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Cause Related Marketing: A Win-Win Approach (A Conceptual Framework) Dr. Amardeep Kaur Ahluwalia, Assistant Professor, GNDU Regional Campus, Gurdaspur. Ms. Simranjit Bedi, Assistant Professor, Khalsa College for Women, Amritsar. Address : 50-51, Lal Avenue, P.O. Rayon & Silk Mills, Amritsar - 143001 PUNJAB. Mobile : 95696-88722 E-mail ID : [email protected] Abstract Cause-related marketing (CRM) is a marketing tool that brings benefits to a sponsoring company, a cause and a consumer. Companies all over the world are showing greater interest in CRM because of the plethora of benefits it brings to key stakeholders and the increasing consumer concern over socially responsible consumption. CRM appears to be a win-win situation for businesses and non-profit organizations equally. This marketing strategy provides a win for the charity or cause, a win for the consumer and a win for the business. CRM is a type of corporate social responsibility initiative. Over the last decade, cause-related marketing (CRM) has become a popular marketing strategy for companies. Academic research suggests outcomes of CRM campaigns are generally positive for companies as well as for causes. For companies, CRM has been noted to increase sales and enhance companies’ image. As for causes and the organizations promoting these social issues, they received greater funding and publicity. Overall the impacts of cause-related marketing on consumers’ responses are significant. Keywords: Cause Related Marketing, Corporate Social Responsibility, Mutual Benefits, Suggestive Measures. INTRODUCTION Marketing, now, is not merely about only the market. The focal point is getting wider day by day. The companies are devising different strategies to contribute to societal development activities along with their attainment of corporate goals and objectives. Cause related marketing is one of those tactics that enables the marketers to involve the customers directly into the process. (Babu and Mohiuddin, 2008). Simply providing quality products or services does not suffice in today’s competitive business environment to win and establish the brand (Adkins, 2004). Most of the companies are using Cause Related Marketing as a strategic tool (Till and Nowak, 2000) to build a positive corporate image in the minds of consumers (Chattananon et al., 2008) which results in enhancing the sales of a company’s products (Varadarajan and Menon, 1988) and profits as well (Adkins, 2004). Also consumers have better perceptual associations with those organizations that work with charities and good causes (Farache and Perks, 2008). Cause marketing refers to a type of marketing involving the cooperative efforts of a profitable business and a non-profit organization for mutual benefit. Typically in a Cause Related Campaign, a brand is affiliated with a cause either environmental or social. To compete today, brands need to constantly define their value in the world (1). Cause-related marketing(CRM) represents the confluence of perspectives from several specialized areas of inquiry such as marketing for nonprofit organizations, the promotion mix, corporate philanthropy, corporate social responsibility, fund-raising management, and public relations. (Varadarajan and Menon, 1988). CRM aims to link corporate identities with nonprofit organizations, good causes, and significant social issues through cooperative marketing and fundraising programs (Hans and Gupta, 2013). American Express first employed the concept of CRM in 1982 in the USA (Till & Nowak, 2000). Each time someone used the card, 5 cents were donated to several arts organizations participating in the San Francisco Festival. It was a successful endeavour and encouraged the corporation to try similar actions on a national basis. In 1983, American Express developed the programme for the renovation of the Statue of Liberty, which was probably the first CRM programme to gain worldwide renown. Use of the card increased the sales by 28% and US$ 1.7 million was donated to the project (Adkins, 2004; Barone et al., 2000). CAUSE RELATED MARKETING (CRM) DEFINED Varadarajan and Menon (1988, pp.60) defined cause-related marketing as the process of “formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specific amount to a designated cause when customers engage in revenue providing exchanges that satisfy organizational and individual objectives”. Skory and Repka (2004, p.2) posit that “Cause Related Marketing is simply marketing with a worthy cause”. Brink et al (2006, p.5) stated that “CRM is a specific marketing activity in which the firm promises its consumers to donate company’s resources to a worthy cause for each sold product or service.” Amalgamating these three definitions, CRM may be described as the process of formulating and implementing marketing activities that are characterized by a promise of the firm to donate company resources to a worthy cause for each sold product or service satisfying organizational and individual objectives. Adkins (2004) contemplates CRM as a strategic alliance between the company and a cause for the achievement of mutual benefits. CRM is a program designed to create a partnership between a company and a cause in order to raise money through product sales. Cause related marketing can be understood as a strategic positioning and marketing tool which links a company or a brand to a relevant social cause or issue for mutual benefit. It is the initiation and funding of deserving causes. Nothing builds brand loyalty among todays increasingly hard to please consumers like a company’s proven and long term commitment to a worthy cause (Hans and Gupta, 2013). LITERATURE REVIEW There has been a growing interest and attention in CRM based programs over the past few years. CRM is growing and its growth is due to several factors such as increased awareness, favorable consumer responses and positive consumer purchasing intentions towards CRM and support of companies towards worthy causes which ultimately increases company’s