Cause-related marketing (CRM) began in 1981 when American Express agreed to donate $I for every new credit card issued to the Ellis Island/Statue of liberty Restoration Foundation. Since then, the use of this strategy has been widespread and rewarding. Curiously, cause-related marketing has become associated with large corporations. The study presented  here confirms the lack of use of CRM among small businesses. This reluctance appears unfounded as those small businesses that have ventured into CRM agreements report success in terms of increased sales, attracting new customers and enhancing the store's image. CRM has gained in popularity and can be a viable strategy for small businesses looking to differentiate themselves. In a world of parity products  and services, this might be a key weapon in the small business arsenal

Barnes, Nora Ganim

English

Cause-related marketing (CRM) began in 1981 when American Express agreed to donate $I for every new credit card issued to the Ellis Island/Statue of liberty Restoration Foundation. Since then, the use of this strategy has been widespread and rewarding. Curiously, cause-related marketing has become associated with large corporations. The study presented  here confirms the lack of use of CRM among small businesses. This reluctance appears unfounded as those small businesses that have ventured into CRM agreements report success in terms of increased sales, attracting new customers and enhancing the store\u27s image. CRM has gained in popularity and can be a viable strategy for small businesses looking to differentiate themselves. In a world of parity products  and services, this might be a key weapon in the small business arsenal

