International Encyclopedia of Civil Society

Living Edition
| Editors: Regina A. List, Helmut K. Anheier, Stefan Toepler

Cause-Related Marketing

  • Silke BoenigkEmail author
  • Peter Schubert
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-99675-2_9513-1
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Synonyms

Definition

Cause-related marketing (CrM) studies oftentimes use a narrow definition that describes CrM from a for-profit corporate perspective (e.g., Chang and Chu 2020; Neel Das et al. 2020; Varadarajan and Menon 1988). For example, Varadarajan and Menon (1988) define CrM as “the firm’s contribution to a designated cause being linked to customers’ engaging in revenue-producing transactions with the firm (exchange of goods and services for money)” (p. 60). In other words, when a customer purchases a product or uses a service, x percent of the price will be donated to a nonprofit organization or to a specific project/cause. Based on this definition, marketing researchers have analyzed customer attitudes and behaviors towards CrM (Barone et al. 2007; Krishna 2011), and/or firms’ revenue or image effects from CrM campaigns (Adkins 1999; Chang and Chu 2020).

Over time, however, CrM has evolved from a short-term, transactional sales promotion into a widely accepted strategic approach to foster long-term cross-sector partnerships. Consequently, some researchers have highlighted the need for more CrM studies that analyze benefits and effects from a nonprofit perspective (Andersen and Johansen 2014; Boenigk and Schuchardt 2013, 2015; Runté et al. 2009; Wymer and Samu 2003). Runté et al. (2009), for example, define CrM as “… a triadic relationship between consumers, business, and NPOs. … Consumers purchase the product and engage in the necessary action to stimulate the donation, the business mounts the marketing campaign and provides the product or service that is marketed, and the NPO or cause links its name to the campaign and receives a benefit in exchange” (p. 256).

Introduction and Historical Background

Cause-related marketing (CrM) was coined and trademarked in the context of a partnership between the Ellis Island Foundation and American Express (Varadarajan and Menon 1988). In 1983, American Express donated one cent for each credit card transaction and one dollar for each new card issuance to the Ellis Island Foundation with the designated goal of renovating the Statue of Liberty. Endowed with a marketing budget of $6 million US dollars, the campaign generated $1.7 million in donations, an increase in credit card usage by 28% and an increase in new card applications by 45% (Lafferty et al. 2016; Varadarajan and Menon 1988). Another widely recognized and successful CrM campaign was the “Krombacher Rain Forest Project,” launched in 2002, a long-term CrM partnership between the German brewery Krombacher and the World Wildlife Fund (WWF) that ended June 2008 and raised €4 million (www.wwf.de).

CrM campaigns intend to create a win-win-win situation for all three actors involved. From a business perspective, CrM campaigns allow for-profit firms to strengthen their socially responsible image, ultimately aiming at increasing product sales (Adkins 1999). From a nonprofit perspective, CrM provides an additional funding stream in light of increased competition for private contribution and government grants. Nonprofit organizations further benefit from a higher public visibility either for their brand or for the charitable cause itself (Boenigk and Schuchardt 2015; Runté et al. 2009). From a consumer perspective, CrM serves as an additional purchase decision criterion and a convenient way of combining consumption with philanthropy in times when consumer behavior is increasingly influenced by social and ecological factors (Koschate-Fischer et al. 2012).

Ever since, cause-related marketing has gained great popularity in organizational practice. According to the latest IEG sponsorship report, CrM spending in North America amounted to $2.14 billion in 2018, which corresponds to a 4.4% increase over 2017 (IEG 2018). Although CrM has spread most rapidly in the United States, it is nowadays an established marketing tool in many other countries as well. While representative country-level CrM data is difficult to obtain, academic studies on the topic have now been conducted in 43 different countries (Natarajan et al. 2016). According to a global consumer study with 30,000 participants from 60 countries, 55% (10% increase over 2011) responded that they were “willing to pay extra for products and services from companies that are committed to positive social and environmental impact” (Nielsen 2014, p. 5), highlighting the widespread market potential for CrM partnerships.

Key Issues

Analogous to the rapid spread of CrM in organizational practice, academic scholars have shown great interest in the topic ever since a seminal conceptual study by Varadarajan and Menon (1988). Among the most recent reviews of the extant CrM literature (Bergkvist and Zhou 2019; Guerreiro et al. 2016; Lafferty et al. 2016; Natarajan et al. 2016), the largest identified 302 academic articles published in peer-reviewed journals between the years 1988 and 2016 (Natarajan et al. 2016). Among these articles, 45% were published between the years 2011 and 2016, illustrating the particular attention CrM has received by scholars in the past decade.

CrM Success Factors and Outcomes

Previous CrM literature primarily focuses on the examination of success factors, that is, explaining how CrM partnerships should be designed to be effective. Lafferty et al. (2016) identify three different broad success dimensions investigated in the literature:
  1. 1.