profits. Various studies have been conducted in respect of CSR and CRM at the national and international level. The studies being reviewed in this concern are as below: Varadarajan and Menon (1988) have seen Cause Related Marketing in the early stages but completely in a projective way. They defined Cause Related marketing as the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenueproviding exchanges that satisfy organizational and individual objectives. They have identified large number of objectives but six main objectives seems more promising i.e. Increasing sales, Enhancing corporate Stature, Thwarting negative publicity, Customer Pacification, Facilitating Market Entry, Increasing the level of trade merchandising activity for brand promoted. They suggested that causes can be categorized into three levels, national, regional and local. Adkins (2000) postulated that CRM is not philanthropy, which expects nothing in return. From her point of view it is merely good business for both non-profit and for-profit organizations. CRM alliances should be a relationship of mutual benefit for the corporation, for the charity and for the cause. For the corporation, the benefits include an increase in brand awareness or even increased corporate profits. For the cause, the benefit comes in the form of increased contributions and generating more awareness. CRM presents varied benefits in the form of new customers, increased product sales, positive brand identity, enhanced corporate image, competitive advantage, increased brand loyalty and sales, motivated employees, signifying organizational values and enhancing reputation. Till and Nowak (2000) declared that CRM is both a strategic and tactical approach. From their perspective in a tactical approach a brand might embrace a cause for a restricted period of time. The authors perceived the strategic approach as the heart of brand positioning. As such, the alliance with the cause or non-profit organization is a crucial factor for the brand identity. Barone, Miyazaki and Taylor (2000) noted that there were actually two approaches to cause related marketing. The direct approach which tie the size of donation to sales of particular products. For example, Proctor & Gamble promises and invites their buyers to purchase among a large number of products belonging to P&G and help to educate the under privileged by consumer participation in purchases. The second approach is indirect, providing no clear link between revenue achieved and size of donation. For example, TATA tea worked with Janaagraha on a voter- registration drive, with the campaign named “Jaago Re!” (“Wake Up”). Following this, the company moved the campaign on to opposing corruption. By Jaago Re! Campaign it engages itself with societal issues. CONE Survey Report (2007) studied consumer expectations from U.S. companies and how their perceptions can influence purchase intentions, willingness to hire and investment decisions related to companies. Firstly consumers were studied; research was then extended to employees, investors and other key stakeholder groups. Most Americans said when choosing companies they are influenced if there is any relevance and consistency between the sustained cause and the activity of a company. Environmental protection and sustainable development are among the causes most appreciated by the Americans. The results suggested that 78% of Americans believe companies have a responsibility to support social issues, 92% have a more positive image of companies and products that support causes and 84% would be likely to switch brands to one associated with a good cause, if price and quality were similar. The consumers preferred local as compared to national and global cause. Chaney and Dolli (2000) conducted a study in New Zealand and found that 57% of respondents remembered purchasing a product that involved a cause-related marketing campaign. In 15% of these cases, the respondents had switched brands because of the campaign as they were readily willing to participate and contribute in such programs. According to Stole (2006), Cause Related Marketing (CRM) is the hybrid of product advertising and corporate public relations. He mentioned that there are six main types of CRM arrangements. They are: advertising, providing cause’ message, public relations, tying up with nonprofit organizations; corporate sponsorship, providing financial help to an event; licensing, where a business pays to use a charity logo on its products or services; direct marketing, where both a business and a non-profit raise funds and promote brand awareness; purchase-triggered donations, wherein the company contributes an amount from the price of product to a social or charitable cause. Skory and Repka (2004) stated that CRM is used by marketers to change consumer perceptions, attitudes and buying behavior. The concept focused on three ideas such as society, environment and financial success. They found in their study that 78% of people have a more favorable view of a company that contributes or sponsors a cause that they think is worthy. Cause Related Marketing is a stimulating idea where both business and charity can benefit. It also attracts new sources of funds, resources and support. Shabbir et al. (2010) disclosed in their study relationship between Cause Related Marketing (CRM) campaigns, brand awareness and corporate image as possible antecedents of consumer purchase intentions in the less developed country of Pakistan. The data was collected from 203 students studying in different universities of Rawalpindi and Islamabad. The findings indicated that consumer purchase intentions are influenced by the cause related marketing campaigns; it was also observed that the brand awareness and corporate image partially mediated the impact of CRM campaigns on consumer purchase intentions. Babu and Mohiuddin (2008) conducted a study using demographic variables. The demographic variables were found to have great influence on the purchase decision making process of customer. The findings have showed that