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STRATEGYPartners in Profits:Small Businesses Move Slowly IntoCause-Related MarketingNora Ganim BarnesUniversity of Massachusetts DartmouthABSTRACTCause related marketing (CRMJ began in /98/ when American Express agreed to donate SIforevery new credl I cardissued to the Ellis Islanib'Statue ofLibeny Restoration Foundation. Sincethen, the use of ibis strategy has been widespread and rewarding. Curiously, cause-relatedmarketing has become associated with large corporations. The siudy presented here confirmsthe lack ofuse ofCRM among small businesses. This reluctance appears unfounded as thosesmall businesses that have ventured into CRM agreements report success in terms ofincreasedsales, attracting new customers and enhancing the store's image. CRM has gainedin popularityand can be a viable strategy for small businesses looking to diferent t'ate themselves. In a worldofparity products and services, this might be a key weapon in the small business arsenal.INTRODUCTIONIn 1981 American Express entered into an agreement with the not for profit Statue ofLiberty/Ellis Island Foundation. For every new American Express card issued, money would bedonated to the restoration project. This marked the first national joint venture marketingcampaign of this type in the United States. The designation of this relationship as "causerelatedmarketing" was registered by American Express with the United States Patent Office as a servicemark (BBB,1987). The result of the campaign was $ 1.7million donated to the foundation andan increase in American Express card usage of 28% (Josephson, 1984).Since then, there have been literally hundreds of these relationships including Proctor 8t Gambleand Special Olympics, Burger King and the March of Dimes, and Campbell Soup and theLiteracy Foundation. Just recently, Coca-Cola announced that their beverage division is adoptinga cause-related marketing(CRM) drive for its vendingoperationon a trial basis in England. TheRoyal National Institute for the Blind will receive money for every can sold from speciallylabeled machines. This marks the first venture of CRM campaigns into the self service arena(Marshall, 1996). Articles about these campaigns, have covered the pages of most leadingnewspapers and trade publications. Leading marketing and business journals have been detailingthe advantages, disadvantages, and possibilities for these relationships (See especially Barnes,1991). A definitive article on the subject offered the following definition: "Cause-relatedmarketing occurs when a company promises to make a charitable contribution contingent on acustomer purchasing something from the firm" (Varadarajan, 1989). The authors make it clear47Journal ofSmall Business Strategy Volume 9, Ão. l Spring /998that cause-related marketing is a partnership that is beneficial to both parties.Figure I depicts the components of a typical CRM campaign. The for-profit business partnerlends its promotional expertise and one or more of its products as a focal point of the campaign.The not-for-profltpartner contributes its name, image, and audience. If consumers purchase theproduct, both partners reap rewards. The consumer also realizes those emotional rewards offacilitating a donation to a worthy cause.Figure IElements of a Cause-related Marketin Cam ai nCorporation; Outcomes:Lends advertising Increases profits, buildssupport, product for corporate image, namefocus of campaign recognition, andgoodwillCause-related marketing campaignOutcomes:Not for profit organization: Donation of money,lends name, audience, and image manpower, employmentadvocacy, recognitionln such a relationship, the businesses and not-for-profit organization are interdependent. Bothcan incur risk and/or benefits. Businesses may unknowingly become involved with not-for-profits that have internal problems, administrative conflicts or other difficulties. They must becognizant of the "marketability" of the cause and the demographic.'f the potential audienceinvolved. For the not for profits the concerns are equally serious. They must convince a businessthat they can deliver a desirable audience without compromising the integrity of theirorganization. Despite these concerns, cause-related marketing has proliferated. To date, thereis scant evidence of the strategy being risky or unproductive. On the contrary, CRMs appear tobe one of the most successful promotional strategies in recent memory. At one time marketingresearch indicated consumer cynicism about these partnerships, but this appears to have abated,making CRM more popular than ever (Warner, 1996). Studies of Fortune 500 companies showwide spread awareness and use of cause related marketing. In virtually every case examined, theresults of these campaigns have been very positive. The for-profit company usually enjoys imageenhancement and increased sales while the not-for-profit partner receives a substantial donation.Many not-for-profit organizations are hiring professional consultants to advise them on potentialcorporate partners. Consumers are equally excited about this strategy.48Journal ofSmail Business Strategy Volume 9, No. l Spring /998A new survey of 2000 adults shows that 76'/e would buy a product involved in a CRM campaignif the product price was competitive (Cone/Roper II, 1996). The same study went on to reportconsumer receptivity to cause-related marketing campaigns is greatest among those likely tomake key purchasing decisions: Women age 18-49 and parents of young children (Warner,1996).Amidst all this activity, small businesses have somehow remained untouched by cause-relatedmarketing. A search of small business literature including the academic journals and the tradejournals reveals only two articles dealing with this topic. The first appeared