Cause Related Marketing: A Win-Win Approach

(A Conceptual Framework)

Dr. Amardeep Kaur Ahluwalia, Assistant Professor, GNDU Regional Campus,

Gurdaspur.

Ms. Simranjit Bedi, Assistant Professor, Khalsa College for Women, Amritsar.

Address : 50-51, Lal Avenue,

P.O. Rayon & Silk Mills,

Amritsar - 143001

PUNJAB.

Mobile : 95696-88722

E-mail ID : simran202122@yahoo.co.in

Abstract

Cause-related marketing (CRM) is a marketing tool that brings benefits to a sponsoring

company, a cause and a consumer. Companies all over the world are showing greater interest in

CRM because of the plethora of benefits it brings to key stakeholders and the increasing

consumer concern over socially responsible consumption. CRM appears to be a win-win

situation for businesses and non-profit organizations equally. This marketing strategy provides a

win for the charity or cause, a win for the consumer and a win for the business. CRM is a type of

corporate social responsibility initiative. Over the last decade, cause-related marketing (CRM)

has become a popular marketing strategy for companies. Academic research suggests outcomes

of CRM campaigns are generally positive for companies as well as for causes. For companies,

CRM has been noted to increase sales and enhance companies’ image. As for causes and the

organizations promoting these social issues, they received greater funding and publicity. Overall

the impacts of cause-related marketing on consumers’ responses are significant.

Keywords: Cause Related Marketing, Corporate Social Responsibility, Mutual Benefits,

Suggestive Measures.

INTRODUCTION

Marketing, now, is not merely about only the market. The focal point is getting wider day

by day. The companies are devising different strategies to contribute to societal development

activities along with their attainment of corporate goals and objectives. Cause related marketing

is one of those tactics that enables the marketers to involve the customers directly into the

process. (Babu and Mohiuddin, 2008). Simply providing quality products or services does not

suffice in today’s competitive business environment to win and establish the brand (Adkins,

2004). Most of the companies are using Cause Related Marketing as a strategic tool (Till and

Nowak, 2000) to build a positive corporate image in the minds of consumers (Chattananon et al.,

2008) which results in enhancing the sales of a company’s products (Varadarajan and Menon,

1988) and profits as well (Adkins, 2004). Also consumers have better perceptual associations

with those organizations that work with charities and good causes (Farache and Perks, 2008).

Cause marketing refers to a type of marketing involving the cooperative efforts of a

profitable business and a non-profit organization for mutual benefit. Typically in a Cause Related

Campaign, a brand is affiliated with a cause either environmental or social. To compete today,

brands need to constantly define their value in the world (1). Cause-related marketing(CRM)

represents the confluence of perspectives from several specialized areas of inquiry such as

marketing for nonprofit organizations, the promotion mix, corporate philanthropy, corporate

social responsibility, fund-raising management, and public relations. (Varadarajan and Menon,

1988). CRM aims to link corporate identities with nonprofit organizations, good causes, and

significant social issues through cooperative marketing and fundraising programs (Hans and

Gupta, 2013).

American Express first employed the concept of CRM in 1982 in the USA (Till &

Nowak, 2000). Each time someone used the card, 5 cents were donated to several arts

organizations participating in the San Francisco Festival. It was a successful endeavour and

encouraged the corporation to try similar actions on a national basis. In 1983, American Express

developed the programme for the renovation of the Statue of Liberty, which was probably the

first CRM programme to gain worldwide renown. Use of the card increased the sales by 28%

and US$ 1.7 million was donated to the project (Adkins, 2004; Barone et al., 2000).

CAUSE RELATED MARKETING (CRM) DEFINED

Varadarajan and Menon (1988, pp.60) defined cause-related marketing as the process of

“formulating and implementing marketing activities that are characterized by an offer from the

firm to contribute a specific amount to a designated cause when customers engage in revenue

providing exchanges that satisfy organizational and individual objectives”. Skory and Repka

(2004, p.2) posit that “Cause Related Marketing is simply marketing with a worthy cause”. Brink

et al (2006, p.5) stated that “CRM is a specific marketing activity in which the firm promises its

consumers to donate company’s resources to a worthy cause for each sold product or service.”