    Firm and cause characteristics, including consumer perceptions of the partners’ involvement in CrM, their reputation prior to CrM, or their perceived motives to realize CrM.

     
  2. 2.

    CrM campaign characteristics, including the perceived congruence between the partners (brand-cause fit, firm-cause fit; Barone et al. 2007), the campaign’s pricing strategy (product price, donation amount), product-cause fit or geographical scope.

     
  3. 3.

    Consumer characteristics, including consumer involvement, attitudes, demographics, motives, or the congruence between the consumer and the CrM partners.

     
Drawing on these three dimensions, research has assessed the effectiveness of CrM based on two different types of outcomes (Lafferty et al. 2016; Tsiros and Irmak 2020; Vanhamme et al. 2012).
  1. 1.

    Financial outcomes: From a nonprofit perspective, primarily the increase of donation intentions and hence CrM campaigns’ fundraising potential. From a company view, the increase of consumer purchase intention, behavior, or product choice.

     
  2. 2.

    Social outcomes: Building a stronger customer-company and customer-nonprofit relationship; furthering the engagement of customers with nonprofit organizations, strengthening its brand image and public awareness, or increasing organizational identification among employees.

     

Indeed, considerable evidence shows that CrM, when carefully considering the different success dimensions, can effectively increase product sales and build a positive brand image for the firm (Bergkvist and Zhou 2019). Nevertheless, most prior CrM research generates knowledge on consumer behavior that holds implications for for-profit firms. To the contrary, research that examines CrM from a nonprofit perspective is comparatively scarce (Andreasen 2012). The likely reason is that these partnerships are largely within the control of the firm, that is, firms usually initiate, fund, and evaluate CrM campaigns through their marketing departments (Boenigk and Schuchardt 2015; Wymer and Samu 2009). However, several additional issues or themes have emerged in the literature that nowadays explicitly investigates CrM from a nonprofit perspective.

CrM and Donation Intentions

A research stream examines the effect of customer exposure to CrM on subsequent donation intentions. As a transaction-based partnership, most CrM research has used customers’ purchase intentions as an outcome variable (Lafferty et al. 2016). While the study of purchase intentions is surely relevant for nonprofit organizations, given that higher purchase numbers commonly increase donations accrued through the campaign, CrM can have effects on individual donation intentions beyond the CrM partnership. Studies in this stream have argued that consumers may believe that by purchasing products from socially responsible companies they “have already done their share” with respect to philanthropic giving (Krishna 2011; Lichtenstein et al. 2004, p. 23). Berglind and Nakata (2005) further argued that closer ties between donation appeals and product marketing can lead to an oversaturation and desensitization regarding the urgency of social issues, and therefore to a donation fatigue. Other scholars have discussed potential crowding-out effects whereby consumers fail to distinguish between purchases and donations. To the contrary, Nowak and Washburn (2000) highlight that support intentions for a low affinity cause increase when it collaborates with a firm that has a strong reputation. Boenigk and Schuchardt (2015) find a similar pattern in the context of luxury campaigns, where the association with luxury brands can increase the chance of acquiring wealthy donors.

CrM and Attitudes Towards the Nonprofit Organization

As mentioned earlier, another stream in the CrM literature examines whether nonprofit organizations benefit from CrM in the form of more positive customer attitudes towards the nonprofit organization. Previous findings show that positive customer attitudes towards the firm and a high fit can have a strong positive effect on attitudes towards the nonprofit organization (Basil and Herr 2003). The positive attitude effect in case of a good fit appears to be stronger for the nonprofit organization than for the firm (Lafferty et al. 2004; Wymer and Samu 2009). The positive spillover effect from the firm’s reputation on the nonprofit partner further depends on the public awareness of the nonprofit itself. While nonprofit organizations with little public awareness benefit from an increase in trust (Nowak and Washburn 2000) and positive attitudes (Boenigk and Schuchardt 2013), organizations that already have a high public awareness do not achieve similar gains. However, CrM can also have negative effects on a nonprofit organization. For example, Boenigk and Schuchardt (2015) found that CrM partnerships with luxury firms could decrease organizational identification among employees and volunteers of the participating nonprofit organization. This finding calls for careful reflection on partner selection when engaging in CrM.

CrM and Partnership Management

While the aforementioned literature streams draw implications for nonprofit management from a consumer perspective, other scholars have directly adopted an organizational perspective, assessing goals, concerns, and governance mechanisms in CrM partnerships. Runté et al. (2009) conducted an in-depth analysis of goals nonprofit organizations pursue with CrM partnerships in comparison to their experienced partnership outcomes. The results show that nonprofit organizations enter CrM partnerships not only for the sake of first-order goals, that is, gaining direct financial support, but also for a range of second-order goals, including raising public awareness, fostering long-term corporate relationships, generating event support or expanding their network. Regarding experienced CrM outcomes, the authors find that organizations have higher expectations towards raising public awareness, building a network and securing long-term funding than actually realized through CrM campaigns. Against this backdrop, Liston-Heyes and Liu (2010) argue that nonprofit organizations should reflect more carefully upon their partner selection. They find that CrM partnerships with financial service providers tend to be more long-term compared to partnerships with retail companies.