in Small BusinessReports in 1991 and encourages small business to try the strategy(Hendricks,1991). The authorreports cause-related marketing can give small business owners "name-spreading publicity, amore positive public image, and access to new markets." Ironically, the second article appearedin 1993 and reiterated the discussion in the 1991 piece citing the earlier piece at length andsupporting Hendrick's conclusion (Manager's Magazine).Based on the results of this literature search, and the available information on cause-relatedmarketing, the following questions were generated and served as a guide for the researchpresented here:I . What is the level of awareness among small business owners of cause-related marketing?2, To what extent have small business owners attempted to involve themselves in cause-relatedmarketing campaigns and to what end?3. Is cause-related marketing a viable strategy for small businesses?SAMPLING/METHODOLOGYA national list of small businesses was generated from Lotus I Business Source. Using asystematic random sampling procedure, 1500 calls were made. The final sample of 940 smallbusinesses in this study comes from completed interviews with approximately 19 smallbusinesses in each of the ftity states in the U. S.. The response rate was an encouraging 63'/e.It is interesting to note that 38'/a of all small businesses studied employed 1-3 people full time,with three quarters of the sample having no more than 11 full time employees. The annual salesreported ranged from $ 15,000 to over $3 million. Three quarters of the sample reported salesof under $ 1 million. All responses were examined to determine the effect, if any, size and annualsales had on a businesses'attitudes toward cause related marketing. All types of businesses werestudied. As expected, cause-related marketing was not a factor for most wholesalers ormanufacturers of industrial products. (See Table I for Profile of Sample)Each interview was conducted using a structured questionnaire focusing on the business ownersfamiliarity and use of cause-related marketing. Details of such campaigns were sought alongwith outcomes and assessments. All demographic data from the Lotus I Source were verified.The results of the 940 interviews follow.FINDINGSInterviews began with two background questions relating to familiarity with the cause-relatedmarketing strategy and participation in such a promotion. Overall, 59'/a of small business ownersqueried were familiar with the strategy. When asked if they had ever been involved in such acampaign, the numbers plummeted to 6'/e or 59 of the 940 businesses studied. This level of49Journal ofSmall Business Strategy Volume 9, Ão. I Spring l998involvement appears to be very low. One study of ft(ty Fortune 500 firms found 52% ofrespondents involved in CRM campaigns (Barnes, 1991). Regardless, the sample here of 59small businesses actually experienced in these promotions, represents the largest study to dateof business involvement.Size of the business and annual sales prompted statistically significant differences between thosewho had been involved with CRM and those who had no involvement. The larger and moreaflluent a small business, the more likely it is to participate in CRM. The average number ofemployees in firms that have done CRM is 46, while the non-participants average 16 employees.The annual sales of those who have participated averaged $ 1.3 million. The non participantsaveraged just below $ 1 million in annual sales.It appears that the smaller businesses (i.e. 15 employees, less than $ 1 million in sales) have notengaged in CRM. Some indication of the viability of the strategy for small businesses might begleaned from a closer examination of those "larger" small businesses that have had experiencewith CRM.Contractual agreements with the not for profit partner were generally not used. One third of theparticipating small businesses prepared a written agreement while two thirds made allarrangements and commitments verbally. None of the participants reported any problems withtheir not for profit partners or the logistics of the campaign.There was a sense among these respondents that their customers really enjoyed the CRMcampaign. Over 60% reported positive customer feedback regarding the promotion. Onlyslightly less (57%) described the campaign as "very effective". Seventy-five percent indicatedthey would definitely or probably recommend CRM to other small businesses owners.Table IProfile Of The Sam le¹offull time em lo ees1-3 339 374-7 203 228-11 121 1312-15 85 915-30 92 1031-100 70 8&100 6 IAnnual Sales ¹$ 1 5,000-$374,499 208 25$375,000-$734,499 171 21$734,500-$ 1mil 217 27$ 1.1mil-$2.1mil 132 16$2.2mi1-$ 3.2mil 80 10& $3.2mil 9 IEx erience With CRM ¹Yes 59 6No 881 9450Journal ofSmall Business Strategy Volume 9, //o. l Spring /998The benefits of cause-related marketing can vary. In this study, 53%cited increased sales as theprimary benefit of their most recent CRM campaign. Almost 20% of the owners indicated thepromotion yielded new customers and increased sales, while 14%mentioned image enhancementas the primary benefit. Other perks cited include better public relations and increased namerecognition.The diversity of the not-for-profit partners in this study is striking. They range from adoptinga local school, hospital, symphony, or food kitchen, to involvement with the American CancerSociety, The United Way, Special Olympics, and National Aids Research Foundation. This isconsistent with other studies which indicate education, health, crime and safety, homelessnessand hunger, and the environment are the major areas of focus in CRM campaigns (Weisend,1996). For a more complete list of the not for profit partners in this study see Table 2The small businesses that ran these campaigns were equally