world. It is formed by 26 states, the Federal District, and 5,570 municipalities.

Table A1
The table shows the distances between Rio de Janeiro and other Brazilian capital cities.

From	To	Distance (km)
Rio de Janeiro (RJ)	Porto Alegre (RS)	1,600
	Manaus (AM)	4,300
	Recife (PE)	2,300
	Cuiabá (MT)	2,000

• Note. Source: Elaborated by the authors.

Clubinho Preto’s consumers paid the delivery cost, but sometimes it exceeded the subscription price. That math was keeping Marcos awake at night. On the one hand, the country’s large population and the Portuguese as the common language were a business opportunity for expansion. On the other hand, there was a delivery cost challenge to be overcome.

MARKET AND COMPETITORS

Talita does not like to define Clubinho Preto as a book subscription business or as a toy subscription. She sees her business as a service to build a positive Afrocentric education, but she knows that positive Afrocentric education is a huge segment. It is possible and necessary to work on many things to contribute toward changing education in Brazil. Talita felt it challenging to fit Clubinho Preto into a narrower specific market segment or to identify its competitors. Clubinho Preto’s boxes carry different products, such as books, clothes, toys, accessories, sunglasses, hair ribbons, and bracelets. Talita questioned whether Clubinho Preto was in the editorial, clothing, or gifts markets. What was Clubinho Preto’s market?

As for competitors, there are a lot of book clubs in Brazil where parents can subscribe to receive up to four books from the most prominent players, such as Mauricio de Sousa Produções and Leiturinha. Clubinho Preto proposed to deliver representativeness and inclusion in its content. Due to its purpose, Clubinho Preto became like another book club, Palavrinha, a subscription club to a specific audience, the religious Christian consumer.

Marketing and communication strategies

Clubinho Preto’s team created a website and opted for organic growth on social media to give visibility to their business. They had no initial investments, so they tried to keep marketing costs to a minimum. In the first month of operation, they received ten orders. In the second month, that number doubled, and by the third, there were already 100 orders. Seeking stable revenue, they opted for a business model based on subscriptions. Almost two years after Clubinho Preto was created, it had 120 loyal subscriptions.

Clubinho Preto’s communication strategies are based only on content posted on its Instagram profile, which is where they were most successful, with over 19,000 followers by the end of 2021. They communicate Afro-centered cultural content and the club’s products through the networks. All posts were organically delivered to the followers and other Instagram users.

THE SEARCH FOR INVESTORS

Talita needed more investments to improve Clubinho’s distribution and growth, as she could not fill new subscriptions without investing in necessary items such as staff, structure, and more suppliers. Talita thought of alternative solutions to finance Clubinho Preto. First, she wanted a partner to increase her communication and distribution capabilities. The group had the idea to participate in the reality show Shark Tank Brasil¹. They hoped to win over an experienced partner to help them grow the business while hoping to gain visibility by appearing on a television show.

The episode aired in January 2021. The ‘sharks’ did not invest in Talita’s business. Their main argument was that Talita was not exclusively dedicated to Clubinho. Talita left the show with no partner nor the money she needed. She managed to gain another 200 new Instagram followers for Clubinho’s profile but no new subscriptions. Shark Tank Brazil’s experience was frustrating for Talita, but Marcos did not share the same opinion. He thought that it was an opportunity to show their business in a large media and that they did harvest the rewards of this exhibition by being accepted into other small business programs.

A few months later, Talita was invited to participate in Rede Globo’s mentoring program for small businesses, VAE (Let’s Activate Entrepreneurship). Rede Globo is the largest Brazilian TV network, and VAE was one of its social responsibility corporate initiatives. The program provided mentoring and contact with potential investors, bringing more visibility to Clubinho Preto because its advertisement was displayed on Globo’s open TV channel. However, they still did not receive any investments.