Amalgamating these three definitions, CRM may be described as the process of formulating and

implementing marketing activities that are characterized by a promise of the firm to donate

company resources to a worthy cause for each sold product or service satisfying organizational

and individual objectives. Adkins (2004) contemplates CRM as a strategic alliance between the

company and a cause for the achievement of mutual benefits. CRM is a program designed to

create a partnership between a company and a cause in order to raise money through product

sales.

Cause related marketing can be understood as a strategic positioning and marketing tool

which links a company or a brand to a relevant social cause or issue for mutual benefit. It is the

initiation and funding of deserving causes. Nothing builds brand loyalty among todays

increasingly hard to please consumers like a company’s proven and long term commitment to a

worthy cause (Hans and Gupta, 2013).

LITERATURE REVIEW

There has been a growing interest and attention in CRM based programs over the past

few years. CRM is growing and its growth is due to several factors such as increased awareness,

favorable consumer responses and positive consumer purchasing intentions towards CRM and

support of companies towards worthy causes which ultimately increases company’s profits.

Various studies have been conducted in respect of CSR and CRM at the national and

international level. The studies being reviewed in this concern are as below:

Varadarajan and Menon (1988) have seen Cause Related Marketing in the early stages

but completely in a projective way. They defined Cause Related marketing as the process of

formulating and implementing marketing activities that are characterized by an offer from the

firm to contribute a specified amount to a designated cause when customers engage in revenue-

providing exchanges that satisfy organizational and individual objectives. They have identified

large number of objectives but six main objectives seems more promising i.e. Increasing sales,

Enhancing corporate Stature, Thwarting negative publicity, Customer Pacification, Facilitating

Market Entry, Increasing the level of trade merchandising activity for brand promoted. They

suggested that causes can be categorized into three levels, national, regional and local.

Adkins (2000) postulated that CRM is not philanthropy, which expects nothing in return.

From her point of view it is merely good business for both non-profit and for-profit

organizations. CRM alliances should be a relationship of mutual benefit for the corporation, for

the charity and for the cause. For the corporation, the benefits include an increase in brand

awareness or even increased corporate profits. For the cause, the benefit comes in the form of

increased contributions and generating more awareness. CRM presents varied benefits in the

form of new customers, increased product sales, positive brand identity, enhanced corporate

image, competitive advantage, increased brand loyalty and sales, motivated employees,

signifying organizational values and enhancing reputation.

Till and Nowak (2000) declared that CRM is both a strategic and tactical approach. From

their perspective in a tactical approach a brand might embrace a cause for a restricted period of

time. The authors perceived the strategic approach as the heart of brand positioning. As such, the

alliance with the cause or non-profit organization is a crucial factor for the brand identity.

Barone, Miyazaki and Taylor (2000) noted that there were actually two approaches to

cause related marketing. The direct approach which tie the size of donation to sales of particular

products. For example, Proctor & Gamble promises and invites their buyers to purchase among a

large number of products belonging to P&G and help to educate the under privileged by

consumer participation in purchases. The second approach is indirect, providing no clear link

between revenue achieved and size of donation. For example, TATA tea worked with Janaagraha

on a voter- registration drive, with the campaign named “Jaago Re!” (“Wake Up”). Following

this, the company moved the campaign on to opposing corruption. By Jaago Re! Campaign it

engages itself with societal issues.

CONE Survey Report (2007) studied consumer expectations from U.S. companies and

how their perceptions can influence purchase intentions, willingness to hire and investment

decisions related to companies. Firstly consumers were studied; research was then extended to

employees, investors and other key stakeholder groups. Most Americans said when choosing

companies they are influenced if there is any relevance and consistency between the sustained

cause and the activity of a company. Environmental protection and sustainable development are

among the causes most appreciated by the Americans. The results suggested that 78% of

Americans believe companies have a responsibility to support social issues, 92% have a more

positive image of companies and products that support causes and 84% would be likely to switch

brands to one associated with a good cause, if price and quality were similar. The consumers

preferred local as compared to national and global cause.

Chaney and Dolli (2000) conducted a study in New Zealand and found that 57% of

respondents remembered purchasing a product that involved a cause-related marketing

campaign. In 15% of these cases, the respondents had switched brands because of the campaign

as they were readily willing to participate and contribute in such programs.

