Nowadays, globally, consumers’ expectations have reached a new high, as they expect companies to act responsibly in changing the world. More than often these expectations are not met solely out of the kindness and generosity of corporations, but they are mixed in with corporate social responsibility programs and cause-related marketing. Consumers want more of the products and services they buy to support worthy social and environmental issues.Cause Related Marketing, Corporate Social Responsibility, Consumption Philanthropy, Corporate Philanthropy

Dumitrescu Luigi

Stanciu Oana

Tichindelean Mihai

Vinerean simona

English

Research Papers in Economics

   
 
 
                                  Studies in Business and Economics 
                   Studies in Business and Economics - 79 - 
 
 
 
 
 
CAUSE RELATED MARKETING –  
TRUE HEART-FELT CORPORATE BENEVOLENCE? 
 
 
DUMITRESCU Luigi  
Lucian Blaga University of Sibiu, Romania 
 
STANCIU Oana 
Lucian Blaga University of Sibiu, Romania 
 
TICHINDELEAN Mihai  
Lucian Blaga University of Sibiu, Romania 
 
VINEREAN Simona  
Lucian Blaga University of Sibiu, Romania 
 
 
Abstract: 
    Nowadays, globally, consumers’ expectations have reached a new high, as they expect 
companies to act responsibly in changing the world. More than often these expectations are not 
met  solely  out  of  the  kindness  and  generosity  of  corporations,  but  they  are  mixed  in  with 
corporate social responsibility programs and cause-related marketing. Consumers want more of 
the products and services they buy to support worthy social and environmental issues. 
  
  
Keywords:  Cause  Related  Marketing,  Corporate  Social  Responsibility,  Consumption 
Philanthropy, Corporate Philanthropy.  
 
 
1.  Introduction 
   
  The United States gave birth to cause marketing in early 1980s, which has 
today become a mainstream business strategy for driving sales and building  brand 
affinity. Cause Related Marketing (CRMk) started to take form in 1983, when American 
Express  practically  coined  and  perpetuated  this  concept,  through  its  campaign  in 
restoring the Statue of Liberty. Everytime an American Express card was used or a 
new member subscribed a small donation was being made for the restoring project. In 
just 3 months, 1.7 million dollars were gathered for the cause and the usage rate of 
AmEx cards increased by 27%, while the new subscription rate rose by 45%. This is 
how cause marketing was born.      
 
 
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  Kotler  describes  Cause  Related  Marketing  (CRMk)  connects  a  company’s 
contributions to a certain cause, in order to incite customers, directly or indirectly, to 
participate in profit-driven transactions. Cause Marketing is part of Corporate Societal 
Marketing (CSM). 
  Cause Related Marketing (CRMk) is without a doubt one of the first “areas” 
that has brought together the profit area and the non-profit area, in order to achieve 
mutual benefits. Consumer brands can serve as catalysts and critical platforms for the 
target public’s engagement and support for a cause or organization. Marketers can 
certainly use the tools available to incite involvemet from consumers in certain social 
causes and to raise awareness on important issues ( Kotler, 2009, p.792). 
  Strategies  that  combine  consumption  with  philanthropy  have  skyrocketed  in 
the last two decades. Among corporate sponsors, cause marketing expenditures went 
from almost zero in 1983 to an estimated $1.3 billion in 2006, according to IEG Inc., a 
Chicago-based  firm  that  tracks  cause-related  activities  in  the  United  States 
(Eikenberry, 2009). 
  For  a  long  period  of  time  executives  wondered  if  they  even  have  any 
responsibility as they followed renowned economist Milton Friedman, who argued that 
the only “social responsibility of business is to increase profits”. But now more than 
ever, consumers are primed to use their purchasing power to make a difference.  
 