CHANGE OF ROUTE

Clubinho Preto reached the end of 2021, almost two years after its foundation and the duration of the COVID-19 pandemic, seeking investments for its delivery system and business growth. Talita was tired of the excessive workload and the lack of financial resources and started to rethink her business. She knew there was a repressed demand for what her business had to offer. Entrepreneurship in Brazil was challenging for many reasons, including geographic distances. In Clubinho’s case, it was especially harder because it was intended to fight a racist cultural structure. Talita was confident in the potential of her business and her dream to positively impact society. Her own son’s childhood inspired the creation of Clubinho Preto. For her, it was a personal mission to have Thales and other black children growing up proud of their Afro-Brazilian culture. Talita started to make some exploratory research and invited her team to think about alternatives:

Talita: Guys, we need to reflect on new possibilities for Clubinho. Have you heard of Brazilian Law 11,645 of 2008²?

Katiúcha: What is it about?

Talita: The law made mandatory for all schools the teaching of Afro-Brazilian and indigenous history and culture. This was an attempt to reduce social inequality and historical injustices.

Thais: I didn’t know anything about it, and I imagine it didn’t work. Am I right?

Talita: You are right, Thais, but according to my research, there were some educational advances, but few schools were really committed to the quality of teaching this subject. They say there is a lack of qualified teachers and social interest. Another barrier for schools was dealing with the increase in financial costs related to adding a specialized extra class.

Katiúcha: I bet there is very little governmental control and supervision of the law’s application.

Talita: You are right but this can be an opportunity for us! We can offer Clubinho Preto’s boxes to the B2B market. We could sell boxes directly to schools and companies that had difficulty complying with the law. This could be a solution to increase our revenue and to reach even more children. Our business would have capillarity without the need for investments in distribution. We could also increase the product portfolio by offering Afro-referenced content, training, and materials for teachers, institutions, and students.

Katiúcha: I am not sure this is a good idea, Talita. We could lose control over the content and have less autonomy over the curation of the material.

Thais: Also, many executives include this agenda in their businesses mostly because of social pressure but are not committed to the cause. They promise diversity and inclusion but they don’t translate the speech into effective actions. We already had some experiences with executives that reached us because of TV appearances, but negotiations did not follow through after the first contact.

Talita: You have a point. It is not worth having a lucrative business if our social goal is not attained. We did not create Clubinho Preto only for the money, we want both: to make money and to have a social impact.

Marcos: I don’t know. It is not the moment to make such an investment. We are very low on cash. This segment addition would require us to hire more employees for the production and shipping of the higher number of boxes, and we would probably need a larger space for all our inventory. We do not have the money for that.

Katiúcha: I agree with Marcos because by adding a new segment we can reduce quality throughout the operating system. It can damage our relationship with our loyal B2C subscribers, and we could lose all the hard work we had already put into the business.

The discussion and the entire situation drained Talita. She believed it was the last effort to make it work. Besides her partners’ objection, she thought selling their products to other businesses could work. But would this decision make her business lose its purpose? Talita was at a crossroads. She had to rethink her business journey and decide which path to take. Talita questioned herself daily: What should I do to turn Clubinho Preto into a successful business and fulfill my dream of fighting racism?

LEARNING OBJECTIVES

After completing this case, students should be able to: (a) recognize the challenges associated with purpose-driven social businesses; (b) rxplain how to use a clear purpose to create value in a social business; (c) manage seminal marketing concepts such as segmentation, targeting, and positioning in a social business; (d) value the DE&I (diversity, equity, & inclusion) impact on business decisions, performance, and society.

INFORMATION SOURCES

Primary and secondary data were used to prepare this case. The primary data were obtained from interviews with Clubinho Preto executives. The primary data were complemented by secondary data obtained by consulting Clubinho Preto’s social media, as well as a plethora of academic and non-academic articles and pieces. All the material gathered (triangulated, reconciled, organized, and adapted for teaching purposes) is listed at the end of this document.