According to Stole (2006), Cause Related Marketing (CRM) is the hybrid of product

advertising and corporate public relations. He mentioned that there are six main types of CRM

arrangements. They are: advertising, providing cause’ message, public relations, tying up with

nonprofit organizations; corporate sponsorship, providing financial help to an event; licensing,

where a business pays to use a charity logo on its products or services; direct marketing, where

both a business and a non-profit raise funds and promote brand awareness; purchase-triggered

donations, wherein the company contributes an amount from the price of product to a social or

charitable cause.

Skory and Repka (2004) stated that CRM is used by marketers to change consumer

perceptions, attitudes and buying behavior. The concept focused on three ideas such as society,

environment and financial success. They found in their study that 78% of people have a more

favorable view of a company that contributes or sponsors a cause that they think is worthy.

Cause Related Marketing is a stimulating idea where both business and charity can benefit. It

also attracts new sources of funds, resources and support.

Shabbir et al. (2010) disclosed in their study relationship between Cause Related

Marketing (CRM) campaigns, brand awareness and corporate image as possible antecedents of

consumer purchase intentions in the less developed country of Pakistan. The data was collected

from 203 students studying in different universities of Rawalpindi and Islamabad. The findings

indicated that consumer purchase intentions are influenced by the cause related marketing

campaigns; it was also observed that the brand awareness and corporate image partially mediated

the impact of CRM campaigns on consumer purchase intentions.

Babu and Mohiuddin (2008) conducted a study using demographic variables. The

demographic variables were found to have great influence on the purchase decision making

process of customer. The findings have showed that a customer is influenced by the companies’

cause related marketing programs while adopting a new brand or executing its purchase

intension and the customers prefer to support generally health and life saving issues.

Farache (2008) conducted a study to understand consumers’ perceptions regarding CRM.

The study was performed on 200 consumers. The research established that consumers have a

better perception of firms that work with charities and good causes than those who do not. They

believe that the partnership between corporations and charities has an impact on the society.

However, they are aware that corporations themselves benefit from this partnership. Concerning

good causes, consumers prefer to support those associated to children benefits. The researchers

posit that an individual’s personal connection with a cause might have substantial influence on

consumer attitudes and behavior in relation to support of a specific cause.

OBJECTIVE OF THE STUDY The objective of the study is to understand the concept of cause-related marketing, the

benefits offered for the three entities i.e the company, the nonprofit organization and the

customer and make appropriate suggestions.

DATA AND METHODOLOGYIn this paper qualitative research methodology is used to understand the concept of cause

related marketing and its growing importance. The study is based on secondary data collected

from various published sources, books and websites.

CAUSE RELATED MARKETING – AN ELEMENT OF CORPORATE SOCIAL

RESPONSIBILTY

Cause-related marketing (CRM) is a common and popular form of CSR. Corporate social

responsibility (CSR) initiatives have become increasingly popular. Cause-related marketing as

part of corporate social responsibility becomes an increasingly used tool by companies operating

in the markets today. Cause Related Marketing (CRM) is a part of Corporate Social

Responsibility (CSR) actions, as the newly drawn Company Law Act of 2013 has laid a 2 per

cent of average net profit of last 3 years to be mandatorily spent on CSR by companies having

net worth of 5 billion or more or turnover of 10 billion or more or net profit of 50 billion or

more. Kotler and Keller (2009) view cause-related marketing as a part of societal marketing.

Corporate social responsibility and cause related marketing are more than buzz words today. In

recent times, corporate social responsibility has gained lot of importance among companies

because of its long-term benefits. Companies should be responsible to the society for their

activities and owe to the environment in which they operate.

Corporate social responsibility has become the buzzword and every organization is trying

hard to do something responsible and worthwhile in the society. It has also become mandatory as

per the law to show how the organizations are fulfilling their social responsibility (Sisodia et al.,

2013). CRM is defined as the process of formulating and implementing marketing activities that

are characterized by contributing a specific amount to a designated non-profit initiative that in

turn, causes customers to engage in revenue-providing exchanges (Mullen, 1997). It is the

combination of both marketing and CSR. Cause Related Marketing advocates the long term

partnership between the corporation and community.

VALIDATION FOR CAUSE RELATED MARKETING

Cause related marketing offers a lot of benefits for the society, the organization and for

the cause itself as it represents a co-alignment between a for profit organization and a non-profit

organization working together and complementing each other to gain mutual benefits. CRM

links companies with causes for mutual benefits. The concept of CRM suggests that it has two

objectives: (1) to improve corporate performance and (2) to help worthy causes.