2.  Cause-related marketing or shopping with a conscience 
 
  A  2011  Cone/  Echo  Global  CR  Opportunity  Study  showed  that  consumers 
across the globe want to shop with a conscience. Out of 10 000 respondents to the 
designated survey for the aforementioned study, 94% of consumers are likely to switch 
brands to one associated with a good cause, when price and quality are about the 
same.  This  staggering  number  reflects  that  companies  are  doing  a  good  job  in 
competitive  differentiation  through  responsible  business  behavior  and  in 
communicating their positive affiliations and practices to their target consumers (Cone, 
2011).  
  However,  companies  should  take  CRMk  and  CSR  practices  very  seriously 
because  just  as  many  people  (93%)  are  prepared  to  boycott  a  company  for 
irresponsibility. Therefore, companies should be careful in associating their name to a 
cause or take on responsible initiatives if they are not part of a long-term program or if 
the commitments are not truthful and transparent, in order to avoid a backlash. 
  Cause-related  marketing  offers  enormous  opportunities  for  business  and 
society.  One  example  of  this  is  Nokia's  'Make  a  Connection'  campaign  with  the 
International Youth Foundation. This campaign provided materials such as teaching 
packages  to  assist  children  with  learning  difficulties,  while  flexible  working 
arrangements at Nokia allowed hundreds of employees to work with young people on 
educational projects ( Burns, 2000). Nokia’s promotion of this campaign provided them 
with a unique opportunity to 'make a connection' with the youth segment of the mobile    
 
 
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phone market, illustrating the power of cause-related marketing campaigns to assist 
with brand differentiation. 
  In an article published in Stanford Social Innovation Review (Summer 2009), 
entitled  The  Hidden  Costs  of  Cause  Marketing,  the  authors  propagate  the  term 
consumption  philanthropy  as  a  synonym  for  cause  related  marketing  (Eikenberry, 
2009, p.52). Consumption philanthropy pairs the support of a charitable cause with the 
purchase  or  promotion  of  a  service  or  product.  One  might  argue  that  consumption 
philanthropy represents a customer’s effort and choice to buy a "socially responsible" 
product  represents  the  intention.  In  the  table  below  there  is  a  presentation  of  the 
different types of cause marketing (Table 1). 
Transactional 
CRMk 
Being the most widespread model of consumption philanthropy, it 
implies that a company contributes with a certain proportion of the 
proceeds  for  each  product  or  service  unit  associated  to  a  pre-
determined social cause. Two of the most famous examples are the 
pink  products  associated  with  Susan  G.  Komen  Breast  Cancer 
Foundation  and  Product  Red  campaign,  supported  by  Bono  and 
Robert  Shriver.  Consumers  buying  a  products  associated  with 
either  of  these  two  campaigns  are  also  supporting  breast  cancer 
research or the battle against HIV/AIDS, malaria, and tuberculosis 
in Africa. 
Promotion-
Based CRMk 
Companies  promote  a  cause  and  make  charitable  contributions. 
However, in this case the donations are not necessarily business 
transactions or monetary exchanges, but they promote the cause as 
well as the corporation in question. 
Licensing 
CRMk 
In this case, a charity licenses the use of its name and logo to a 
corporation.  In  exchange,  the  company  donates  a  percentage  of 
every transaction associated with that the licensed name and logo. 
Table 1: Different types of Consumption Philanthropy or Cause-Related 
Marketing 
(Adapted from Eikenberry, 2009, p. 53) 
 
  For  a  better  understanding  of  the  concept  of  cause-related  marketing  a 
delineation  from  the  concept  of  strategic  philanthropy  is  required.  Thus,  strategic 
philanthropy  implies: 
• Alignment of community involvement and philanthropic activities with basic business 
objectives; 
• Usage of basic skills and customization regarding the focus on customer needs; 
• Moving from "one-time sale" to focusing on long-term strategic effort.  
  However, in The Competitive Advantage of Corporate Philanthropy, Michael 
Porter  and  Mark  Kramer  talk  about  corporate  philanthropy  instead  of  strategic 
philanthropy. They state that philanthropy can often be the most cost-effective way for 
a  company  to  improve  its  competitive  context,  enabling  companies  to  leverage  the 
effort and infrastructure of nonprofits and other institutions (Porter, Kramer, 2002).      
 