DISCIPLINES AND TARGET AUDIENCE

This case is relevant for executive training programs and undergraduate students in marketing courses or social entrepreneurship. The case can be adapted to business strategy courses as well.

Supplemental materials for student preparation before class

• Clubinho Preto’s website: https://clubinhopreto.com.br (retrieved on December 01, 2021);

• Clubinho Preto’s Instagram profile: @clubinhopreto;

• Talita’s interview about Clubinho Preto (Peixoto, 2021);

• Data on Brazilian racial inequality (Instituto Brasileiro de Geografia e Estatística [IBGE], 2021).

Assignment questions

To assist students in preparing for the case analysis, they should reflect upon the following questions before class:

1. What were Clubinho Preto’s main challenges?

2. How did Clubinho Preto segment its market and define its target audience?

3. What were the risks involved in entering a new market segment?

4. Thinking about the company’s future, in your opinion, does Clubinho Preto have a chance to be successful? Justify your answer.

5. In Talita’s place, would you enter the B2B market? If yes, which segment in the B2B market would you choose? Why?

TEACHING PLAN

This teaching plan is meant for a 90-minute session. To optimize class time, it is suggested that students read and prepare for discussion in advance. The following plan is a suggestion for application in the classroom:

1. Class introduction: the teacher can ask one or two students to summarize the case. Answer the first assignment question: the case is about a small Brazilian business with a social inclusion purpose. The owners are facing the dilemmas of a new business trying to grow and make a profit. Estimated time: 5 to 7 minutes.

2. Assignment questions: assignment questions are provided to students before class to assist them with preparing the case analysis. It is suggested to warm up the class by showing the video ‘Doll Test’ (Fanpage.it, 2016). The video should be used to make a critical analysis of the topic and to provide more information about the environment where the case develops. Estimated time: 10 to 13 minutes.

Another warm-up possibility is the ‘neck test.’ The teacher proposes to the students to go outside the school, observe and produce a report about how many black people they can see and which occupation they have. The students share their reports when they return to class. Estimated time: 30 minutes.

3. Plenary discussion and teacher contributions: after warming up, the teacher opens the discussion with the case analysis and makes the necessary additions and corrections (Questions 1 to 4). Estimated time: 40 minutes.

4. Wrap-up points: to wrap up the class, the instructor should dedicate 20 minutes to debate with the students about how diversity, equity, and inclusion (DE&I) promote change in social representation (Question 5).

CASE ANALYSIS SUPPORTED BY THE LITERATURE

Question 1: What problems does Clubinho Preto face in this case? What is Talita’s main challenge?

The case revolves around Clubinho Preto’s possible expansion strategy to other markets. Clubinho Preto presents a value proposition of high quality and personal curation of the products for individual consumers with the purpose of racial inclusion. But unfortunately, it does not escalate this way, and the people involved in this small new business are overworked.

The owners feel that it is time for a change. There is an internal desire to expand the market, add the B2B format to the existing B2C, and become financially sustainable. However, there is no consensus within the team.

At this point, the instructor could ask why the students think Talita and her partners have difficulty making these segmentation decisions. That is because the problem goes beyond segmentation. Talita’s main challenge is how to line up financial sustainability with the social purpose of her business. The entire reason for Clubinho Preto’s existence is to help in the fight against racism to build a more diverse, equal, and inclusive society. How can this purpose become a sustainable business?

According to Hockerts (2006, p. 145), a social business exists where “an emerging social innovation is also seen as a viable business opportunity and turned into a commercial for-profit business creating, in the process, new market space while also simultaneously attaining a social objective.” For Bartlett and Ghoshal (1995, p. 88), the purpose is “a company’s moral response to its broadly defined responsibilities, not an amoral plan for exploiting commercial opportunity.” Purpose-driven businesses are those whose members - at all organizational levels - are inspired by and make choices consistent with that purpose (Gartenberg, 2022).