In order to conduct CRM program, organizations in most cases partner with a non-profit

organization already working towards a social cause. Varadarajan and Menon (1988) have

specified six broad objectives for CRM partnerships:

Increasing sales

Enhancing Corporate image

Thwarting negative publicity

Customer pacification

Facilitating market entry and

Increasing the level of trade merchandising activities for the brands promoted

Originally, the most important business goal of a cause-related marketing program has been

to impact a company’s sales. Yet research has shown that, for companies committed to corporate

social responsibility, CRM programs can offer other benefits as well. Among the many benefits

of a cause related marketing campaign, they are (Kotler and Lee, 2005 and Cone Roper Study,

2007):

Attracting and retaining customers - the most innovative case is the one of American

Express Company. By the fundraising campaign to restore the Statue of Liberty the

company increased the use of credit cards, and attracted new customers.

Reaching niche segments- nongovernmental organization are working with marketing

leaders in order to reach niche consumers, to enter a specific audience and generate

interest towards an important campaign that could save lives and provide social welfare.

Partnering with nonprofit organizations can also help a company to connect with specific

demographic or geographic markets.

Increased consumer participation – this marketing strategy directly or indirectly invites

the buyers to participate in the cause. Once they buy the product of the company which is

engaged in the cause related program like child education, P&G –Shiksha, etc; Consumer

will more voluntary come to support the particular cause and buy the company's product

or services more often.

Increasing sales of products or services – It creates a positive image for the products and

the business organization in the minds of the customers, which directly promotes the sale

revenue.

Creating a positive image of a brand – by associating with supporting the cause, the

company will reach a larger visibility which will consolidate and strengthen brand equity.

It is a creative way to make awareness about the particular cause by which organization

or its products are engaged. It creates a positive impact over the customer in the purchase

process decision as cause related marketing provides a platform to generate the awareness

about the specific cause to its customer.

Raise funds for a social cause – example is the Avon brand, which positioned itself by

recruiting, training and motivating sales force, and created a strong CRM campaign to

fight against breast cancer.

Market Differentiation - CRM helps to create an alternative and distinctive approach to

brand advertising. In a competitive world, differentiating products using the traditional

attributes has become difficult. When price and quality are equal, the corporations are

using cause as a differentiator.

Reinforced Company Mission - CRM efforts can help communicate to employees,

customers, suppliers and other stakeholders a company’s commitment to corporate social

responsibility.

The possible benefits of cause marketing for nonprofit organizations include an increased

ability to promote the nonprofit organization's cause via the greater financial resources of a

business, and an increased ability to reach possible supporters through a company's customer

base. The possible benefits of cause marketing for business include positive public relations,

improved customer relations, additional marketing opportunities, and making more money for

the organization (2). Customers are not satisfied just to receive a product or a service; they

expect a value that goes beyond quality, in the area of social responsibility. Customers are

moving towards those companies that prove citizenship and assume responsibility. Market

research highlighted that most consumers will prefer to buy from those companies that are

engaged in supporting a cause, while there are no differences in price and quality of products or

services (Cone 2007). Previous research has indicated that deploying CRM leads to positive

consumer perceptions about the organizations and could result in higher purchase intention for

the brand (Webb and Mohr, 1998; Barone et al, 2000; Nan and Heo, 2007and Meenaghan and

O‟Sullivan, 2001)

SUGGESTIONS FOR CREATING A WINNING CRM STRATEGY

Although CRM campaigns help the companies to improve their corporate image, there

are also some measures which must be taken into consideration, for example, the selection of the

non-profit organization really matters a lot. In addition, highlighting the contribution to society

through electronic and print media can help the companies not only in enhancing brand

awareness but also in reducing consumer skepticism (Farache and Perks, 2008). Few basic

guidelines in marketing a cause related program are discussed below;

Identifying the right issue or cause - It is necessary to find before establishing any cause

related marketing relationship that an issue is aligning with the company’s product or

services, its market or its geographical community. Choose a cause which people relate

with. A cause which is appropriate in one country may not attract much positive response

from another country.

Selecting a right partner - It is necessary that a profit and a non- profit completely

understand each other’s goals and objectives. The relationship between the two must be

of a long term nature. For a long-term relationship, it is imperative that the two believe in

each other’s ideologies.