 
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  A corporation should carefully analyze the elements of its competitive context 
and  identify  areas  of  overlap  between  social  and  the  economic.  That  is  where  the 
companies should focus their corporate giving. Furthermore, the new creation of value 
will lead to a greater social and economic impact, creating mutual benefits.   
  Porter considers the limitations of cause marketing, mentioning that at its best, 
CRMk can improve the reputation of a company by linking its identity with the admired 
qualities of a popular cause or nonprofit.    
 
3.  The giving and receiving of CRMk 
 
  The  typical  Fortune  500  company  contributes  1.3%  of  pretax  earnings  to 
charity and then there are the most giving companies that are devoting 5% or more. 
Companies should not just increase their giving, but what they really need to do is 
increase  the  types  of  support  and  better  leverage  their  existing  assets.  (Cone, 
Feldman, DaSilva, 2003) Companies that demonstrate a sense of social responsibility 
stand out in a world of increasingly undifferentiated goods and services. 
  A  cause  marketing  campaign  can  have  different  business  objectives  from 
increasing sales, developing new business relationships, improving customer loyalty to 
enhancing overall reputation and retaining and attracting valuable talent (Figure 1).  
 
Figure 1. Benefits of Cause Related Marketing 
   
However, finding a cause that satisfies business and philanthropic objectives, 
but  does  not  conflict  with  the  brand  identity  is  a  highly  complex  challenge  that 
companies must tackle. 
  Today, there are more than 1.6 million nonprofit organizations in US alone, 
with plenty of causes to choose from, however companies go for the most popular 
ones, particularly education and poverty. One survey found that over 300 companies 
had associated themselves with breast cancer charities, the majority of whom became 
"lost in the sponsorship clutter" (Belch and Belch, 2001, p. 608). 
    
 
 
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4.  Critics 
 
  Despite its major advantages, cause-related marketing does have limitations 
and pitfalls. For instance, companies view CRMk as a great branding or PR strategy, 
however, cause marketing works best to make a brand even stronger.  
  Critics identify cause related marketing as a hybrid of product advertising and 
corporate public relations, as today companies sell pink ribbon pins, yoghurt or soup to 
“fight” breast cancer.  
  Today, there are more than 1.6 million nonprofit organizations in US alone, 
with plenty of causes to choose from, however nonprofit organizations that do not fit a 
predetermined corporate profile or do not  appeal to  target buyers, even  if they are 
undertaking vital issues, are not taken into consideration. 
  One  cause  related  marketing  example  that  promised  a  lot  but  went  terribly 
wrong is RED Campaign. (Product) RED started with the main objective of gathering a 
team formed of the biggest companies in order to raise money for Global Fund, to 
Fight  AIDS,  Tuberculosis,  and  Malaria  in  Africa.  Major  companies  like  Apple,  Gap, 
Motorola,  Converse,  Dell,  Emporio  Armani,  and  others  manufactured  products  that 
either  were  red  or  were  promoted  under  the  RED  campaign.  The  campaing  was 
initiated by Bob Shriver and highly promoted by Bono from U2, but it also involved 
many other celebrities promoting the products: Steven Spilberg, Oprah Winfrey, Chris 
Rock. Other than celebrity marketing, RED implied also event marketing through the 
RED room at the Grammy Awards.  
  So, the marketing outlay created a lot of buzz, with some estimates that Gap, 
Apple and Motorola, collectively, spent up to $100 million on marketing, in just a few 
months from the launch of the campaign. However, the money raised for the Global 
Fund  did  not  come  near  to  that.  A  year  after  its  launch,  AdAge  claimed  the  RED 
campaign raised only $18 million, to which Bob Shriver said it was not true and that the 
campaign raised at leat $25 million in a year.  So skewed a ratio casts doubt on the 
sincerity of the companies’ commitment to this particular cause and on the celebrities 
who associated themselves with this campaign. 
  Another example is Upromise, a program that brings together corporations like 
Exxon Mobil, Coca Cola, and McDonald’s, to help people afford a college education 
and gather money through a college savings service. More explicitly, each time the 
future student, a parent, a friend or extended family shop within a registered system of 
Upromise affiliates, which involves more than 600 online retailers, 8000 restaurants 
and different grocery and drug stores, a small proportion of the purchase is saved in 
the Upromise account.  
  The  contribution  of  the  program’s  partners  varies,  with  a  few  partners  that 
donate as much as 25%, while most of them donate just one percent of the purchase’s 
value. So, in the least optimistic scenario relatives and friends would need to purchase 
$100,000 of goods and services, in order to earn $1,000 for the college fund. This 
program  also  gathered  several  critics  from  a  cause-related  marketing  perspective, 
because even though the  chance to raise sufficient  money for college seems a bit      
 
