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.
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.
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
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.
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.
Sometimes if the campaign is done in poor taste or run ineffectively, a cause-related marketing campaign can actually cause a company to lose money. The popular Yoplait yogurt campaign, which ran in partnership with the Canadian Breast Cancer Foundation, was viewed with conflicted interest by consumers. Consumers had to clean and save each Yoplait lid for a 10-cent donation. Consumers quickly realized that they would have to eat three cartons of yogurt per day for more than three months in order to reach a sizeable donation of just $20! The last straw was the fact that consumers had to spend even more money mailing the lids to the company.
Faux cause-related marketing has emerged more recently. This is where companies try to mimic a real cause theme, but in actuality, they are being deceptive and making fun of the issue.
A recent example was Groupon's first Super Bowl ad. One ad looked as if the company was in partnership with helping Tibetans, but in reality, it was showcasing someone using a Groupon coupon at a Tibetan restaurant. The ad was viewed in poor taste, and it hurt the company's image.
Consumers have to decide for themselves if a company is truly invested in the cause or if it is just a marketing scheme. Consumers should also investigate how much of their product purchase price is really passed on to the charity.
Cause-related marketing is the team marketing efforts of a for-profit and a non-profit business. There is an increasing trend of marketers using this type of consumer engagement. One pro of using cause-related marketing is that if it's done correctly, it can create a financial windfall for both the profit and non-profit company. It can also create positive public relations and happy customers.
The negative aspects of cause-related marketing include consumers burning out from constant requests for donations and actually avoiding a place of business or product because of it. Lastly, if the process is not done correctly, it can hurt a company's image and run off its customers.
After watching this lesson, you should be able to identify the positive and negative effects of cause-related marketing.