Traditionally there were only for-profit and nonprofit businesses with their characteristics and challenges. Business strategy theories concerning for-profit firms assume profit maximization for shareholders. Non-profit strategies assume the maximization of social value creation. Social businesses are in a hybrid space between for-profit and nonprofit (Wilson & Post, 2013). They face a paradox when using a market-based system to create social value. Figure 1 shows where social businesses are in the organizational landscape.

Figure 1
Social business location in the organizational landscape.

Question 2: In your opinion, did Talita’s purpose get in the way of Clubinho Preto’s value creation? Why?

A clear purpose definition is essential for creating value in a social business. The creation of value, whatever the type, is usually incorporated from its conception to the development of products and services. In traditional businesses, benefits are reserved only for shareholders, but in social businesses, the alignment of the social purpose, the market-based approach, and the business model allows the reallocation of value to multiple stakeholders. This approach influences every decision made. The interconnectedness of stakeholder interests drives their business models and becomes an opportunity for more value creation. The assemblage of multiple interests leads to a different way of doing business (Wilson & Post, 2013) where the financial goal of maximizing profit for shareholders meets win-win outcomes (see Figure 2 for customers, employees, suppliers, communities, and multiple stakeholders (Chandy et al., 2021). Talita’s purpose did not get in the way of Clubinho Preto’s value creation. Her business problem lies in the misalignment of purpose, market approach, and business model.

Figure 2
The impact of marketing.

Arc A-B-C in Figure 3 shows traditional enterprise trade-offs. A more profitable business requires a compromise regarding the amount of social value that can be created and vice versa. Traditional thinking suggests that financial return and social impact compete, so giving to one unavoidably takes away from the other. Therefore, the creation of economic wealth would be incompatible with social wealth. On the other hand, arc D illustrates ‘social business thinking’ (Wilson & Post, 2013, p. 729). Through this understanding, hybrid enterprises are designed to avoid those trade-offs since their beginning. As such, social businesses experiment with creative ways to invest in social causes while realizing financial returns and to invest financially while achieving social returns (Wilson & Post, 2013).

Figure 3
Traditional and social business thinking.

The historical undeserving of the black community can become a business opportunity. This is a market estimated at US$ 300 billion annually (Chui et al., 2021), a significant reason for companies in Brazil, the United States, and globally to compete in this market.

Question 3: Is it possible to sell a purpose? What aspects should marketing campaigns consider showing the business’s purpose far beyond profit?

Purpose today goes far beyond corporate social responsibility (Bonchek & France, 2018). Thinking about ethics in marketing decisions permeated the readjustment of the reason the business exists. Purpose is not philanthropy; it has to guide all of the parts and decision-making in the company. It must be inherent to the company’s operational system. Purpose guides and inspires everyone in the organization to create economic and social value together (Bonchek & France, 2018).

In a social business, the purpose has to be discussed at the highest-level strategy meetings. This affects hiring practices, vendors you work with, how you reward product development, and marketing (Bonchek & France, 2018). Mills-Scofield (2013) highlights Alex Osterwalder’s phrase about business models: “The most amazing business models are those where profit and impact live in harmony.” Only in this way will the company be perceived and recognized as a company that respects its purpose, creating social and economic values. Boncheck and France (2018) emphasize that it is necessary to transform purpose into a competitive advantage internally and externally. Externally, purpose can create social impact, while internally, it aligns and energizes the organization.

Rodriguez-Vilá and Bharadwaj (2017) suggest marketing strategies should consider ways for social purposes to create value by strengthening (or creating) brand attributes relevant to consumer choice. With the students, the instructor can analyze Clubinho Preto’s brand attributes³. A suggestion of Clubinho Preto’s brand analysis:

Trait: all African-Brazilian supply chain.

Benefit: reinforce the perception of unity and power around the lifting of a positive African-Brazilian culture.

Brand personality: promote awareness for the fight against racism.

Question 4: If you were to engage in a new social business, like Talita, how would you compare segments? What would you consider in the evaluation?

