Realize Realities of Cause-Related Marketing

In cause-related marketing (CRM) promotions, a marketer pledges to donate a small portion of sales revenues to a nonprofit organization or cause. Past studies say such promotions improve brand attitudes and purchase intentions. But while taking note of those conclusions, researchers at Vienna University of Economics and Business, University of Hamburg, Vrije Universiteit Amsterdam, and University of Groningen say that the conditions under which the studies were conducted are not sufficiently representative of the typical conditions under which marketers conduct these promotions.
     The most common use of CRM promotions is by marketers of fast-moving consumer goods (FMCGs), such as in grocery stores, where a shopper is choosing from a multitude of alternatives under time pressure. The vast majority of past studies, however, have been conducted in lab or field settings where participants are choosing among a few alternatives with ample time to carefully consider them all.
     In their own study, the researchers analyzed 63 actual CRM promotions including a range of 20 grocery and drugstore product categories. The average duration of the promotions was 11 weeks, and the average donation amount was about 3% of the product price.
     The average sales lift from the promotions was about 5% per week. But the most successful of the promotions accounted for the realities of FMCG contexts: The shopper should want to buy the particular product for reasons other than the charitable contribution. Sales lift can more than double when the brand is a market leader in the category or the item is priced below the alternatives in the category. The sales lift also was greater for categories with few alternatives and when the price differences for equivalent items were small.
     The combination of contribution to a charity with discount for the customer was also explored in a Temple University, Aalto University, Hanken Swedish School of Economics, and Sichuan University study. Analysis of results showed that a moderate discount in this situation works better than no discount or a deep discount. The moderate discount used for the studies was 30% and the deep discount was 50%. In discussing their results, the researchers say a discount in the range of 10% to 30%—more than only 3%—would be best for increasing sales.
     Why doesn’t a deep discount boost item sales as much as a moderate one? Because the deep discount erases the motivation of feeling charitable. People are buying for the price alone.

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Image at top of post based on photo by Kelly Sikkema from Unsplash