 
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distant, through the purchases the corporations involved in this program get invaluable 
and  very  relevant  demographic  and  behavioral  information  about  the  purchasing 
patterns  of  their  target  market.  And  with  more  than  10  million  registered  potential 
students, not including their relatives and friends, corporations are definitely extending 
their marketing database.  
  Basically, organizations, whether they are for profit or nonprofit, should expect 
a scrutinization of their campaign, just like all of their business practices are monitored, 
such as labor or environmental initiatives. 
  Especially today, with the ubiquity of the web, bad and unflattering news travel 
even  faster,  and  that  is  why  corporations  should  adhere  to  every  standard  they 
promote or associate themselves with. 
 
5.  Conclusion 
 
  Consumers are primed to use their purchasing power to make a difference. 
Therefore, a common denominator seems to evolve: if a product is tied to a cause, 
globally, consumers are more likely to buy it.  
  There  is  no  doubt  consumers  are  idealistic  in  their  intent  and  in  order  to 
maximize  the  effects  of  cause  related  marketing,  companies’  initiatives  require  a 
thoughtful and holistic approach. Making use of the emergence of new media, it is a 
pivotal time to earn trust of motivated consumers in order to ensure positive social 
media coverage very early on in a CRMk campaign.  
  In  order  to  ensure  long-term  customer  engagement,  companies  should  be 
transparent with their cause marketing initiatives and report metrics on the undergoing 
CRMk  initiatives.  CRMk  programs  should  be  taken  into  account  as  a  long-term 
strategy, rather than a fixing a damaged company image. 
 
 
6.  References  
 
Belch,  G.  E.,  Belch,  M.  A.,  2001.  Advertising  and  Promotion:  An  Integrated  Marketing 
Communications Perspective. Fifth Edition. New York: McGraw-Hill. 
Burns, J., 2000. Business learns the value of good works. Financial Times. 
Cone, C.L., Feldman, M.A., DaSilva, A.T., 2003. Causes and Effects. Harvard Business Review, 
July 2003   
Cone, Echo Global, 2011. Corporate Responsibility Opportunity Study 
Eikenberry, A., 2009. The hidden costs of cause marketing. Stanford Social Innovation Review - 
Summer 2009. 
Kotler, Ph. et al., 2009. Marketing Management – European Edition.  Harlow, England: Pearson 
Prentice Hall Publishing 
Porter,  M.E.,  Kramer,  M.R.,  2002.  The  Competitive  Advantage  of  Corporate  Philanthropy.  
Harvard Business Review, December 2002.  

Advertising and Promotion: An Integrated Marketing Communications Perspective. Fifth Edition.

Business learns the value of good works. Financial Times.

Causes and Effects. Harvard Business Review,

Marketing Management – European Edition.

CAUSE RELATED MARKETING – TRUE HEART-FELT CORPORATE BENEVOLENCE?

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CAUSE RELATED MARKETING – TRUE HEART-FELT CORPORATE BENEVOLENCE?

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