Theoretical Background: Introduction to Cause-Related Marketing

Abstract

Nowadays, the importance of cause-related marketing (CRM) is unquestionable, and it has become one of the main initiatives in corporate social responsibility (CSR). Since 1983, when the first campaign called in that way was developed by American Express in the USA, CRM has grown in popularity, and CRM examples can be currently found around the world.

In this theoretical chapter, some definitions and core concepts are considered, and types of CRM are analyzed. The main steps of a CRM program for its implementation are also explained. Finally, ethics and cultural differences are referred to as key aspects in CRM campaigns.

FormalPara Learning Objectives

• 1. To discover the importance of cause-related marketing for companies, nonprofit organizations, consumers, and society in general

• 2. To define cause-related marketing, its main characteristics, and key aspects, distinguishing it from other terms

• 3. To show different types of CRM

• 4. To study the main advantages and disadvantages of CRM

• 5. To define the main steps to follow in an implementation of a CRM campaign

• 6. To understand ethical dilemmas that can appear in CRM

1.1 Introduction

Example

“1 package = 1 vaccine” (if you buy a Dodot package, you will donate a vaccine to Unicef to fight against tetanus …); “1 Danone = 1 life seed” (if you buy a Danone yogurt, you will donate the value of 1 seed to the Red Cross, for food security projects …); “1 Teddy = 1 Euro donated” (if you buy a teddy, IKEA Foundation will donate 1 Euro for children education …); “Donate 1 Euro in your invoice and collaborate with the children” (Meliá Hotels & Unicef); etc.

These are only some examples of cause-related marketing (CRM) campaigns, in which companies collaborate with nonprofit organizations (NPOs) donating an amount of money (or goods/services) for a social cause when customers buy the product/s involved in the campaign.

The importance of CRM is unquestionable. CRM has become one of the main initiatives in corporate social responsibility (CSR). Since 1983, when American Express developed the first campaign called in that way,¹ CRM has grown in popularity. Thus, the convergence of social, economic, and political pressures (Austin, 2000: 69) helped the development of CRM in the 1980s (◘ Fig. 1.1): (1) consumers were becoming more conscious about companies “behind” the products they bought, influencing their observation on their purchase behavior, and they were more demanding of corporate ethical behaviors; (2) some companies tried to satisfy these consumers, creating their own philanthropic foundations, to ensure the social welfare and assume their social responsibility (their corporate image was quickly improved and a differentiation based on values was achieved); and (3) the growing number of NPOs and the “cut” in the public aid budget for them increased the “competition” among them to obtain financial resources and to operate.

Fig. 1.1

Main actors in CRM. (Source: Own elaboration)

CRM programs offer numerous advantages for all the main parts implied: companies, nonprofit organizations, and consumers (and, consequently, society in general). For this reason, it was quickly imitated by other companies in the USA but also in other countries. Thus, CRM has become an important strategy for all kinds of organizations from any sector. Currently, CRM examples can be virtually found in every country around the world.

1.2 Definition and Main Characteristics

Cause-related marketing (CRM) is considered as one of the main initiatives of corporate social responsibility (CSR) (Galan – Ladero & Galera – Casquet, 2018; Kotler & Lee, 2005). CRM is defined as:

An agreement between a company and a non-profit organization to collaborate in a social cause and get mutual benefit. The commitment of the company focuses on contributing (financially or in kind) to the cause in terms of sales. Therefore, the donation will depend on consumer behavior.

(Adapted from Santesmases 1999: 1004; Kotler & Lee 2005: 23; in Galan, 2012) Thus, CRM is not social marketing nor nonprofit marketing.

CRM was initially considered a commercial activity, a marketing mix tool (classified as a type of sales promotion or as public relations); later, CRM was described as an example of corporate philanthropy linked to a marketing strategy; subsequently, some authors started to consider it between the conventional for-profit marketing and the nonprofit marketing (e.g., Alaviitala, 2000); and nowadays it is considered a CSR initiative (Kotler & Lee, 2005; Nelson & Vilela, 2017) belonging to the holistic marketing approach, where sustainability is also considered.