Establishing the relationship - There should be clear understanding of the nature of the

relationship of the two companies. Generally a formal document which spells out how the

fund is raised by the company and any limitations such as a maximum amount to be

contributed must be addressed in advance to avoid any future conflicts.

Checking the legalities - Certain important legal formalities such as the formal

agreement to use the non-profit organization’s name in promoting the cause, the national

laws and regulations, the liability resulting from the wrongdoing of the non-profit

organization etc must be settled.

Communicating partnership message - The most important part of the CRM is the

effective marketing campaign keeping in mind the target audiences but the publicity

should be subtle. Show the customers that the brand has actually benefitted the cause so

that they are assured that their association with company has led to some improvement in

a cause which is close to their heart.

Reviewing the results - Standards should be set both qualitatively and quantitatively to

track the results and performance of both the entities in terms of sales, profits and

contributions.

Moreover, the use of an appropriate celebrity for overall communication strategy in CRM

campaigns could produce better results for the company reflected in positive attitudes/feelings of

the consumers towards the company.

CONCLUSION

It is clear that Cause Related Marketing has come a long way since the days of charity

and general philanthropy. Today it is a global phenomenon which has developed into the new

way for business and nonprofit causes to joint venture to achieve mutual benefits. It supports a

cause with the power of the corporate brand, marketing, and people to achieve social and

shareholder value while communicating values. Thus, corporate social responsibility and cause

related marketing have become important for all companies to design their marketing

communication strategy and they have emerged as a tool for effecting public perception which

eventually leads to building strong brand image and enhancing customer loyalty. Cause-related

marketing is more prevalent today because CRM is able to enhance corporate image and profits

as well as increase funds for a multitude of causes. The growing popularity of CRM is indicative

of a promising trend, acknowledging not only that business success is attuned with the public

good, but that both can be achieved in agreement. Corporations must recognize that even if the

concept of CRM is commendable, its misuse can lead to disastrous results. Care and discretion

should be exercised by the firms and causes in the design and implementation of such

partnerships.

BIBLIOGRAPHY

Books & Journals

Adkins S (2000) “Cause Related Marketing: Who cares wins”, Oxford: Elsevier

Butterworth-Heinemann.

Adkins S (2004), “Cause Related Marketing: Who cares wins”, Oxford: Elsevier

Butterworth-Heinemann.

Babu, M.M. and Mohiuddin, M. (2008), “Cause Related Marketing and Its Impact on the

Purchasing Behaviour of the Customers of Bangladesh: An Empirical Study”, AIUB

Business and Economics Working Paper Series, Working Paper No. AIUB-BUS-ECON-

2008-05, http://orp.aiub.edu/WorkingPaper/WorkingPaper.aspx?year=2008.

Barone, M. J., Miyazaki, A. D., and Taylor, K. A, (2000), “The influence of cause-related

marketing on consumer choice: Does one good turn deserve another?” Academy of

Marketing Science Journal 28 (2), pp. 248-263.

Bloom, P.N., Hoeffler, S., Keller, K.L., and Meza, C.E.B. (2006), “How Social Cause

Marketing Affects Consumer Perception”, MIT Sloan Management Review, Vol. 47 (2),

pp. 49-55.

Carringer, P.T. (1994), “Not Just a Worthy Cause: Cause-Related Marketing Delivers the

Goods and the Good”, Am. Advert, Vol. 10, pp. 16-19.

Chaney, I., and Dolli, N., (2000), “Cause-related marketing in New Zealand”,

International Journal of Nonprofit and Voluntary Sector Marketing 6 (2), pp. 156-183.

Chattananon A, Lawley M, Supparerkchaisakul N, Leelayouthayothin L (2008). “Impacts

of a Thai cause-related marketing program on corporate image”, International Journal of

Emerging Markets, 3(4), pp. 348-363.

Collins, M. (1993), “Global Corporate Philanthropy – Marketing beyond the call of the

duty”, European Journal of Marketing, Vol. 27 (2), pp. 46–58.

Cone Roper, (2002), “Cone corporate citizenship study: The role of cause-related

marketing. Executive Summary”, Available from the Cone Web site:

http://www.coneinc.com/Pages/pr_13.html.