The instructor can first reflect with the students on which criteria can be used to evaluate segments.

Andreasen (2006) presents nine factors to consider in an evaluation:

• Segment size - How many people are in the segment? What percentage of the population do they represent?

• Problem incidence - How many people in the segment are either engaged in the problem-related behavior or not?

• Problem severity - The level of harm being caused by the level or seriousness of problem incidence.

• Defenselessness - To what extent can people ‘take care of themselves’ or what is the extent of the support required?

• Reachability - Can the audience be readily identified and reached?

• General responsiveness (readiness to change) - Is the segment ‘ready, willing, and able to change’?

• Incremental costs - Cost estimation to reach and influence the segment compared to other segments.

• Responsiveness to marketing mix - How responsive is this market likely to be to social marketing strategies (product, price, promotion, and place)?

• Which segment brings the best match between organizational capabilities (mission, expertise, and resources)?

The next step is to show how a company chooses a segment. The instructor can discuss the approaches in social businesses. Social businesses, with their marketing campaigns, can also influence mindsets and lead a transformation using their brands. The instructor can illustrate this with a product created by Lush Cosmetics during the COVID-19 pandemic, the 30-Second Soap (Contagious Magazine, 2021). The brand is known for its purpose to be sustainable, to be against animal testing, a user of minimal packaging, a defender of vegetarians, ethical buying, and handmade products. How is this purpose shown in a time of social need? The instructor can explore the video, linking purpose to the management of seminal marketing concepts such as segmentation, targeting, and positioning for social businesses.

The following questions can help stimulate discussion: Why segment social businesses? Is it important for business development? A point to discuss involving Talita’s case is the attraction of investors to expand Clubinho Preto. Soros (2021) highlights segmentation difficulties for social companies: “The mission equity formula can be adjusted to maximize alignment between investors, mission, and management, which is often a challenge for mission-driven companies.” Therefore, the mission has to attend to customers, suppliers, and investors’ expectations. Social businesses need to present to investors the relevance of their purpose, but also the business numbers - both real and expected. Another segmentation issue in social businesses refers to entrepreneurs justifying and defending their projects or the social and cultural tension they intend to improve. The social business purpose has rational criteria and evaluation for decision marketing because it is necessary to focus resources on the target market (Kotler & Lee, 2008). Which approach would you use to decide which segment to attend? In the case of Clubinho Preto, how does the limited budget impact your approach?

Social businesses do not have the resources to solve all the cultural and social problems, so entrepreneurs need to focus on a specific problem or community in a specific place where they can put their efforts to make their businesses succeed. Clubinho Preto has a limited budget that should be considered for that decision. Decisions about targeting, in this case, should be based on the bigger need (size, incidence, severity, and defensibility); readiness for action (readiness, disposition, and capability to respond); facility to reach (places available for distribution and communication); and better correspondence (mission statement, knowledge, and resources) (Kotler & Lee, 2008).

Finally, it comes to the decision-making moment for the case: In Talita’s place, would you enter the B2B market? If yes, which segment in the B2B market would you choose? Why? At this time, it is valid to return to the criteria evaluation of segments selected by the students and encourage them to analyze each possible segment. Instead of suggesting a specific correct answer for the case, the purpose of the case study method is to provide the student with a learning opportunity.

It is interesting to discuss the risks of expanding the market pointed out in Clubinho Preto’s case. Currently, the company attends to only a small number of consumers who value the brand and the product’s characteristics. They were the ones that elevated the company in its very beginning and helped make the business locally known. Expanding the market by including businesses could split Clubinho Preto’s efforts and attention away from its current consumers and end up driving them away. Individual consumers are the ones who ensure their income. In addition, expanding the market is not a guarantee that the desired new audience will accept the boxes. In conclusion, this change can put the company at risk since market segmentation and product positioning are inextricably linked (Green & Krieger, 1991).

