1. PROS of Cause Related Marketing
Benefits for Nonprofits of Cause Related Marketing
Cause related marketing offers many benefits for nonprofits and for corporations as well. In this mutually beneficial relationship the corporation and the nonprofit will combine their respective assets to create both social and shareholder value. Their partnership will allow them to connect with a broad range of constituents from suppliers to employees and consumers, and to communicate their organizational values effectively.
The first company to use the phrase cause related marketing was American Express back in 1983. They used it in relation to a campaign to raise money for restoration work on the Statue of Liberty, in which the company donated 1 cent to the cause for each purchase with one of their credit cards. The innovative campaign was wildly successful for the company, which saw their number of new cardholders grow by 45%.
Benefits for Businesses of Cause Related Marketing
Cause related marketing has many benefits for businesses, as it can boost brand equity, change consumer behavior and improve the bottom line. Cause related marketing goes beyond simple philanthropy or altruism in the sense that it is based on mutual benefit to both the business and the charity or cause that they partner with.
CRM has the power to address challenging social issues using corporate resources and funding, while it also gives a boost to the marketing objectives of the corporation. The idea is appealing on an intuitive level sense it is a “win, win, win” situation that benefits many different parties. The company, the charity, consumers and society at large all benefit from cause related marketing campaigns. Research has shown that there is a strong relationship between cause related marketing campaigns and consumer brand affinity and brand loyalty.
2. CONS of Cause Related Marketing
Downsides of Cause Related Marketing
Cause related marketing has both advantages and disadvantages that should be considered carefully before deciding on the pursuit of a CRM campaign.
One of the primary risks is that one of the parties involved in a CRM partnership will do something that damages its reputation. This will negatively impact the other party in the relationship and may undermine their reputation as well, even if they have done nothing wrong. To decrease the chance of this outcome, both corporations and nonprofits should do their homework and choose their CRM partners wisely. Another concern in CRM campaigns is for the nonprofits who lend their good names to for-profit ventures. There is some concern that this may weaken the trustworthiness of the nonprofit in the eyes of society, and even lead to charges of “selling out.”
Are Corporations Taking Advantage of Socially Responsible Advertising?
Judith Schwartz raised the important question of whether corporations were taking advantage of socially responsible advertising as a purely for-profit strategy. The trend is towards more corporations pursuing this form of marketing, but the question of motivation and influence remains a concern.
The definition of altruism is selfless sacrifice for the benefit of others. The fact that corporations choose to publicly donate or sponsor a charitable cause does not make them altruistic if their main purpose in doing so is to increase profits for their shareholders. Corporations form Starbucks to Reebok didn’t sacrifice anything and in fact gained from their CRM campaigns. It could be argued that Reebok promoted international human rights in a campaign to minimize the fact that they use child labor in the manufacture of their products.
Corporate Social Responsibility and Advertising
Daniel Francavilla argues that corporate social responsibility initiatives are not about altruism and rather all about profits. If any of the corporations who launched these campaigns were actually sacrificing resources or profits to help a good cause rather than earning more as a result, this could be described as altruistic.
However, this would be diametrically opposed to the corporate goal of earning as much money as possible and growing their profits each year. Instead, corporations will donate some of their profits to good causes only if they can map a clear benefit to themselves in terms of the bottom line. The increase in cause related marketing campaigns today shows how afraid modern corporations are of offending their customers, but sometimes these campaigns can backfire on the corporation and create a consumer backlash.
Not all corporations are bad. In fact, many actually do serve people in a positive way by provding valuable goods and services that people are willing to pay for.
I think cause related marketing can be a postivie force for both companies and for nonprofits, and social enterprises. Nonetheless, I agree that there are some shady companies that try to exploit good causes, but I think that this is a rare instance. I think that transparency and accountability are becoming more important for both nonprofits and for profit companies, and communities are demanding more of this, particularly with social media and the internet.
What’s your opinion?