Shawn has a masters of public administration, JD, and a BA in political science.
If you ever attended a charity event sponsored by one or more companies, then you have been exposed to cause-related marketing (CRM). CRM occurs when a company forms a strategic relationship with a specific social cause or causes that are mutually beneficial to all parties. Advantages to the company include:
- Developing goodwill
- Increasing reputation
- Differentiating from the competition
- Boosting organizational morale
- Increasing brand awareness
- Increasing customer loyalty
- Developing good public relations
Benefits to the social cause include:
- Increases in funds provided by the partnering company
- Increases in donations through greater exposure
- Greater public awareness of the cause, its supporters, and the activities undertaken to advance the cause.
Some scholars have identified some concerns with cause-related marketing:
- Both the short-term and long-term effects of CRM on other sources of income available to charities are known
- There is concern that donations and support from the company will dry up for causes if the companies engaging in CRM do not see a sufficient return on their investment
- Individuals may be less likely to donate if they think they are doing so through their purchases of certain products
- Long-term sustainability of the cause may be threatened if funding sources dry up and the company pulls out of the partnership
- There is an ethical and moral issue about a shift from the intrinsic motivation of a company towards social responsibility to using social causes as an instrument to increase profitability and market share
- A company may risk alienating certain consumers that may be hostile to certain social causes
Let's pretend you are the president of a new running shoe company. You are looking at various marketing options. You are an avid runner and a strong health and fitness advocate that is very concerned about the growing childhood obesity problems currently facing the country. You and your marketing team conduct some research and find a new charitable organization that provides community health and fitness programs for children and adolescents. You contact their fundraising director to see if they would like to work with your company. You agree to sponsor a series of annual 'fun runs' in your key target markets where children participate in a one-mile run. You also cosponsor year round jogging clubs at local elementary, middle, and high schools where you provide free t-shirts and discounts for your running shoes to participants.
You agree to provide all funding for the fun run and the school jogging programs. In return, you get your name attached to all events, on all the t-shirts in the jogging program and can set up a vendor booth at each event. The charity gets use of your funds and keeps all funds raised from the events, except for any sales made by your company, of course. However, you do agree to donate 50% of the net profit of each sale made at events to the charity.
Cause-related marketing occurs when a business enters into a partnership with a charitable organization to support and advance a social cause. CRM can help expand a company's goodwill, increase its reputation, differentiate it from the competition, increase company morale, create greater brand recognition, and better public relations. Benefits to the social cause include greater public awareness and an increase in donations from greater exposure as well as increased funding provided by the partnering company. Concerns with CRM include long-term vulnerability for the cause if the company terminates the relationship, the risk that public donations will decline because of corporate funding, and ethical concerns of a social cause being used as an instrument of corporate profit. A company must also be sure to select causes that will not likely offend most of its customers.
Lesson at a Glance
Cause-related marketing occurs when a company forms a strategic relationship with a specific social cause or causes that are mutually beneficial to all parties. Although there are advantages and disadvantages associated with cause-related marketing, both parties need to weigh those options to ensure the relationship will ultimately be a success with respect to its goals.
Discover your capacity to carry out these goals when you've reviewed the lesson:
- Define cause-related marketing
- List the advantages and disadvantages associated with cause-related marketing
- Present an example of cause-related marketing in action
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