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The Academy of National Economy under the Government of the Russian Federation Department of Economic and Social Sciences Cause-related marketing Written by Tryashina Daria, 3rd year student Date : May 20,2008. Moscow Introduction Altruism. Corporate responsibility. Philanthropy. These words are often used to describe cause-related marketing, an activity in which businesses join with charities or causes to market an image, product, or service for mutual benefit. Embracing a cause makes good business sense.
Nothing builds brand loyalty among today’s increasingly hard-to-please consumers like a company’s proven commitment to a worthy cause. Other things being equal, many consumers would rather do business with a company that stands for something beyond profits. Cause-related marketing can positively differentiate your company from your competitors and provide an edge that delivers other tangible benefits, including: Increased sales, increased visibility, increased customer loyalty, enhanced company image, positive media coverage etc.
These rationales have been strong enough to ensure a rapid growth of the practice, driven by willingness of consumers to reward socially responsible behavior and give preference, at least all else equal, to companies that contribute to various public goods. In the growing literature on economics of philanthropy relatively little attention is paid to an increasingly popular business strategy, known as cause-related marketing (CRM), when commercial firms tie to their brands and products contributions to charitable causes.
At the beginning of my working on the course paper, CRM seemed something inadmissible to me. I could not accept mixing marketing and charity, lust for the profit and a helping hand. But after looking deeper in the problem, after studying the cases of cause-related marketing campaigns I made up my mind. If that is the most attractive way of helping the indigent, then why not everybody turn into CRM, no matter what is their driving motive. In this paper I will explain the main goals and forms of CRM, its advantages and disadvantages and also set a few examples of CRM campaigns. Corporations and philanthropy
In the early-to-mid twentieth century US corporations were often making generous contributions to charitable causes. Corporate giving was motivated by the recognition of the key role of large companies in the economy and society, and thus their responsibility for social progress and welfare. These sentiments were later reinforced by environmental concerns, growing inequality, protests against exploitation of domestic and foreign labor, etc. In response to such societal pressures, companies pledged “socially responsible” behavior ??? a broad concept that provides, inter alia, for sizeable, at times massive, corporate donations.
However, corporate philanthropy raises serious questions that were put forcefully by Milton Friedman in his henceforth famous 1970 diatribe of the practice1. Friedman argued that corporations’ sole business was business, and thus corporate social obligations should be restricted to those before the shareholders, and to the compliance with laws and government regulations. This view doesn’t leave room for corporate contributions to charitable causes. Rationales of philantropy To better appreciate the economic underpinnings of Friedman’s critique, one should invoke rationales for philanthropy.
The latter usually fall into two main categories. First, donors could directly benefit, alongside the rest of society, from the supported public goods. The power of this incentive for private provision of public goods is however limited due to free riding; besides, this rationale cannot explain often observed contributions to “remote” causes which have no immediate bearings upon the benefactor. The second explanation is an altruistic one, when donors find satisfaction from the very act of giving and their involvement in furthering a worthy cause. Put differently, donors experience “warm-glow” feeling from their dealing in charity .
Turning back to companies, they are spiritless and thus cannot experience warm-glow. However, warm-glow can be felt by corporate owners and managers who authorize contributions to charities. If the sole owner of a company makes such contributions, she spends her own money and this is essentially a case of individual giving, even if under a different guise. However, if a decision to donate to charity is made by a manager of a shareholder-owned company, this could constitute a conflict of interest and a possible breach of agency relation, since the manager enjoys warm-glow at the expense of shareholders in whose interests he is supposed to act.
The increased pressure of the bottom-line due to heightened competition in the global economy, diffusion of corporate ownership, and efforts to improve corporate managers’ accountability to shareholders have all precipitated a decline of corporate charitable donations that shrunk in the US (as a percentage of profit) by half over the last fifteen years, and in 2001 alone ??? by almost 15% . In 2004 contributions to charity by US corporations accounted for mere 5% of the nation’s gross philanthropy ??? by comparison private individuals donated 75% of the total.
This trend is consistent with Friedman’s assertion that charity is better left to individuals, not companies. Despite this decline, corporations maintain their presence in philanthropy, as the external forces for “corporate social responsibility” remain unabated. Businesses are compelled ??? by public opinion, government pressure (which is increasingly the case in Russia ), or other means ??? to invest resources into projects and activities that either have no direct impact on the sponsors’ earnings, or such impact alone does not justify the scale of sponsorship.
