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Ethics and Cause-Related Marketing

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  • 0:06 Cause-Related Marketing
  • 0:55 Pros for Cause-Related…
  • 2:19 Downside of…
  • 2:53 Negative Results of…
  • 4:11 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Do you avoid a specific store entrance when people are collecting money for charity outside? In this video, you will learn more about social responsibility and, specifically, the growth of cause-related marketing.

Cause-Related Marketing

It seems that no matter where you go now, consumers are being asked to donate money. Have you ever waited at a checkout line in the supermarket and been asked if you would like to contribute a dollar to a national or local charity? Or have you seen advertisements telling consumers that if they purchase a company's specific, special version of a product, a donation will go to a non-profit?

This is called cause-related marketing, and its growth has exploded during the last ten years. A more official definition of cause-related marketing is that it is the team marketing efforts of a for-profit and a non-profit business.

The trend has increased due to many reasons. The biggest is that the recession has made consumers more conservative with their money. If a product purchase results in helping those less fortunate, there is a positive psychological benefit to the consumer...or maybe even some guilt for not doing it.

Pros for Cause-Related Marketing

Cause-related marketing works. It is estimated that it generates $7 billion in revenue! In addition to being successful at bringing about profits, studies of cause-related marketing have shown that it increases positive public relations for both non-profit and for-profit companies.

Consumer purchases of cause-related products fell 7% between 2004 and 2007
Cause-Related Product Purchase Bar Graph

Some examples of companies utilizing cause-related marketing for positive results include The Gap, which donates money to (RED), which is a non-profit that helps fight disease in Africa. If you purchase a (RED) product, The Gap says it will give 50% of the profit to the non-profit organization.

One of the very first successful cause-related marketing campaigns occurred way back in 1983. The partnership was between American Express and the Statue of Liberty Restoration Project. The thrust of the campaign was that every time a consumer used his or her American Express credit card, one cent was donated to the restoration project, and if a consumer opened a new American Express account, then one dollar was given to the fund.

It was deemed successful with an increase in American Express usage of 28% and over $1.7 million was given to the Statue of Liberty Restoration Project. The success of this campaign gave marketers around the nation pause and made them also consider a partnership between a for-profit and non-profit as an option for success.

Downside of Cause-Related Marketing

Consumers have been increasingly hit with cause-related marketing campaigns and have grown very weary of being asked to constantly donate to numerous causes. This can cause a backlash with consumers actually avoiding places soliciting for donations or not purchasing products tied to charities. Consumers can feel overburdened, and want to not feel constantly responsible for society's issues. In a 2007 survey, 36% of consumers said they purchased a product based on a cause-related campaign, which was down from 43% just three years prior.

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