a customer is influenced by the companies’ cause related marketing programs while adopting a new brand or executing its purchase intension and the customers prefer to support generally health and life saving issues. Farache (2008) conducted a study to understand consumers’ perceptions regarding CRM. The study was performed on 200 consumers. The research established that consumers have a better perception of firms that work with charities and good causes than those who do not. They believe that the partnership between corporations and charities has an impact on the society. However, they are aware that corporations themselves benefit from this partnership. Concerning good causes, consumers prefer to support those associated to children benefits. The researchers posit that an individual’s personal connection with a cause might have substantial influence on consumer attitudes and behavior in relation to support of a specific cause. OBJECTIVE OF THE STUDY The objective of the study is to understand the concept of cause-related marketing, the benefits offered for the three entities i.e the company, the nonprofit organization and the customer and make appropriate suggestions. DATA AND METHODOLOGY In this paper qualitative research methodology is used to understand the concept of cause related marketing and its growing importance. The study is based on secondary data collected from various published sources, books and websites. CAUSE RELATED MARKETING – AN ELEMENT OF CORPORATE SOCIAL RESPONSIBILTY Cause-related marketing (CRM) is a common and popular form of CSR. Corporate social responsibility (CSR) initiatives have become increasingly popular. Cause-related marketing as part of corporate social responsibility becomes an increasingly used tool by companies operating in the markets today. Cause Related Marketing (CRM) is a part of Corporate Social Responsibility (CSR) actions, as the newly drawn Company Law Act of 2013 has laid a 2 per cent of average net profit of last 3 years to be mandatorily spent on CSR by companies having net worth of 5 billion or more or turnover of 10 billion or more or net profit of 50 billion or more. Kotler and Keller (2009) view cause-related marketing as a part of societal marketing. Corporate social responsibility and cause related marketing are more than buzz words today. In recent times, corporate social responsibility has gained lot of importance among companies because of its long-term benefits. Companies should be responsible to the society for their activities and owe to the environment in which they operate. Corporate social responsibility has become the buzzword and every organization is trying hard to do something responsible and worthwhile in the society. It has also become mandatory as per the law to show how the organizations are fulfilling their social responsibility (Sisodia et al., 2013). CRM is defined as the process of formulating and implementing marketing activities that are characterized by contributing a specific amount to a designated non-profit initiative that in turn, causes customers to engage in revenue-providing exchanges (Mullen, 1997). It is the combination of both marketing and CSR. Cause Related Marketing advocates the long term partnership between the corporation and community. VALIDATION FOR CAUSE RELATED MARKETING Cause related marketing offers a lot of benefits for the society, the organization and for the cause itself as it represents a co-alignment between a for profit organization and a non-profit organization working together and complementing each other to gain mutual benefits. CRM links companies with causes for mutual benefits. The concept of CRM suggests that it has two objectives: (1) to improve corporate performance and (2) to help worthy causes. In order to conduct CRM program, organizations in most cases partner with a non-profit organization already working towards a social cause. Varadarajan and Menon (1988) have specified six broad objectives for CRM partnerships: Increasing sales Enhancing Corporate image Thwarting negative publicity Customer pacification Facilitating market entry and Increasing the level of trade merchandising activities for the brands promoted Originally, the most important business goal of a cause-related marketing program has been to impact a company’s sales. Yet research has shown that, for companies committed to corporate social responsibility, CRM programs can offer other benefits as well. Among the many benefits of a cause related marketing campaign, they are (Kotler and Lee, 2005 and Cone Roper Study, 2007): Attracting and retaining customers - the most innovative case is the one of American Express Company. By the fundraising campaign to restore the Statue of Liberty the company increased the use of credit cards, and attracted new customers. Reaching niche segments- nongovernmental organization are working with marketing leaders in order to reach niche consumers, to enter a specific audience and generate interest towards an important campaign that could save lives and provide social welfare. Partnering with nonprofit organizations can also help a company to connect with specific demographic or geographic markets. Increased consumer participation – this marketing strategy directly or indirectly invites the buyers to participate in the cause. Once they buy the product of the company which is engaged in the cause related program like child education, P&G –Shiksha, etc; Consumer will more voluntary come to support the particular cause and buy the company's product or services more often. Increasing sales of products or services – It creates a positive image for the products and the business organization in the minds of the customers, which directly promotes the sale revenue. Creating a positive image of a brand – by associating with supporting the cause, the company will reach a larger visibility which will consolidate and strengthen brand equity. It is a creative way to make awareness about the particular cause by which organization or its products are engaged. It creates a