Cause marketing is a type of promotion which involves a for profit company and non profit organization cooperating for mutual benefit. This term can be used more generally to refer to any marketing effort which is organized for charity as well.
Cause marketing is separate from corporate giving or philanthropy, because corporate giving involves a donation which is tax deductible. Cause marketing, on the other hand, is usually not donation based. The history of cause marketing dates back to the 1970′s, when one of the first cause marketing campaigns was launched by a major hotel chain and a charitable organization in the US. The hotel chain desired positive media coverage for the grand opening of a new entertainment center in California, while the charity wanted to increase their fundraising efforts and motivate pledges by a certain deadline.
Cause marketing goes beyond a simple ad campaign for a good cause. Partnership is a key aspect of this kind of campaign, as the relationship must be win-win so that neither party is getting a free ride. The for profit should see a benefit to their bottom line, while the non profit should see a boost to the visibility of their organization and cause. Of course, the nonprofit also seeks to benefit monetarily from increased donations and the for profit seeks to gain favor with consumers.
In terms of approaches to cause marketing, there are generally three different tactics that are pursued: point of sale, percentage of sale, and licensing. Point of sale programs take place at the register, while percentage of sale programs donate a portion of each sale to a given cause. Cause marketing uses the marketing concept of strategic positioning to link a company and the products or services it sells with a good cause or social issue. A recent study on the topic of cause marketing revealed that over 75% of consumers would be likely to switch retailers or brands to one which is associated with an important cause, given the situation that prices were equal.
Furthermore, over 80% of consumers in the US said that they view a company more favorably if it is engaged in a social or environmental cause. It’s clear from these findings that companies engaging in cause marketing are taking an important step to build trust with the customers and enhance their brand image. There are a variety of statistics which support the practice of cause marketing. For example, today over 80% of consumers around the world expect that businesses should place an equal importance on business and social issues. It is estimated that over 60% of global brands now engage in some form of cause marketing, and this percentage continues to grow rapidly.
Among marketing executives, almost all agree that it is a valid and successful business strategy. Successful cause marketing campaigns require excellent communication with consumers. Companies need to make it very clear how they are supporting a good cause, because a majority of consumers believe that many companies are not providing enough details about their cause marketing campaigns. Some of the details they want to know include specific amounts being donated and how long the promotions are running. Research also shows that consumers penalize companies with a bad reputation regarding social and environmental practices.