The instructor can reinforce the importance of the alignment between purpose, market segmentation, and the choice of the target segment in defining the market positioning that the company will adopt and consequently developing the appropriate marketing mix to be presented in the following sessions.

Question 5: How can businesses with DE&I as a mission contribute to our society?

DE&I is important to business schools and society because it promotes change in the social representation of black people, indigenous people, women, and all non-white people who, over time, had their social representation stigmatized (Arsel, Crockett, & Scott, 2022). Social representation can be transformed over time through public and private inclusion policies as it is socially constructed, like habits, values, and culture. It can be changed according to the values set by society (Hamilton, 2014).

Prieto and Phipps advocate that it is essential for businesses today to have social sustainability. Society requests to reverse some inequality as “only 8% of managers and 3.8% of CEOs are black and where black women face exclusion and prejudice due to gender, skin color, and hairstyles” (Prieto & Phipps, 2021).

To catch up, social equity demands proactive and ongoing efforts. Empathy is not enough to change the numbers in business and society. Companies have to promote reflection upon what is uncomfortable, discuss what they don’t know, study, give feedback, limit defensiveness, grow from their mistakes, expect change to take time, and encourage their stakeholders to examine policies or assumptions that appear ‘normal’ but that may cause unintentional harm (Dukach, 2022).

Marketing is an excellent resource for creating social justice. Peñaloza and Venkatesh (2006) declare that the market is a place to express and produce cultural groups and relations. For that, the person behind marketing initiatives has to listen to their consumers, all of them - black people, indigenous, and women - to know what they need to feel included.

Furthermore, consumption can help reduce a system of limited choice options imposed on non-white consumers. Every day when it is not possible to buy a black doll or watch TV with black characters or journalists, black people do not recognize themselves as part of society. Bone, Christensen, and Williams (2014, p. 453)called this everyday racial ‘microaggressions.’ It is a kind of experience that impacts people’s sense of autonomy and self-esteem and has a cumulative debilitating effect on the physical and psychological well-being of minority consumers.

To finalize the case analysis, the instructor can point out to students that diversity and social inclusion is a growing market that companies have forgotten for a long time. Also, there is not much competition in the segments, there are no big players since the market for social inclusion is still beginning. The consumer audience seems to value the product and its benefits. For businesses and entrepreneurs, this is a chance to enter a promising market in its beginning and an opportunity to advocate for a social cause and help transform society’s values and culture for a better world. Business with a social purpose promotes a better world. And social marketing promotes marketing for a better world.

CLOSURE

The teacher’s objectives are to enlighten the students on the importance of purpose for the success of social businesses. ESG (environmental, social, and governance), DE&I (diversity, equity, and inclusion), and the United Nations’ SDGs (sustainable development goals) are the main trend topics in businesses and society nowadays. They should be intersectional subjects discussed in every business class. Furthermore, students should be able to relate that to marketing decision-making of creating value with a social perspective in mind.

As Casotti (2019) reminded us, marketing is not only about desires, feelings, fantasies, hedonism, and identities. It includes educational issues, prejudice, stigma, racism, gender vulnerabilities, and socioeconomic inequalities. Sheth and Sisodia (2005) point out the fact that marketing has ignored society’s concerns for a long time. Consumer social awareness has grown, pressuring businesses to adopt more responsible practices. Recently we could identify businesses facing challenges to change their behavior. In 2019, Dolce and Gabbana had to publicly apologize to the Chinese people for an advertisement considered to be disrespectful, racist, and sexist⁴.

Table 1
Topics in order of presentation.