diverse. While virtually all wereretailers, they included restaurants, fast food and concession stands, furniture, jewelry, clothesstores, art galleries, book, pet, and toy stores along with a resale children's clothes shop. (For amore complete list of the types of small businesses involved in CRM see Table 3.)All the CRM campaigns reported in this study were conducted in the last twelve months (priorto the interview) and 80% of these owners reported they would be likely to use the strategyagain.Table 2T es Of Small Businesses Involved In CRMArt Gallery Antique Shop Book StoreCatering Expresso Bar Furniture StoreFlag Shop Grocery Store Graphics Arts SuppliesIce Cream Shop Jewelry Store Men's Clothes StorePharmacy Pizza Shop Specialty ShopToy Store Video Rental Women's Clothes StoreTable 3Not-For-Profits Involved With Small Businesses and CRMAmerican Cancer Society Adopt a Local SchoolAmerican Heart Association Animal RescueAids Projects Big Brothers/Big SistersChildren's Hospitals Cystic FibrosisChurches Easter SealsFood shelters Homeless ProjectsLeukemia Society Page Educational FoundationResolve Reading is FundamentalSpecial Olympics Symphony United WayUniversity Programs51Journal ofSmall Business Strategy Volume 9, No. l Spring /998IMPLICATIONS AND CONCLUSIONSOnly a small percentage of small businesses have engaged in cause related marketing campaigns,even though they have proven to be more than a short term tactic. (Some of the benefits forcompanies that have engaged in these campaigns can be see in Table 4.) As the U. S. economycontinues to recover slowly and small businesses fight for survival, it is imperative that new andpotentially profitable strategies be considered. The climate is conducive as not for profits seekwhat businesses can offer: crucial new sources of revenue. In return, the small business partnergains the opportunity to enhance it's image and increase sales through association with a worthycause (Andreasen,1996).Table 4Benefits of T ical Cause-related MarketinCompany Charity Benefit BenefitName Name C~i ~CharitBeatrice/Hunt World Wildlfe increased $ 50,000Wesson Fund coupon redemptionContinental Hobby Airport facilitated cashAirlines Texas market entry donationGeneral Foods MADD/Mothers increased coupon cashAgainst Drunk redemption donation upDriving $ 100,000Johnson Bs Special Olympics "significant increase cashJohnson in direct mail response donationCoca-Cola Special Olympics increased worldwide $ 110,000involvement ofbottlers/referralThose that have tried CRM report the campaigns to be effective, with over half of the businessesreporting increased sales. The experience of the small businesses in this study parallels those ofFortune 500 firms that are enjoying the benefits of CRM. Most report increased sales, imageenhancement and new customers. Small businesses should be encouraged to experiment withCRM on a local basis in order to develop a level of comfort with these campaigns. Consumersreport being the most receptive to programs aimed at improving local public schools (Warner,1996). This would be a good starting point. For example, a small coffee shop donated one centfor each cup of coffee sold to a local elementary school for the purchase of sports equipment.After a three month campaign, the school was able to buy an array of bats, balls and nets for thechildren.Most small businesses engaging in CRM are doing so without written agreements. While CRMis a low risk strategy, written agreements do facilitate the promotion. It is important to record52Journal ofSmall Business SsrasegJf Volume 9, lio. I Spring l998the responsibilities of both parties. Interested parties should collect, research or examine sampleagreements. Many are now available from participating organizations.Cause-related marketing is now well into its second decade. Large corporations such as ProctorJk Gamble, Coca-Cola, and Campbell's Soup, continue to enjoy the benefits of long termrelationships with not for profit partners. Small businesses appear reluctant to venture into suchpartnerships even though those who do, have reported success. Given the slow economic growthof the 90's, the daily struggle for small businesses to survive, and consumer receptivity to thesepromotions, it would seem prudent to look more closely at cause-related marketing.REFERENCESAndreasen, A. (1996). Profits for Nonprofits: Find a Corporate Partner. Harvard BusinessReview 4, 41-59.Barnes, N. G. (1991).Philanthropy, Profits, and Problems: The Emergence of Joint VentureMarketing. Akron Business and Economic Review, 78-86.Better Business Bureau. (1987). Charities in the Marketplace. ~lnsi ht, 3, 1-5.Cone Research Group. (1993, December 13). Cone-Commissioned Survey Verities CauseMarketing. Consumer Attitudes Survey Released. Adweek New En land AdvertisinWeek, p. l.Cone/Roper II. (1996). Stud of Cause-Related Marketin Re ort of Cone Communications,Boston, MA.Hendricks,M. (1991).Doing Well WhileDoing Good. Small BusinessRe orts 16(11),28-38.Josephson, N. (1984, January). American Express Raises Corporate Giving to Marketing Art.A~di A . id-l I .Marshall, S. (1996, July 18). CCBS Machines To Deliver Cash for Blind Charity. ~Marketin,l.Referred by Association. (1993,January). Mana er's Ma azine 68(1),28.Small Business Economic Trends. (1996, September). Small Business Trends, 1-23.Varadarajan, P. and Menon, A. (1998)Cause-Related Marketing: A Coalignment of Marketingg«gy AC q Phil h py. J~ffM k i,l ly,yg.yd.Warner, J. (1996, December 23). Doing Good Pays Off. Adweek New En land AdvertisinWeek, 4.53

Partners in Profits: Small Businesses Move Slowly Into Cause-Related Marketing

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Partners in Profits: Small Businesses Move Slowly Into Cause-Related Marketing

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