The flipside of such behavior is companies’ refraining from business practices, technologies, sources of supply etc. , which are commercially profitable and legal, but are considered questionable by public opinion (e. g. dealing with international partners suspected of violation of human rights, worker safety and environmental standards). Compliance with this pressure leads to immediate loss of profits but could still benefit companies indirectly, making the observance of informal “civil regulation” overall profitable, as it allows to avoid sanctions that would ensue otherwise and could cost the businesses dearly.
If the public holds business to higher “social responsibility” standards, a failure to meet such standards could lead to losses of customers that punish commercial egotism by turning to more socially conscious competitors. Similarly if government’s expectations are not met, a company could lose government contracts or be penalized by other means at government’s disposal, such as tighter scrutiny and regulatory control. The history of CRM Cause-related marketing, or CRM, has exploded in recent years even though it is a relatively young concept.
But the roots of what we call now CRM go back further to the 19th century. The first company that went into cause-related marketing was American Express. This company has a long history supporting both the Statue of Liberty and Ellis Island, beginning in 1885 when the company raised money through a call to employees to help fund the Statue’s pedestal. In 1976, in honor of the nation’s bicentennial, American Express made a $75,000 grant for restoration work and also underwrote a documentary film about the history of the Statue, which was shown to millions of Statue visitors for many years.
Twenty two years ago, American Express launched its first and best-known national cause-related marketing campaign, to fund the restoration work on the Statue in preparation for its centennial celebration in 1986. American Express gave a portion of every purchase through their credit card to the endeavor and an additional amount for every new application that resulted in a new credit card customer. The company also launched a $4 million advertising campaign. The results are now legendary: the Restoration Fund raised over $1. million and American Express card use rose 27%. New card applications increased 45% over the previous year. All this was accomplished with a three-month campaign. The company also supported The American Immigrant Wall of Honor at Ellis Island, raising a total of $19 million. But even now American Express continues to help the Statue of Liberty. In 2001 the company announced a nationwide fundraising and awareness campaign to help reopen the doors to the Statue of Liberty.
American Express rolled out a series of awareness and fundraising initiatives and had pledged $3 million to The Statue of Liberty-Ellis Island Foundation, Inc. to make critical safety improvements so that the monument can again be accessible to the public. The Statue has been closed to the public since September 11, 2001. The American Express contribution had two parts. First, the company donated one cent to The Statue of Liberty-Ellis Island Foundation for every purchase made on an American Express Card of up to $2,500,000 from December 1, 2003 through January 31, 2004.
The company also made a direct contribution of $500,000. What is cause- related Marketing. The first definition of cause-related marketing, given by Varadarajan & Menon in 1988, is the following: Cause-related marketing is a marketing strategy whereby the firm makes a contribution financial or, otherwise, to a non-profit organization contingent upon a customer engaging in a revenue-providing exchange that satisfies business and individual objectives. This strategy may include additional elements such as sponsorship, sales promotion, cobranding and employee involvement.
Cause-related marketing is the process of formulating and implementing marketing activities that are characterized by an offer from a firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives. In effect, cause-related marketing is a strategy designed to achieve business objectives through support of a cause or charity. CRM has also been referred to as “strategic philanthropy” and a way for business to “…do well while doing good” (Varadarajan & Menon).
This approach presents an attractive proposition to businesses that have come under increasing pressure to generate a return for every investment. It is also suggested that the strategic use of philanthropy is an important component in building long-term competitiveness. Companies often resolve the dilemma between being profitable and socially responsible by resorting to “strategic philanthropy” whereby support to social causes pays back through positive externalities that such efforts create, which aligns social and economic goals of the company.
Socially responsible actions of corporations thus serve a dual purpose of being an end for the company that is concerned about its image and at the same time a means to expand profits and revenues, i. e. a yet another business strategy. Main modes of contributing to corporate bottom-line through strategic philanthropy. The first consists in improving infrastructure, raising quality and availability of labor and other inputs, relieving social tension in the regions where the company operates to mitigate political risks, and in other means of improving the operational environment of the company.
This is essentially the corporate version of the above mentioned direct incentive for philanthropy. The second mode, known as cause-related marketing (CRM), consists in bundling the image of the company or a particular brand or product that it sells with a charitable cause. The purpose of this business strategy is to differentiate the company and its products from competitors, to win loyalty and goodwill of customers by supporting a worthy undertaking, and thereby to ultimately expand the company’s market share and profits. Forms of cause-related marketing
CRM can take various forms, the most straightforward one being a pledge of remittance To a designated charity of a certain amount per customer’s purchase. The donated amount could be either lump-sum, or a percentage of the paid price. Donations could also be indirect, in the form of forgone profit due to the company’s refusal to deal with suppliers or use technologies that cause damage to environment. An extreme form of this motive is participation of alcohol and tobacco producers in anti-drinking and antismoking campaigns.