Therefore, its main objective is to positively influence consumer attitudes and buying behavior (Fries et al., 2009). Thus, the most relevant characteristics are (Galan – Ladero & Galera – Casquet, 2018) as follows:

• 1. There is a link between a for-profit organization (a company) and a nonprofit organization (a NPO), in order to support a social cause and obtaining a mutual benefit (Penelas – Leguia, Galera – Casquet, Galan – Ladero, & Valero – Amaro, 2012).

• 2. The donation (monetary and/or in kind) is conditioned by sales (CRM ultimately depends on consumer behavior – if he/she buys the product/s or uses the service/s – linked to the CRM campaign).

1.3 Types of Cause-Related Marketing Programs

CRM campaigns have evolved along this time, and many types of CRM programs can be distinguished, according to different criteria (Galan - Ladero, Galera - Casquet, Valero - Amaro, & Barroso - Mendez, 2013), such as:

• The donation type (e.g., in some campaigns, a specific amount of money is donated for each product sold; in others, a specific amount of product (good or service) is donated for each application; some other campaigns donate a fixed amount of money or a percentage of sales or a percentage of profits)

• The product type (although CRM was initially applied to financial products (credit cards), it has subsequently been extended to practically all types of products – goods and services – in all sectors: FMCG, toys, clothes, mattresses, cigarettes, soft drinks, fast food, luxury products, jewelry, phone calls, hotels, flights, etc.)

• The number of products linked to the campaign (e.g., some campaigns are linked to a specific product, but others include some products; and other campaigns are related to all the products of the company)

• Firms or nonprofit organizations involved (e.g., in some campaigns, only one firm and one nonprofit organization take part in them; but, in others, there are several ones – profit and nonprofit organizations – and, in other campaigns, other type of organizations are implied: universities, town councils, etc.)

• Its duration (e.g., some campaigns are developed for a short period of time – a day, several days, several weeks – but others are extended for a long period of time, several months or years indeed; and some of them can be offered indefinitely)

• Its geographical scope (e.g., some campaigns focus on a local scope, while others are for a regional scope; national, international, or global scope can also be found in other campaigns)

• The supported cause (e.g., there are a wide variety of possible causes: childhood in need, research about a certain disease, fight against hunger and poverty, environment protection, child welfare and education, etc.)²

• The media used (e.g., some campaigns use traditional mass media, such as TV, radio, or press; but many of them are also using social networks, Apps, and other technologies – SMS, websites, emails, banners, blogs, YouTube, etc.)

• Who pays the donation (e.g., in some campaigns, only the company pays the cost of the donation; but in others, it is only the consumer who makes the donation to the cause; and there are other campaigns where both, company and consumer, each pay a part of the donation).

1.4 Advantages and Disadvantages

CRM programs offer numerous advantages for all the main parts specially implied: companies, nonprofit organizations, and consumers (Galan - Ladero et al., 2013):

• For companies: tax incentives, purchase motivation (new values are added to the product and offered to the consumers); increase on sales and market share; promotion of the product/brand/corporation; customer loyalty and expansion of the customer base; employee motivation, commitment, and loyalty (low turnover); improvement of organizational image, corporate reputation, and positioning; a competitive advantage (differentiation from competitors, based on ethical and social dimensions); access to the media (better conditions or, indeed, free advertising) and visibility; attraction of good investors; improvement of relationships with stakeholders; etc.

• For nonprofit organizations: diversification of funding sources; logistical support; an increase of program effectiveness; cause/mission spreading; visibility and better access to the media; enhancement of their image and participation in society; an increase on the number of partners, donors, and volunteers; learning from the company (e.g., management, professionalism, etc.); awareness about a social cause; education on values; improvement of relations with society; etc.

• For consumers: new values added to the product; ability to participate in charitable causes; knowledge about the situation of certain groups and populations from other countries; purchase awareness and satisfaction; etc.