When discussing Better Marketing for a Better World (Chandy et al., 2021), it is possible to see the role of marketing in contributing to the world’s improvement or decline concerning essential issues such as persistent poverty, inequity, illiteracy, insecurity, disease, climate change, pollution, and human trafficking, among many others. That role is not always clear. Discrimination, for example, can be seen in the domain of sociology and psychology, but consumer behavior regarding stigmatization is undoubtedly a subject of marketing (Crockett, 2017). Discrimination can be a side effect of targeting and segmentation, it can be implicit in branding and communications, and social media algorithms can boost it. There is also the reverse sense that should be considered of how the world can influence marketing. Surroundings can help shape the company and its marketing decisions. Climate change, for instance, can affect different aspects of marketing, including new product design, distribution channels, and brand positions. It should be clear to students that their responsibility as marketing professionals in creating a better or worse world. There is still a long way for us to reduce social inequalities, and social businesses and marketing can help achieve this goal.

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• 1
  . Shark Tank Brasil is an entertainment TV show in the same format as Shark Tank in the USA. The TV show selects entrepreneurs to pitch their businesses to four or five investors. The goal is to get investors to put money and expertise into the business: https://www.youtube.com/watch?v=CsF_Em288jA
• 2
  . Brazil. Lei nº 11.645 de 10/03/2008. Diário Oficial da União, 11 Mar. 2008. Accessed 24 February 2022. legis.senado.leg.br/norma/569484
• 3
  . Rodriguez-Vilá and Bharadwaj (2017) define brand attributes as characteristics that managers instill in a product or service, including features and benefits, as well as personality or reputation supported through marketing communications. A restaurant, for example, may use sustainably sourced ingredients (a trait), which can reinforce a perception of great taste (a benefit), and through marketing communications, promote reputation for environmental awareness (the brand personality).
• 4
  . Real Footage - Real News, Dolce and Gabbana racist advert, English subtitles (pizza, cannoli). https://www.youtube.com/watch?v=ragHYXS02ow

• JEL Code:

  M1, M14, M3, M31.

• Reviewers:

  Two reviewers did not authorize the disclosure of their identities.

• Peer Review Report:

  The disclosure of the Peer Review Report was not authorized by its reviewers.
• 
  # of invited reviewers until the decision:
  

  	1	2	3	4	5	6	7	8	9
  1st round

• Discipline:

  Marketing and Social Entrepreneurship

• Subject:

  Business Purpose, Diversity, Equity, Inclusion

• Industry:

  Education, Book

• Geography:

  Global

• Funding

  The authors reported that there was no funding for the research in this article

• Plagiarism Check

  RAC maintains the practice of submitting all documents approved for publication to the plagiarism check, using specific tools, e.g.: iThenticate.

• Copyrights

  The authors retain the copyright relating to their article and grant the journal RAC, from ANPAD, the right of first publication, with the work simultaneously licensed under the Creative Commons Attribution 4.0 International license (CC BY 4.0).

• Peer Review Method

  This content was evaluated using the double-blind peer review process. The disclosure of the reviewers’ information on the first page, as well as the Peer Review Report, is made only after concluding the evaluation process, and with the voluntary consent of the respective reviewers and authors.

• Data Availability

  RAC encourages data sharing but, in compliance with ethical principles, it does not demand the disclosure of any means of identifying research subjects, preserving the privacy of research subjects. The practice of open data is to enable the reproducibility of results, and to ensure the unrestricted transparency of the results of the published research, without requiring the identity of research subjects.

Edited by

Editor-in-chief:

Marcelo de Souza Bispo (Universidade Federal da Paraíba, PPGA, Brazil)

Associate Editor:

Sidnei Vieira Marinho (Universidade do Vale do Itajaí, Brazil)

Data availability

RAC encourages data sharing but, in compliance with ethical principles, it does not demand the disclosure of any means of identifying research subjects, preserving the privacy of research subjects. The practice of open data is to enable the reproducibility of results, and to ensure the unrestricted transparency of the results of the published research, without requiring the identity of research subjects.

Publication Dates

• Publication in this collection
  18 Dec 2023
• Date of issue
  2023

History

• Received
  24 Oct 2022
• Reviewed
  11 Apr 2023
• Accepted
  11 Apr 2023
• Published
  05 June 2023
• Published
  24 Nov 2023