Another definition of cause-related marketing as a business strategy aiming to : (a) associate [a company’s] product with a perceived social good and thus boost its appeal to a defined market segment which shares that perception (b) increase a broader market segment’s perceptions of the enterprise as socially-engaged or responsible; (c) derive bottom-line benefits from increasing market share in the targeted segment”. A yet another version of this approach is a promise to fairly compensate company suppliers that would be otherwise victims of “unconscionable” exploitation.
CRM is analogous to the commercial practice known as “tie-in sales”, when a company sells packages consisting of its primary products in combination with accompanying ingredients that could be in principle obtained independently. For CRM such add-ons are charitable donations. CRM has mushroomed since the American Express’s campaign in 1980s. Measured by revenues contributed to charity, it grew in the US from $120 million in 1990 to an estimated $1. 08 billion in 2005. It is noteworthy that this impressive growth occurred against the backdrop of the overall decline of corporate philanthropy.
Major manufacturers and retail chains such as Avon, Barclays, Cadbury, The Home Depot, Target, Timberland, McDonalds and ConAgra, all practice CRM. Private and household sectors surveys indicate a significant potential of CRM as a business strategy and a philanthropy tool. A corporate survey conducted in 2005 by the UK-based Business in the Community movement reported that close to 60% of marketing directors practiced CRM in the year preceding the survey, and 2/3 of them found it important in achieving their marketing objectives. 7% of respondents are of the opinion that CRM can enhance corporate or brand reputation. Why companies can profit from CRM? Why adding donations to charity to the main product (the basic good) makes economic sense for the company? Clearly such package is more appealing to a customer that values the chosen charitable cause, but it costs the company more, and the latter could still make a profit under at least one of the following conditions: he company has an advantage over its customers in conducting philanthropy, and could keep at least some of the gains that such advantage creates, or CRM opens additional opportunities for the company on the primary market that it serves. Skills of advertising to affect personal behavior Cause marketing uses the skills of advertising to effect social change, to benefit individuals or society at large. It can be a form of advertising in the service of the public.
Cause Marketing seeks to impact personal behavior in a number of ways. Among these are: Avoidance or discontinuance of risky practices like smoking or drug abuse or unprotected sex Discontinuance of anti-social actions such as littering or carelessness with campfires; Seeking counseling for destructive behavior such as compulsive gambling or spousal abuse; Taking preventative measures such as getting inoculated, reducing cholesterol intake, or fastening a safety belt; Seeking out and using information about various diseases;
Re-examining personal attitudes toward issues like race and sexual preference; Identifying and taking action against inhumane or discriminatory practices; Organizing, joining, and giving financial support to groups that benefit our society: Becoming involved in community activities such as mentoring and monitoring neighborhood crime. Cause marketing can also help to create or change public policy. In short, when properly employed, cause marketing informs about, and creates action on behalf of a cause. Advertising which does that is also widely classified as “Social Marketing”. Cause-related??Marketing” is a label that has been defined by Kotler and Andreasen in their book “Strategic Marketing for Non-Profit Organizations” as “any effort by a corporation to increase its own sales by contributing to the objectives of one or more nonprofit organizations”. Cause of firmly held benefits What makes the difference in most public service advertising is the complex psychological makeup of the target “consumer” for these messages. To change deeply held public attitudes, one needs a thorough understanding of the belief systems and motivations of the targets of that effort.
And this requires sophisticated research, plus some very finely honed strategic and creative skills. For example, most good product selling lines or slogans are fairly simple and straightforward. They generally present factual evidence of a product’s superiority in language that is hopefully mind-opening and memorable. But product selling lines usually don’t come with deep psychological underpinnings. Cause advertising almost always does. Often it targets people who are addicted to drugs, alcohol, tobacco, or gambling.
These targets of cause campaigns are frequently in denial about their problems, and therefore ostensibly uninterested in your message. When cause campaign themes or slogans fail, it is more than likely because they contain no psychological or emotional “hook. ” The goal of most commercial advertising is simply that of changing purchasing patterns. The cause marketing campaign seeks to change strongly ingrained behavior or firmly held beliefs. Cause-related marketing : an important component in building long-term competitiveness.