But also some disadvantages:

• For businesses: a negative image, if consumers consider the company’s strategy as only commercial (to increase sales), a corporate image “washing”, and/or to sell low-quality products; possibility of conflict with the NPO; credibility and reputation losses, if the NPO is controversial (e.g., Oxfam scandal,³ in 2018); results can be non-immediate; or if the cause chosen is not appropriated

• For nonprofit organizations: loss of prestige if the campaign is not well designed, or it is only “mercantilist,” or if the company has unethical behavior; loss of its essence and identity, if the company interferes; possibility of conflict with the company (e.g., if the company asks for many restrictions, or exclusivity indeed); a decrease on resources and donors, if they do not accept the program; work overflow, if the campaign has a sweeping success; if the corporate collaboration is only in the short-term; or if the NPO selection is only according to its attraction power

• For consumers: it is easy to “clean” consciousness without losing the consumerist habit (especially in Christmas or Ramadan, a special time for religious people where they are more sensitive and donate more); it is not a real solution for social problems; and there is not usually enough information about the final destination of the funds obtained in the campaign; or incitement to consumption: loss of the guilt feeling over the purchase of luxury products

However, a position of excessive intransigence of the NPOs regarding business behaviors, imposing them ethical codes, can easily lead to companies choosing to carry out CRM actions for themselves through institutions created for this purpose (Garcia, 2000), as their own foundations.

1.5 Key Aspects in Cause-Related Marketing Success

There are different key aspects to be considered in CRM campaign to success (Fundación Empresa y Sociedad, 1999):

• Coherence (among the cause, the company, the NGO, the product involved, etc.). For example, products should be ethical and in accordance with the values that the NGOs defend.

  Example

  At the beginning, campaigns like Fortuna’s (1999) or Hasbro’s (2000 & 2001) were pointed out in Spain because of their lack of coherence (or negative coherence):

  Fortuna “For 0.7”: a cigarette brand donated 0.7% to humanitarian projects in the Third World. It was harshly criticized for several reasons: (1) It was a product considered unethical, because it harms health; (2) initially, the bases to request the donation funds by interesting NGOs were not available; and (3) the campaign focused on supporting humanitarian projects in the Third World, when precisely that was its new target market, after the restrictions on tobacco consumption that were being imposed in North America and Europe, and laws were not so strict about the proportions of components that each cigarette can have.

  Hasbro (2000 & 2001): although this campaign was very well planned, paying attention to all the details, it was criticized because this company (which sells a war toy line) was linked to ACNUR Spain, a NGO that helps refugees from war conflicts (although the specific toy linked to the campaign was unarmed – it was an adventurous journalist).

  However, over time, the incoherence has been addressed, and, nowadays, organizations take great care that campaigns are consistent. Thus, for example, Danone’s campaign “A Big Family for 1 million children” (◘ Fig. 1.2), launched in Spain in the last quarter of 2020 and developed in collaboration with the Red Cross and FESBAL (Spanish Federation of Food Banks), allocated 20% of the profit of the Danone natural yogurt pack (×8) to these two nonprofit organizations to help feed children in need. Therefore, Danone intensified its commitment to the groups most disadvantaged by the COVID crisis and to the Food Banks. In this case, there is great coherence between the company, the NGOs, and the chosen cause (“healthy, inclusive, and sustainable food”).

Fig. 1.2

2020 Danone’s campaign. (Source: “Used with kind permission by Danone” (2020)

“Danone, a big family for 1 million children,” in English. “By buying a Danone Natural family pack, you are donating healthy food to a child in need”

• Commitment (in the long term, encompassing the entire organization to give credibility to the campaign). For example, preventing CRM campaigns from being only at Christmas (in countries with a Christian tradition) or at Ramadan (in Muslim countries) or when there is a natural catastrophe.

Example

Avon has been collaborating in the fight against cancer for many years uninterruptedly. However, many companies only wanted to collaborate during 1–2 weeks and especially at Christmas or Ramadan times.

• Communication (to achieve transparency and quality information): before the campaign (explaining the main aspects of the program), during the campaign (presenting partial results and explaining its evolution), and after the campaign (showing the final results, detailing the amount given to every project, making available a website to follow the evolution of the projects, etc.).

  Little by little, companies are providing more complete information about the campaigns, especially at the level of results. Anyway, they still have a lot to do and improve.

  Example

  It is difficult to find a really good example. Perhaps, the “1 Danone = 1 life seed” campaign (in 2008) could be a case. Danone and Red Cross offered quite complete information (before, during, and after the campaign), especially through its website.