Corbishley, K .M. and Mason R.B. (2011), “Cause-related marketing and consumer

behaviour in the greater eThekweni area”, African Journal of Business Management, Vol.

5 (17), pp. 7232-7239, Available online at http://www.academicjournals.org/AJBM

Farache F, Perks KJ (2008), “Cause Related Marketing: Consumers’ Perceptions and

Benefits for Profit and Non Non-Profits Organisations”. BAR, Curitiba, 5(3), pp. 210–

224.

Gupta S, Pirsch J (2006), “The company-cause-customer fit decision in cause-related

marketing”. Journal of Consumer Marketing. 23(6), pp. 314–326.

Hans, Atul and Gupta, Anil (2013), “Cause Related Marketing CRM: a win-win

arrangement - (for both Nonprofit making organizations and profit making

organizations)”, International Journal of New Innovations in Engineering and

Technology (IJNIET), Vol. 1, Issue 4, pp. 51-54.

Kotler P. and Lee N. (2005), “Marketing Management”, Pearson Education, New Delhi.

Kureshi, Sonal and Thomas, Sujo (2014), “Cause Related Marketing – An Indian

Overview”, Working Paper No. 2014-04-03, Indian Institute of Management,

Ahmadabad, pp. 1-12.

Meenaghan, T. and O‟Sullivan, P. (2001), “Sponsorship and Advertising: A Comparison

of Consumer Perceptions”, Psychology & Marketing, Vol. 18, No. 2, pp. 191-215.

Mullen, J. (1997), “Performance-based corporate philanthropy: How ‘giving smart’ can

further corporate goals”, Public Relations Quarterly, Vol. 42 (2), pp. 42-48.

Nan, X. and Heo, K. (2007), “Consumer responses to corporate social responsibility

initiatives: examining the role of brand/cause fit in cause-related marketing”, Journal of

Advertising, Vol. 36 No. 2, pp. 63-74.

Ptacek, J.J. & Salazar, G. (1997), “Enlightened self-interest: Selling business on the

benefits of cause related marketing”, Non-Profit World, Vol. 15 (4), pp. 9-15.

Quinones, Victor and Rebollo, J. (2009), “Cause Related Marketing and its Effects on

Employees”, Forum Empresarial, Vol. 14(2), pp. 19-37.

Shabbir, S., Kaufmann, H.R., Ahmad, I., and Qureshi, I. M. (2010), “Cause related

marketing campaigns and consumer purchase intentions: The mediating role of brand

awareness and corporate image”, African Journal of Business Management, Vol. 4(6), pp.

1229-1235.

Sisodia, R. S, Vyas, Rahul and Maheshkar, Snheal (2013), “Cause Related Marketing : A

Path Maker to Doing Socially Responsible Business”, Pacific Business Review

International, Vol 5, Issue 11, pp. 108-111.

Skory M. and Repka S. (2004), “The Description of Social, Cause-Related Marketing

and Corporate Social Responsibility”, Journal of the Canadian Institute of Marketing,

Vol. 7 (2), pp. 1-3.

Stole, I. (2006), “Cause-Related Marketing: Why Social Change and Corporate Profits

Don’t Mix”, The centre for media and democracy’s reporting on spin and disinformations

since 1993, http://www.prwatch.org/node/4965.

Till BD, Nowak LI (2000), “Toward effective use of cause-related marketing alliances”,

Journal of Product and Brand Management, 9(7), pp. 472-484.

Varadarajan, P.R, Menon, A. (1988), “Cause-Related Marketing: A Co-alignment of

Marketing Strategy and Corporate Philanthropy”, Journal of Marketing, Vol. 52 (7), pp.

58-74.

Webb, J.D. and Mohr, L.A. (1998), “Typology of customers responses to cause related

marketing: From skeptics to socially concerned”, Journal of Public Policy & Marketing,

Vol. 17 No. 2, pp. 226-239.

Web Links

1. http://www.tiltindia.co.in/magazine/2014/07/05/cause-related-marketing/

2. http://en.wikipedia.org/wiki/Cause_marketing

3. http://www.conecomm.com/stuff/contentmgr/files/

0/7c6165bb378273babd958415d58ec980/files/

2002_cone_corporate_citizenship_study.pdf

4. http://www.prlog.org/10249898-web-business-community-turn-back-to-charity.html