There are now many versions of cause-related marketing, but basically it is an agreement between a business entity and a nonprofit to raise money for a particular cause. The business entity expects to profit by this arrangement by selling more products and by enjoying the “halo” effect[1] of being associated with a respected nonprofit or cause. A cause-related marketing program is not an anonymous or low-key donation to a nonprofit but one that lets the public know that this corporation is socially responsible and interested in the same causes that its consumers are.
The nonprofit benefits both financially and through a higher public profile as a result of its partner’s marketing efforts. Forms of CRM campaigns Cause-related marketing campaigns have blossomed over the last few years and can appear in a variety of interesting forms : Product sales. (Red) campaign has brought together many companies to sell specially branded products (a red Gap T-shirt or a red iPod for instance) with a portion of the selling price going to the Global Fund for HIV/AIDS prevention. Purchase Plus.
This is a campaign waged at the checkout line at grocery stores or other retail venues. Typically a customer is asked if he would like to add a donation to his bill. The amounts are usually low enough for most people to say yes. The store processes the money and gives it to the nonprofit with which it has partnered. Promotion of the cause is usually pretty low-key but that makes these programs easy to set up and they are quick so a business can respond to, say, a natural disaster in a timely way. Now they are spread only in European countries and USA, but not yet in Russia.
Licensing of the nonprofit’s logo, brand, and assets. Licensing runs the gamut from products that are extensions of the nonprofit’s mission to using its logo on promotional items such as T-shirts, mugs, and credit cards to having the nonprofit provide a certification or commendation of particular products. An example of the latter is the American Heart Association which provides recognition for products that meet their standards for heart health. Cobranded events and programs. Probably the best known example of a cobranded event is the Susan G.
Komen “Race for the cure. ” A cobranded program is exemplified by a London Children’s Museum that teamed up with the 3M (Minnesota Mining and Manufacturing company, an American multinational conglomerate corporation with a worldwide presence) company to build and outfit a science gallery for children. The involvement of the corporation in this program is deeper than the usual “sponsorship” with scientists from the company involved in helping with the exhibits to the company’s employees serving as volunteers. Social or public service marketing programs.
Social marketing involves the use of marketing principles and techniques to encourage behavior change in a particular audience. An example is the partnership of the American Cancer Society and Novartis, on their Great American Smokeout. Advantages and disadvantages of cause-related marketing. Benefits There are advantages for both nonprofit and business. For business, cause-related marketing proves that it is socially responsible, and provides great public awareness of its values and willingness to support good causes.
For the nonprofit, the contributions from a cause-related marketing project can be significant, and those funds are usually unrestricted so even overhead costs can be supported by them. Besides actual monetary benefit is the intangible value of the publicity and advertising that usually accompanies a cause-related marketing program, which is often done by the corporation’s public relations and marketing departments. Recent research made in USA showed: 8 in 10 Americans say that corporate support of causes wins their trust in that company. 6% of Americans would be likely to switch brands to ones associated with a good cause, if the priced and quality are similar. 90% of Americans would consider switching to another company’s products or services if they learned about the former company’s illegal or unethical practices. 86% of Americans want companies to talk about their cause-related efforts. Women control 80% of all consumer buying ??? which represents as much as $3. 4 trillion per year or 2/3 of U. S. gross domestic product. According to this information we can conclude that cause-related marketing helps companies to gain a good reputation.
And that patronage and fundraising campaigns make customers trust your business more. But going into CRM has not only advantages, but some negatives and risks too. Risks Many good programs can be sabotaged if the public believes that a company is using a nonprofit’s positive image to disguise an inferior product, that the nonprofit is being manipulated by the corporation, or that the nonprofit will actually receive funds from the program. Moreover, some questions may appear, while considering the purchase. As an informed donor don’t you want to know how much?
Would you still buy the product if only a penny was going to charity? What if the charity was only receiving a set amount, pre-determined by the licensing agreement, no matter how much the firm’s sales increased as a result of the marketing campaign? The structure of the program may also be an issue of concern. For example, two-stage giving programs that require consumers to undertake a behavior in addition to main purchase, such as mailing in a barcode, may mean that corporate contributions are exaggerated if this secondary behavior is not clearly communicated and subsequently undertaken.
Given the extensive number of concerns outlined, it has been suggested that firms need to anticipate the potential problems associated with a cause-related marketing strategy and address this issues early in the planning stages. Commercially-related concerns have also been expressed regarding the effectiveness of these programs. For example, the ability to quantify results, the ability to attract consumer attention and the resource-intensive process of negotiating and administrating the program have all been questioned.
