Cause Related Marketing: Giving More Than Just Spare Change?
Published by MBA Skool Team, Published on July 03, 2013
Today’s marketplace is flooded with brands in all product categories. With ever-increasing competition, a company is expected to conduct business such that it stands for not just the financial returns to itself but for comprehensive social and economic returns to the customers and the society at large. Customers of today believe that a company rather than solely working on the bottom line for the owners also has certain obligations to the society. In fact, a company that stands for more than just profits connects better and longer with the customers.
She can you can by Tupperware, Soldier for Women by Gillette, Real beauty sketches by Dove, Thank you mom by Proctor & Gamble and Jaago re by Tata Tea are thus a few examples of attempts made by leading corporations across the world to do well by doing good. These campaigns are launched under a marketing strategy rooted back in 1983, when Jerry Welsh, the then vice president of American Express announced a donation of $1 for every new card issued and $0.01 for every transaction to restoration of the Statue of Liberty. He termed this novel strategy as ‘Cause-related Marketing’.
What is cause related marketing?
Cause related marketing is a marketing strategy wherein a product/service/brand/company is marketed in association with a designated ‘cause’. This identified cause is generally a problem that is prevailing in customers’ setting. It can be social like women empowerment, child welfare, health and hygiene, environmental like global warming, wildlife conservation or even abstract motivations like friendship, family bonding, patriotism etc. Cause marketing campaigns are used by companies strategically to create brand differentiation by enhancing brand equity and credibility. Now, more than ever, the companies are realizing the power of aligning themselves with the causes. Earlier it was used mostly to augment sales and profits, but now it is used as a compelling brand positioning tool as it works on invigorating brand equity and enhancing corporate image with significant economic and community impacts.
Cause-related marketing: a distinct strategy
Cause Related Marketing and Corporate Social Responsibility (CSR) are often used interchangeably but there exists a vast difference between the two, especially in terms of their drive. CSR is a responsibility an organization undertakes for welfare of society. It refers to the philanthropic activities done by the company, commonly in fields of environment and social welfare. The underlying objective is to project oneself as a responsible corporation resulting in positive brand image in eyes of consumer. It is purely altruistic in nature, at least in definition. Cause Related Marketing on the other hand is a marketing strategy done with a sole objective of building surplus i.e. profit and goodwill. It is done by associating the product with a designated cause which can either be environmental, social or political and is characterized as a profit-motivated giving. It is a strategic move to lure the consumers relating with the cause. Unlike CSR, it is more targeted approach and a less selfless philanthropy.
Another phenomenon cause marketing is often confused with is sales promotion. The offering of an economic incentive to motivate consumers to engage in revenue exchange relationships with the company, the salient feature of any sales promotion activity, is not the characteristic of cause related marketing; rather it is the contribution by the company to the associated cause when a consumer engages himself in such exchanges. Therefore, cause marketing, if at all, is somewhat a middle ground between range of activities aimed at positively affecting business (sales promotion) and those based on purely altruistic considerations (corporate social responsibility) and thus a distinct, rather shrewd strategy in itself.
Company-related and cause-related objectives
Cause related marketing can be employed by a company to achieve a number of marketing objectives, primarily, gaining visibility, generating increased sales, promoting repeat purchases, increasing brand recognition, enhancing and reinforcing brand image, broadening customer base and facilitating entry.
Cause related objectives of cause marketing programs include generating awareness for the cause and cause organisation, its mission and aims, augmenting visibility and exposure, raising funds and resources, promotion and most importantly to encourage individuals to volunteer their services for cause benefit.
Cause marketing practices
Cause related marketing is a flexible tool and can be employed in varied ways. Some of the common forms of providing assistance to cause organisations are:
This is the classic form of assistance to cause wherein a company donates a part of every sale of the affiliated product to the cause organisation. For a long time this was the only form of assistance but with rigorous advent of the strategy, more forms of practices have come up, though, this still continues to be the most commonly practised form. Many examples can be quoted for this practice, a famous one being ITC’s INR 1 donation for every four Classmate notebooks sold, and a more recent Nihar naturals 2% of every oil bottle donation to CRY for child welfare.
Under these programs, the cause is promoted and some contribution, not necessarily monetary, is made by the company. Examples for these are Tata Tea’s Jaago Re campaign where the company propagandized against corruption and enthused the youth to vote, Hindustan Times’ No TV day launched each year in Mumbai encouraging family bonding and Airtel’s Har Friend Zaroori campaign which promotes friendship.
This can be a lucrative practise for both - the company and the non-profit organization. Commonly, a non-profit licenses it logo, brand and name to the company which can place the same on its product. A percentage of sales of each product carrying the imprimatur then goes to the cause organisation. For instance, World Wildlife Fund licensed use of it logo and name to Visa, which in turn donated a percentage of each transaction back to WWF.
Time frame of program
Cause marketing campaigns can be both strategic (long-term) and tactical (short-term). It is generally found that long-term associations aid in enhancing brand loyalty, improving brand image and reducing skepticism regarding company’s motivation. An example is Proctor & Gamble’s Shiksha campaign which has been contributing to the cause of child education since 2004. However, companies at time prefer short-term associations as it calls for limited advertising costs and bigger impact advantages such as Lifebuoy’s ‘Roti Reminder’ at the Kumbh Mela 2013, which promoted the cause of hygiene.
Choice of cause
There is a lot of this and that research when it comes to selecting the cause to associate with. An important variable when selecting a cause is the fit between cause and company’s profile. For example, Maggi launched the Atta noodles promoting Taste bhi health bhi is an example of high cause company coherence, with the cause being health, whereas Aircel’s Save the tiger is fairly lower coherent. It is generally observed that high coherence impedes the suspicions arising in customer’s cognition and hence catalysing the purchase intent. However, these may be insignificant in case of high customer involvement with cause. A company should be cautious of narrowing down on a cause penetrating deep in the emotional quotient of the targeted customer base. This is crucial because cause marketing bases its foundation in the emotional acumen of customers, and associating with a cause that triggers the most positive response from customer’s will result in higher purchase intent due to higher urge to benefit the cause.
Ethical issues regarding cause-related marketing
Cause marketing appears as an all-win phenomenon, but in reality it is not so. In fact, the mere nature of this strategy calls for extreme caution on ethical grounds because it deals with sensitive problems prevailing in the society and also carries with it a great potential to impact customer’s emotions, especially the ones closely relating with the designated causes. It is often feared that companies, instead of social responsibility they undertake on affiliating with a cause, focus only on gaining the aforementioned advantages to fulfil profit-gaining responsibility bestowed upon by the owners. The affiliation between a company and a cause organisation can thus at times damage the cause. The thin line between cause-association and cause-exploitation can be crossed in several ways like meagre percentage of donation amount compared to revenue generated owing to affiliation, unfair selection of cause by affiliating with only the more popular cause to generate higher revenues and undue advantage of customer’s lack of knowledge due to blurred transparency of cause-company agreement.
Cause related marketing fills a crucial void in society by giving the individuals an opportunity to contribute to the causes they feel for. It raises ethical issues but at the same time is not without benefits for cause organisations. Cause related marketing, thus, if executed creatively, carefully pairing cause and company and following the essential ethical code, can emerge as a rare and strong marketing tool converging social and corporate interests, benefitting both equally.
The Article has been authored by Arushie Mangla, IIM Ahmedabad and Urvi Agrawal, A.T. Kearney
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Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.
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