positive impact over the customer in the purchase process decision as cause related marketing provides a platform to generate the awareness about the specific cause to its customer. Raise funds for a social cause – example is the Avon brand, which positioned itself by recruiting, training and motivating sales force, and created a strong CRM campaign to fight against breast cancer. Market Differentiation - CRM helps to create an alternative and distinctive approach to brand advertising. In a competitive world, differentiating products using the traditional attributes has become difficult. When price and quality are equal, the corporations are using cause as a differentiator. Reinforced Company Mission - CRM efforts can help communicate to employees, customers, suppliers and other stakeholders a company’s commitment to corporate social responsibility. The possible benefits of cause marketing for nonprofit organizations include an increased ability to promote the nonprofit organization's cause via the greater financial resources of a business, and an increased ability to reach possible supporters through a company's customer base. The possible benefits of cause marketing for business include positive public relations, improved customer relations, additional marketing opportunities, and making more money for the organization (2). Customers are not satisfied just to receive a product or a service; they expect a value that goes beyond quality, in the area of social responsibility. Customers are moving towards those companies that prove citizenship and assume responsibility. Market research highlighted that most consumers will prefer to buy from those companies that are engaged in supporting a cause, while there are no differences in price and quality of products or services (Cone 2007). Previous research has indicated that deploying CRM leads to positive consumer perceptions about the organizations and could result in higher purchase intention for the brand (Webb and Mohr, 1998; Barone et al, 2000; Nan and Heo, 2007and Meenaghan and O‟Sullivan, 2001) SUGGESTIONS FOR CREATING A WINNING CRM STRATEGY Although CRM campaigns help the companies to improve their corporate image, there are also some measures which must be taken into consideration, for example, the selection of the non-profit organization really matters a lot. In addition, highlighting the contribution to society through electronic and print media can help the companies not only in enhancing brand awareness but also in reducing consumer skepticism (Farache and Perks, 2008). Few basic guidelines in marketing a cause related program are discussed below; Identifying the right issue or cause - It is necessary to find before establishing any cause related marketing relationship that an issue is aligning with the company’s product or services, its market or its geographical community. Choose a cause which people relate with. A cause which is appropriate in one country may not attract much positive response from another country. Selecting a right partner - It is necessary that a profit and a non- profit completely understand each other’s goals and objectives. The relationship between the two must be of a long term nature. For a long-term relationship, it is imperative that the two believe in each other’s ideologies. Establishing the relationship - There should be clear understanding of the nature of the relationship of the two companies. Generally a formal document which spells out how the fund is raised by the company and any limitations such as a maximum amount to be contributed must be addressed in advance to avoid any future conflicts. Checking the legalities - Certain important legal formalities such as the formal agreement to use the non-profit organization’s name in promoting the cause, the national laws and regulations, the liability resulting from the wrongdoing of the non-profit organization etc must be settled. Communicating partnership message - The most important part of the CRM is the effective marketing campaign keeping in mind the target audiences but the publicity should be subtle. Show the customers that the brand has actually benefitted the cause so that they are assured that their association with company has led to some improvement in a cause which is close to their heart. Reviewing the results - Standards should be set both qualitatively and quantitatively to track the results and performance of both the entities in terms of sales, profits and contributions. Moreover, the use of an appropriate celebrity for overall communication strategy in CRM campaigns could produce better results for the company reflected in positive attitudes/feelings of the consumers towards the company. CONCLUSION It is clear that Cause Related Marketing has come a long way since the days of charity and general philanthropy. Today it is a global phenomenon which has developed into the new way for business and nonprofit causes to joint venture to achieve mutual benefits. It supports a cause with the power of the corporate brand, marketing, and people to achieve social and shareholder value while communicating values. Thus, corporate social responsibility and cause related marketing have become important for all companies to design their marketing communication strategy and they have emerged as a tool for effecting public perception which eventually leads to building strong brand image and enhancing customer loyalty. Cause-related marketing is more prevalent today because CRM is able to enhance corporate image and profits as well as increase funds for a multitude of causes. The growing popularity of CRM is indicative of a promising trend, acknowledging not only that business success is attuned with the public good, but that both can be achieved in agreement. Corporations must recognize that even if the concept of CRM is commendable, its misuse can lead to disastrous results. Care and discretion should be exercised by the firms and causes in the design and implementation of such partnerships. 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