The results of supporting a “pro-social stance” cannot be guaranteed therefore making it difficult for firms to justify the expense. Further, company advertising with a social dimension does not necessarily result in short-term sales increases or product differentiation. Finally, the success of cause-related marketing strategies to date may be due to their uniqueness, and as more companies adopt such a strategy, their effectiveness may be reduced. Nonprofit organizations that take part in cause-related marketing are also exposed to risk.
These risks have been identified as follows: the potential for inefficient use of limited management resources on a venture which may not succeed; potential for individual donations to decrease, due to donors not supporting the commercial involvement or a perception that they are no longer needed due to the corporate support. And the inappropriate choice of a partner with a questionable reputation, thus affecting the image and credibility of the nonprofit. The negative example of such an alliance is the partnership between the Arthritis Foundation and Johnson & Johnson in the United States.
The company produced Arthritis Foundation brand pain relievers and advertised them as new, despite the fact that active ingredients had been available previously. Further, the advertising claimed that the Arthritis Foundation helped to develop the product, which was not the case. Finally, the company stated the portion of each sale would be donated to the Arthritis Foundation; however, a fixed donation had been agreed upon regardless of sales. Once these facts were revealed, the company was perceived of taking advantage of the nonprofit organization and committing a fraud.
Johnson and Johnson ultimately settled out of court for US$2million. Also, there is always the possibility that one of the entities involved (nonprofit or corporation) will do something that hurts its reputation. In that case, the other party may be perceived negatively as well. For that reason, corporations and nonprofits should choose their partners wisely. In addition there has been considerable concern about nonprofits lending their good names to for-profit activities. Does it weaken the trustworthiness of a nonprofit? Does it blur the lines between business and philanthropy?
Could a nonprofit “sell out” by lending its support to products that are less than benign for the public? These questions continue to be debated by both fundraising and marketing professionals. Today’s problems Today, there is also a potential problem given that there are so many cause-related marketing programs. The Chronicle of Philanthropy made these caveats about the question: Merchandising deals are not appropriate for just any charity. The ones that do well have significant name recognition or expertise in a particular topic.
It can take up to two years of research, negotiation, and product development before an organization realizes any profit. Too many charities pursuing high profile deals can result in “cause clutter”. Consumers may grow tired of the constant appeals to buy things to support good causes. A recent survey by the leading cause marketing firm found that while 30 percent of surveyed consumers in 2004 said they would pay more for a product if it supports a good cause, a follow-up survey more recently showed that only 14 percent of consumers say they would do so. Women and community bias.
Women are the best target audience for all the marketing spheres. And cause-related marketing is not an exception. Marti Barletta, guru of marketing to women, has turned her attention to women of a certain age in her new book, “Primetime Women: How to Win the Hearts, Minds, and Business of Boomer Big Spenders”. Although Barletta’s book is aimed at business, nonprofit marketers should pay attention as well. Older women feel socially responsible, a trait that can benefit both nonprofits and businesses. How Are Women Different? Barletta lays out the differences between men and women, especially Primetime women.
Key points for nonprofits are: Men pay less attention to people while women are people powered. Stories of real people in difficult situations will trump the latest gadget for women. Men are soloists while women are ensemble players. For men individuality, freedom, autonomy, and independence are valued. Women see themselves as part of an ensemble group. They think “we,” not “me. ” Men do unto themselves; women do unto others. Women see themselves first as members of a community, then as individuals. They feel responsible to people who need help, and they open their wallets as well as their hearts.
Men are driven by envy while women are driven by empathy. Women are not as interested in winning as they are in belonging and being understood. Men want to be admired, but women wish to be appreciated. What Happens to women as they age? PrimeTime women yearn to leave a legacy. PrimeTime women are very interested in civic activism. PrimeTime women are at their peak earnings with plenty of discretionary dollars to lavish on their favorite causes. Cause marketing is ideal for women, and particularly older women, since they have a propensity to feel that they are the “guardians of civilization. Companies and nonprofits should think of meaningful events since PrimeTime Women have not only money but time on their hands. They want to become involved, to be actively altruistic. Products for good work well with PrimeTime Women such as the new (Red) campaign developed by singer Bono. The list of companies that participate in that promotion ranges from Motorola and The Gap to Nike and American Express. Promotions that have worked well with Boomer women include the partnership of BMW and the Susan G. Komen Breast Cancer Foundation with The Ultimate Drive campaign.