Other additional aspects to be considered are (Fundación Empresa y Sociedad, 1999):

• The Code of Conduct (developing the campaign according to ethical aspects, respecting the use of images or the messages used according to the codes of conduct proposed by the NGOs)

  Example

  The Spanish Coordinator of the NGOs proposes a code of conduct to be followed in collaboration with companies.

• Quality in the management of the campaign (trying to establish a [social] quality management model could be useful) For example, creating a specific quality seal for companies implied in this type of campaigns

Example

Some organizations, such as Fundación Empresa y Sociedad, tried to create a “solidarity” seal, although it did not have a great impact.

All these aspects are included in ◘ Fig. 1.3.

Fig. 1.3

Main key aspects in CRM. (Source: own elaboration, based on Fundación Empresa y Sociedad (1999))

1.6 Implementation of a Cause-Related Marketing Program

To be successful, CRM programs require planning, preparation, commitment, implementation, and monitoring by the parties involved (businesses and NPOs). Thus, the main steps to implement a CRM program are summarized in ◘ Fig. 1.4.

Fig. 1.4

Main steps to implement a CRM program. (Source: Galan - Ladero (2013))

1.7 Ethical Considerations

CRM can sometimes offer ethical dilemmas, especially for these reasons:

• Type of product: When the products involved in the campaigns are considered unethical or controversial (e.g., tobacco, alcohol, sex toys, weapons, traffic fines, luxury products, etc.).

• Behavior sought: These campaigns need that consumers buy the products involved in the campaign – the donation will depend on sales (“if you buy more, you donate more”). Thus, an excessive consumerism can be encouraged.

• Design, development, and/or implementation of the CRM campaign: If there is insufficient information (before, during, and/or after the campaign), or images used in the campaign do not respect the codes of conduct proposed by NGOs (e.g., sad poor children or people dying), or messages used in the campaign (only looking for compassion).

• Chosen cause: Cultural differences should be taken into careful consideration in CRM campaigns, especially in an international context. The success (or failure) of a CRM program will depend on the correct analysis of each situation and its adaptation to each society.

Example

Avon: the company adapts its CRM campaigns according to the different cultures of the countries where it sells its products. It has a common cause (“fight against breast cancer”) in all countries where sells its products, but it has another cause (“domestic violence”) only in a few of them.

Controversial campaigns can question the real aim of businesses in CRM campaigns (Do they want to use and “exploit” the good image that NGOs have, just to sell more?). Thus, it is important to remember that “the end does not justify the means” in CRM. Not all products, causes, businesses, NGOs, or other organizations are valid to take part in a CRM campaign. Not everything fits into CRM, because a trivialization of the solidarity could happen.

1.8 Broadening Cause-Related Marketing?

Although, at the beginning, CRM focused only on collaborations between companies and NPOs, over the years, it has tried to develop in organizations that are not properly companies but that also collaborate with NPOs (e.g., universities or public administrations), adapting its format – substituting sales for transactions carried out by these organizations.⁴ This is generating a wide debate in the academic field about whether it is really an extension of CRM or refers to another type of solidarity initiative (and, therefore, it cannot be considered as a CRM strategy, properly).

Thus, for example, since the end of the 1990s, some cases of these adaptations of CRM in universities are found:

• Solidarity enrollments (the university or students donate an amount of money for each enrollment made to an NPO, to collaborate in a solidarity project)

• Solidarity sanctions (some university libraries offer to cancel or reduce the sanction for delays in the repayment of library loans in exchange for the contribution of basic food – for the Food Bank – or toys, for the Red Cross)

• The Solidarity Study Olympics (for each hour of study carried out in the study rooms of the university, the collaborating companies donate 1 Euro to a solidarity cause)

• Others (see, e.g., UNImpulso Challenge, in the University of Extremadura; ◘ Figs. 1.5 and 1.6)

Fig. 1.5

UNImpulso Challenge. (Source: University of Extremadura (2019))

Translation: UNImpulse Social Challenge.

Food Banks in Extremadura need our help!

