Download Marketing Science News March 2017

Press Release
Marketing Science News
Accepted Papers
Mar 6, 2017
Special Issues
Press Release
Cause Marketers Beware: New study conducted in China finds price discounts
may backfire when combined with large donations
CATONSVILLE, MD, March 6, 2017 – Providing consumers the opportunity to feel
altruistic by donating a portion of the purchase price to a charity is an effective way for
businesses to drive sales, as is providing items and services at discounted prices. However,
businesses should proceed with caution when combining these two marketing techniques,
as it can have the opposite effect. According to a forthcoming study in the INFORMS
journal Marketing Science, offering price discounts can reduce rather than increase sales in
cause marketing settings, where firms donate a certain percentage of revenues to a charity.
This surprising finding is driven by the fact that consumer response to the cause marketing
campaign is driven more by a consumer’s effort to feel altruistic than by an intrinsic desire
to support the charity.
The study titled “Self-Signaling and Prosocial Behavior: A Cause Marketing Experiment”
was authored by Jean-Pierre Dubé of the University of Chicago, Xueming Luo of Temple
University, and Zheng Fang of Sichuan University.
The authors collaborated with a large wireless service provider in China who conducted
randomized field experiments involving the purchase of promoted movie tickets to over
40,000 mobile subscribers. The study offered each subscriber one offer at random from a
set of 21 promotional offers – a different combination of percentage price discount and
percentage of price donated to charity. As expected, larger price discounts without
donations led to higher ticket sales; similarly, larger donation percentages without discounts
also increased ticket sales. But when combined with moderate-sized donations (10-15
percent of the full price), larger discounts led to a decline in sales, demonstrating
thatdiscounts and donations are not always synergistic in cause marketing.
“The key insight is that while discounts increase the appeal of the ticket offer, they also
dampen potential self-signaling about the subscriber’s own goodness and altruism,” said
Dubé. “A highly discounted ticket would likely be purchased anyway, regardless of
altruism. A large discount therefore prevents the buyer from feeling altruistic. In contrast,
when a high-priced ticket includes a donation to charity, it is easier for the buyer to feel
altruistic since they would not have otherwise bought the ticket. A survey of the buyers
shows clear support for this conjecture—consumers indeed derive more utility from the
self-perception of being charitable than from the intrinsic act of charitable giving.”
Luo noted, “Social-signaling as a motivation for charitable giving has been long known in
charity circles and among psychologists. But what surprised us here was the motivation to
self-signal, even in the absence of peers. Even more surprising was that this need for selfconfirmation overwhelms the altruism motivation – often the overt reason and conventional
wisdom behind cause marketing.” Echoing this, Fang added “Managers intuitively add
features to make their offers more attractive to consumers, but the big warning for cause
marketers is that price discounts in combination with an offer to donate even a modest
percentage of revenues to charity actually hurts sales – e a very surprising negative
synergy.”
Based on their model of consumer response to discounts and donations, the authors
simulate how much a marketer would generate in terms of revenues and donations for
charity. Interestingly, they find that a large discount with a very small donation percentage
generates the most amount of revenues for the marketers.
Jean-Pierre Dubé
Xueming Luo
Zheng Fang
About ISMS
The authors are members of ISMS, the Informs Society of Marketing Science. ISMS is a society of
scholars focused on describing, explaining, and predicting market phenomena at the interface of
firms and consumers.
About INFORMS
With more than 12,500 members from across the globe, INFORMS is the leading international
association for professionals in operations research and analytics. More information about
INFORMS is available at www.informs.org or @informs.
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The press release is an attempt to make Marketing Science more accessible to the public
through general media. For each issue, the Editor-In-Chief of Marketing Science, currently
K. Sudhir, selects a couple of papers for the press release. He then works with the authors,
Gerry Tellis and Andrew Stephen, (VP and VP Elect of ISMS External Relations
respectively who are also members of the Marketing Science Media Committee) and
INFORMS to prepare the press release. INFORMS issues the press release.
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Accepted Papers
Below is the list of papers accepted during the month of February 2017:

“Sunny, Rainy, and Cloudy with a Chance of Mobile Promotion Effectiveness,”
by Chenxi Li, Xueming Luo, Cheng Zhang, and Xiaoyi Wang.

“The Effect of Calorie Posting Regulation on Consumer Opinion: A Flexible
Latent Dirichlet Allocation Model with Informative Priors,” by Dinesh
Puranam, Vishal Narayan, and Vrinda Kadiyali.

“Product Quality in a Distribution Channel with Inventory Risk,” by Kinshuk
Jerath, Sang-Hyun Kim, and Robert Swinney.

“The Effect of Retail Distribution on Sales of Alcoholic Beverage,” by Richard
Friberg and Mark Sanctuary.
The link to the abstracts: https://yale.box.com/s/amtrqnv25jt6d2cwg3p23qvaz7eqwnsg.
CFP for Special Issues of Marketing Science
Marketing Science is calling for submissions to special issues coming up in the areas of
Health, Consumer Protection and Field Experiments.
Health: http://pubsonline.informs.org/page/mksc/health
Consumer Protection: http://pubsonline.informs.org/page/mksc/consumerprotection
Field Experiments: http://pubsonline.informs.org/page/mksc/fieldexperiments
About ISMS Marketing Science News
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This ISMS News is approved by Marketing Science Editor-in-Chief, currently K. Sudhir.
The VP for Communications of ISMS, currently Xueming Luo, sends the news out.
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