Since women are very peer oriented, businesses and nonprofits should provide group opportunities. Events and promotions should include “girlfriend” possibilities as well as intergenerational opportunities that include grandchildren and other family members. Barletta coins the term “corporate halo” to refer to corporations that go beyond just the occasional cause campaign. The halo includes the sum of a company’s social responsibility and community citizenship. Boomer women are looking for a way to make the world a better place and to leave a legacy. They will favor companies that partner with good causes and do it for the long-term.
Barletta points out that older women will, for the next two decades, occupy the “center of gravity” in the US and in the developed world. This is partly because of their sheer numbers but also because of the fortune that they control. PrimeTime women are an ideal target for corporations and nonprofits to target together. Cause-related marketing tips Identify a cause that fits your business. The goal should be to align your brand with a synergistic nonprofit cause or organization in order to create win-win marketing. Your customer will feel good about buying your product.
Your company will gain profile, a reputation for caring, and, depending on the campaign, increased sales. The nonprofit will generate publicity and awareness for its cause. Win-win , indeed. But all of that only works when your product and the cause share natural affinities. If you own a steakhouse, for example, don’t partner with a group that promotes the vegan lifestyle. Rodger Roeser, who has an experience of , advises to look at what you sell and understand the targets you’re trying to reach. Then align yourself with causes that will bring out the emotions of that audience, from the grassroots.
He has concluded several deals for small businesses with such groups as Habitat for Humanity, March of Dimes and more. He planned a three-month Coats for Kids campaign that began in October 2004 and ran through the Christmas holiday for laundry services client Appearance Plus. He ran promotions in newsletters and took out media ads to publicize the campaign. He made an agreement to dry-clean coats and blankets for free and distribute them to the needy during the holiday. The goal was to get people in the store. Result: Appearance Plus saved a bundle on the cost of customer acquisition, which dropped from $150 to $50 per customer.
Don’t manufacture your concern. There’s no point in supporting an issue you don’t really care about ??? people are bound to catch on. Having a genuine passion or interest in the cause means you’ll stay engaged and you’ll still feel successful even if marketing efforts fall a tad short. Plus, when the owner is engaged, employees tend to get involved as well. For example, Lisa Bell, who owns Tivoli Partners, a Charlotte, N. C. , direct-response marketing agency, chose a cause she cares deeply about that also resonates with her community and clients. For more than five years, we’ve been a major supporter of the Charlotte affiliate of the Susan G. Komen Breast Cancer Foundation,” Bell says. “In Charlotte, so many lives are touched by breast cancer. Clients and potential clients appreciate our work for Komen and view us as a good corporate citizen. It’s definitely helped our business”. Cause marketing is most successful when the mission of the nonprofit truly resonates with the values of the sponsoring company. Define your marketing goals. Decide upfront why you’re getting involved and what you want out of the partnership.
There’s a range of possible marketing benefits from such sponsorships. Non-tangible benefits include building company credibility, enhancing your reputation, differentiating the brand, strengthening customer loyalty, and improving employee pride and retention. Tangible benefits might include increased sales and specific publicity, such as increasing the company profile by having the name highly visible on festivals or on posters and Web sites. You also might seek local media coverage. Don’t gloss over the business benefits. Just because you’re dealing with a nonprofit is no reason to ignore standard business practices. The pitfall for small businesses in cause marketing is not understanding the basics ??? the equivalent of not knowing how to ask for the order,” says Diana Kimbrell of Kimbrell & Company, a cause-marketing agency. Be specific about what you expect. Spell out the details and then get a signed contract. Calculate how many times your company name and logo will be seen, what kind of information will be placed on their Web site, how many banners will be seen, what kind of article will be written for the nonprofit’s newsletter and how many people it goes to. It’s simple math. Put metrics on the process.
You don’t need to get carried away, but you need to measure results to learn what works and what doesn’t. You can request a periodic report, as informal as you like, from the nonprofit. Or, assign an employee to track sales or promotions, preferably someone who cares about the alliance. Don’t be modest about your involvement. This is marketing, after all. That means you must spread the word. “For the past three years, Tivoli has sent out animated e-mails that tout the success of the annual Race for the Cure,” says Lisa Bell. “I’ve shown these e-mail messages in meetings as an example of our work.