Confirm your attendance at UNImpulse and we will send baskets of organic food. The more hours of training, the more kilos of food collected!

Collaborate!

Fig. 1.6

UNImpulso Challenge at the University of Extremadura (2019). Explanation of the campaign. (Source: own elaboration, based on UEx (2019))

This attempt to adapt and apply CRM to the university environment is being successful, and there are more and more campaigns, and in more universities. It allows integrating the social interests of students (“clients”), lecturers, and administrative and service staff and also benefits society as a whole. It also allows the university to collaborate with for-profit organizations (companies) and nonprofit organizations (foundations, NGOs).

The growing importance that social responsibility is acquiring in the university environment allows foreseeing for a greater number of socially responsible initiatives in general and of CRM in particular.

1.8 Conclusions

Among the main conclusions, the following ones stand out:

• CRM has become a successful initiative for all types of organizations. It has experienced a fast growth and a great level of diversification (almost to all sectors), incorporating new technologies, too. It is used in all countries around the world.

• CRM can be considered a current example of holistic marketing approach, where organizations assume CSR and sustainability principles (SDGs). CRM seeks benefits for all the parties involved: a better corporate image and increasing sales and profits but also being socially responsible and integrating CSR policy in the corporate mission (for the company); increased funding and resources (for the NGO); sharing values (for consumers); and awareness about social causes and welfare (for society, in general).

• CRM can become a key tool for businesses because it affects consumer perceptions and purchasing behavior. It can favor positive attitudes toward a brand, product, or company, so it should be seriously considered as a possible source of competitive advantage based on differentiation (according to values; that is, based on psycho-graphic aspects). However, aspects such as coherence, long-term commitment, and communication, following ethical codes, and quality aspects in management are critical. External control, through independent organizations or governmental agencies, can guarantee its correct implementation.

• The consumer sensitivity to CRM campaigns will depend on who pays the cost of the action (the more cost to the customer, the more information will have to be provided) and also the donation amount or cause.

• Examples of CRM campaigns can be found in all sectors, using conventional mass media (TV, radio, press) or incorporating digital technologies (social networks – e.g., Facebook, Twitter, or Instagram – emails, blogs, videos in YouTube, official websites, Apps, etc.).

Consequently, CRM can become a key activity for all kinds of organizations, if it can actually influence on consumer behaviors.

1.9 Questions and Answers/Quiz/Review Questions/Discussion Questions

Questions and Answers

• 1. What is CRM?

• 2. What are the key aspects to be considered in CRM?

• 3. Which are the two most relevant characteristics in CRM?

Quiz/Multiple-Choice Questions

• 1. What was the first company to develop a CRM campaign, named in this way?

  • (a) American Express

  • (b) Coca-Cola

  • (c) IBM

  • (d) McDonald’s

• 2. Currently, CRM campaign is considered:

  • (a) A case of corporate philanthropy

  • (b) A CSR initiative

  • (c) An example of sales promotion

  • (d) A public relations activity

• 3. Indicate the correct option:

  • (a) The duration of a CRM campaign should not exceed 2 weeks, to avoid tiring potential customers.

  • (b) Communication of the CRM campaign is not important. It is only necessary to explain it well at the beginning.

  • (c) It is not advisable to use a code of conduct in CRM campaigns, because it would affect the freedom of the company to create and launch the advertising CRM campaign.

  • (d) The coherence between the company, the NGO, the cause, and the product is fundamental to the success of the CRM campaign.

Review Questions

• 1. Search for a CRM campaign and analyze it.

  • How would you classify it?

  • What are the main advantages and disadvantages for the parties involved?

  • How are the key aspects of CRM developed in this campaign?

  • What steps were taken to implement this CRM program?

  • Do you think there are any ethical implications in that campaign?

Discussion Questions

• 1. Look for a CRM campaign with some controversial aspect (e.g., because it is linked to a problematic company, the NGO has been involved in a scandal, the product is considered unethical, or the cause is not actually adequate).

  Should these types of campaigns be avoided, or not – is raising funds for a solidarity project the most important thing?

• 2. Have you ever bought a product linked to a CRM campaign? If the answer is affirmative, can you describe it? What about your experience?