And it’s amazing how many people received it and passed it along to friends. ” Integrate cause marketing with your other efforts. Partnering with a good cause is only one method of getting out your message, of course. You can’t rely on that alone. Cause must be treated like any other campaign in terms of identifying audience demographics, defining the scope of marketing reach, media coverage potential, the costs of banners, ads, radio spots and so on,”. Harness the power of cause marketing ??? but make sure it’s part of a bigger overall marketing strategy. Examples of CRM
In this part of my course paper I would like to show some examples of cause-marketing campaigns that have been brought about in different countries. USA Lace Armstrong Foundation It is a campaign sponsored by Lace Armstrong Foundation in USA. It is a bracelet campaign from New York City artist David Stevenson benefiting the Parkinsons Unity Walk. When you buy the sterling silver bracelet at the left called ‘Inspiration’ for $175, 40 percent (or $70) goes to Parkinson’s Disease research. The Unity Walk people commissioned the bracelet from Stevenson, and the fulfillment is handled through Stevenson’s website. pic] Revlon Run/Walk for Women Created in 1993 by cancer activist Lilly Tartikoff, Revlon ??hairman Ronald O. Perelman and the Entertainment Industry Foundation, the Revlon Run/Walk for Women has grown into the nation’s largest 5K fundraising event for women challenged with breast and ovarian cancer. Since then more than $50 million has been raised for women’s cancer research, education and support programs. Each year on Mother’s Day weekend, some100,000 men, women and children in Los Angeles and New York City join together with the entertainment community to turn dreams into reality. pic] Revlon Industry Foundation Revlon Industry Foundation is doing an interesting campaign sponsored by US Airways called “Fly With US. Read With Kids. ” It’s targeted at adults, encouraging them to log minutes reading with a child. [pic] T-Mobile This is a campaign from T-Mobile, the American mobile phone company and a division of the European Union’s largest telecommunication company, Deutsch Telekom AG. When you switch to paperless billing, T-Mobile, in conjunction with the Arbor Day Foundation, will plant a tree in your name in a blighted area of the United States.
The Arbor Day Foundation, a tree-planting charity headquartered in Lincoln, Nebraska, calls it the Restoration Project. The tree planting is concentrated in the region around New Orleans devastated by Hurricane Katrina in 2005 and areas of Southern California which were denuded of trees by the fires of 2007. [pic] Chili’s Grill & Bar Chili’s Grill & Bar and its patrons demonstrated their strong support for St. Jude Children’s Research Hospital this past September by once again exceeding expectations for the Create-A-Pepper to Fight Childhood Cancer campaign held at participating Chili’s restaurants nationwide.
Since the inception of its relationship with St. Jude, Chili’s has now raised more than $18 million for the hospital. The funds contribute to Chili’s 10-year plan to raise $50 million for the construction of a new state-of-the-art research and clinical care building named the Chili’s Care Center. [pic] Russia Competition for the best child drawing ??Mobile Communication ???Draw & Color?? From the 5th of May to the 1st of June, 2003, a branch of MTS company in Novosibirsk was conducting a competition for the best child drawing ??Cellar Communication ???Draw & Color??. Campaign targets: to increase the citizens’ loyalty in Novosibirsk; – to create an open image of the company, taking an interest in its city’s and clients’ well-being as well as to draw the children’s and youth’s (likely their future clients) attraction. The 5-25 of May was a period for the children to present their works, devoted to cellar communication. In every school of Novosibirsk there were stickers, informing about the rules. All MTS offices accepted the drawings, with participants amounting to 860. On the first of June, Children Protection Day, a child festival took place in the Central Park.
All the participants as well as anyone who wished to were invited by means of stickers and broadcasts. There was also a jury and rewards. The winners were defined by the jury (designers) in accordance with two parameters: creativity and quality. As a result 50 children won the competition and were rewarded by such prizes as handbags designed as cellar phones and packed with some drawing articles. All others were gifted by the toys also designed as cellar phones. Well-known fairy-tale characters such as Neznaika, Znaika and Tiubik confessed the prizes upon the winners.
During the event a lot of games and competitions were taking place in the Central Park. The MTS branch in Novosibirsk provided all the prizes. The teenage amateurs and a professional circus performed on the central stage. Finally everyone could enjoy a balloon salute. The program ended with a telephone opinion poll of MTS clients in Novosibirsk. Regional Children’s home – we shall help together! This is another CRM campaign from MTS. ??Amur mobile systems?? (a subsidiary of ??Mobile Telesystems?? in Amur Region) staged a campaign called ??Regional Children’s home – we shall help together! ?? .
The project was implemented in 2004. MTS, its subscribers, the mass media and government officials aimed at the achievement of positive social change in the region by attracting funds, sufficient for meeting the orphanages’ needs, through using MTS services and increasing partners’ mutual trust and loyalty . The developed project, based on the ideas of social business, is a way of cooperation among the three sectors of society, of increasing government’s loyalty to business organizations. The project’s target was chosen as the optimal social target from the point of view of potential subscribers’ benevolence;
Campaign purposes: -to involve the people of the region in tackling social problems; -to enhance subscriber’s loyalty to MTS ; -to build up mass media interest in social projects; -to increase government’s loyalty to MTS company; -to raise trust in MTS company by announcing project results at a public meeting where any interested person can take part; -to get additional publicity. The target groups were ????S subscribers; employees of MTS company, children’s home, mass media, government institutions, MTS-business partners ,??ill-wishers??, other social groups.
An essentially new fundraising method in the region was used in this campaign: each subscriber could take part in the project, he/she just chose an alternative complete set ??Jeans?? which is on ??? 0,50 more expensive. MTS company added ??? 0,5 for each alternative complete set. As a result, ??? 1 from each alternative connection was donated to aid the Children’s home. The second variant of subscribers participation in the project: any subscriber could have sent SMS-message on allocated short number (a format of a – DETI, number 050), thus the sum ??? 0,50 was written off from his personal account.
This scheme is very convenient ??? you can help at any time in any place. Almost five thousand subscribers took part in the project, having collected the sum of 99 682 roubles. Conclusion By choosing a cause you are passionate about, cause-related marketing is being emotionally fulfilled. It’s a way to merge your profit center with your “passion center” and build a business that mirrors your personal values, beliefs and integrity. If your cause also resonates with your target market, your activities will generate tremendous goodwill and media attention can be its side effect.
Cause-related marketing yields mutual benefit. Look for partners with a similar agenda whose goals can be better achieved by partnering with your business. Take inventory of the assets that make you an appealing partner in a cause-related venture. There are many types of mutually beneficial relationships you can form with your cause-related partner, including special events, sales promotions and collection plans. An easy way to embrace a cause is to team up with a charity. Never lose the marketing focus of your community partnership efforts.
Even though the work is philanthropy, your cause should generate interest in your company and motivate people to buy from it. Select a cause that is important to your target market, and make sure your target market sees that connection. Many of us are guilty of being swayed by these flashy campaigns and their promises to make the world a better place. We buy the item emblazed with an enormous charity logo and leave the store feeling altruistic. We might even continue to choose a specific brand in the future because of the firm’s philanthropic commitments. But just how charitable are you if you buy a product affiliated with a charitable cause?
Nowadays, cause-related marketing is gradually takes possessions in Russia, but not yet as widely spread, as in other developed countries. But that type of marketing will undoubtedly become very popular in the immediate future. I predict that cause-related marketing will continue to grow in USA and become more popular in Russia. Cause-related marketing has hovered around 10 percent of the total of all sponsorship for the last decade. Eco cause marketing will become commonplace. There’s already some going on in North America. But cause-related marketing with an environmental theme remains more common in Europe than in the United States.
That is because Europeans were always more concerned about ecological problems. Eco cause marketing will need to get simpler in order for it to really grow. Probably, people will increasingly respond to cause-related marketing campaigns for foreign causes, especially in the Third World. Mostly, though I predict that cause-related marketing will continue as a viable tactic and in some cases a strategy for both companies and nonprofits. Because it generates unrestricted money, which is highly coveted in nonprofit fundraising and deepens relationships with supporters. It also engenders loyalty in a company’s customers.
It builds brands, both for-profit and nonprofit. And more to the point, cause-related marketing works best with women in general, who control 80 percent of all household spending. Bibliography Jocelyne Daw, Cause Marketing for Nonprofits: Partner for Purpose, Passion, and Profits, John & Sons, Inc. , Wiley, 2006. Marconi, Joe, Cause Marketing: Build Your Image through Socially Responsible Partnerships, Programs and Events, Dearborn Trade Publishing, 2002. Pringle, Harnish and Mariorie Thompson , Brand Spirit: How Cause Related Marketing Builds Brands, John & Sons, Inc. , Wiley, 2001.
Lovelock, Christopher H. and Charles B. Weinberg, Public and Non-profit Marketing, CA: Scientific Press, Redwood City, 1989. Kotler and Andreasen, Strategic Marketing for Non-Profit Organizations, CA; Sage Publishing, Thousand Oaks, 2008. www. stjude. org www. nonprofit. about. com www. causerelatedmarketing. blogspot. com ———————– [1] A “halo” effect is one where the perceived positive features of a particular item extend to a broader brand. For example, it has been used to describe how the iPod has had positive effects on perceptions of Apple’s other products.