Similar to the diversity of goals pursued with CrM, nonprofit organizations have raised several different concerns regarding such partnerships. Liston-Heyes and Liu (2013) identified three types of concerns raised by nonprofit managers. Concerns over organizational identity arise when managers perceive that collaborating with a for-profit firm conflicts with the values or management practices within the nonprofit organization. Concerns over alliance risks arise when an organization bears high transaction costs to avoid opportunistic behavior of the corporate partner. Last, concerns over the prioritization of corporate stakeholders arise when an organization fears that prioritizing corporate partners leads to negative public perceptions of the partnership. Other scholars have raised further concerns regarding mission drift, which can result from the firm’s specific expectations about the use of generated donations (Berglind and Nakata 2005; Polonsky and Wood 2001). To counter these concerns, organizations frequently complement formal partnership contracts with informal governance mechanisms, including frequent interaction and communication with the partnering firm (Simpson et al. 2011) and with other organizational stakeholders (Liston-Heyes and Liu 2013).

CrM and Consumption Philanthropy Criticism

A last relevant stream scrutinizes CrM partnerships normatively regarding their effects on (civil) society. Referring to CrM as consumption philanthropy, scholars have fundamentally argued that linking philanthropic activity to market mechanisms strips philanthropy of its transformative potential to evoke social change, because it supports the system that creates the very injustices it seeks to combat (Nickel and Eikenberry 2009). A marketization of philanthropy with businesses as intermediaries between donors and service recipients may further produce a higher distance between the agenda of service providers and the actual needs of service recipients (Wirgau et al. 2010). This is because CrM tends to focus on social issues that are particularly highly marketable from a corporate or media perspective, to the possible neglect of other pressing social issues. Such focus on marketability can further contribute to an individualization of approaches to solving collective problems, to the detriment of more strategic cross-sector collaborative efforts for social change (Eikenberry 2009).

From a donor perspective, CrM would make philanthropic action more passive and driven through self-interest-focused purchase decisions. As a result, philanthropy would lose its moral core with fewer people reflecting on their moral responsibility (Eikenberry 2009). Indeed, many CrM campaigns lack transparency and leave the consumer in the dark about the actual size of donations (Langen et al. 2010; Olsen et al. 2003; Nickel and Eikenberry 2009).

Future Directions

Despite the rapid growth of CrM literature over the past decades, the topic provides ample room for future research. Most strikingly, scholars have argued that the focus on consumer behavior has left both the business perspective and the nonprofit perspective underexplored. Particularly with respect to nonprofit organizations, a more in-depth analysis of organizational variables is needed, both in terms of prerequisites for successful CrM implementation and in terms of partnership outcomes. Regarding prerequisites, Liston-Heyes and Liu (2013) identify a lack of studies tackling differences between successful and unsuccessful partnerships from a nonprofit perspective. These differences might include experiences with CrM, attitudes towards the corporate partner, organizational characteristics (e.g., industry, size, structure), or negotiation tactics, which can all influence the successful implementation of CrM.

To improve the evidence on CrM outcomes for nonprofit organizations, future studies could focus more strongly on actual donation behavior, as opposed to the frequent measurement of mere donation intentions. Furthermore, perceptions of CrM by other stakeholders (Boenigk and Schuchardt 2015) warrant more attention for organizations to reflect more holistically upon partnership implications. The balanced scorecard approach to assess CrM partnerships introduced by Wu and Hung (2008) is a valuable step in this direction. Further empirical studies in these domains would enrich the CrM literature that has assessed CrM success almost exclusively based on consumer-level outcome variables (e.g., purchase intention, attitudes towards partners).

Second, very few empirical studies in the literature have considered or specifically explored cultural differences (Wang 2014). Most CrM research has been carried out in the United States and our knowledge is limited regarding the generalizability of generated research findings. Comparative studies are a valuable addition because consumer cultures and corporate cultures differ significantly across countries, likely affecting the perceptions of CrM (Natarajan et al. 2016) and hence campaign outcomes on an individual and organizational level. Beyond empirical findings on relevant contextual factors, Wang (2014, p. 50) argues that “theoretical frameworks are needed to explain what kind of market environment gives rise to a particular association between cultural orientations and attitude toward CrM.”

Third, new digital tools provide an opportunity to expand research on customer engagement and customer experience with CrM. For instance, scholars could test the added value of CrM campaigns in which customers choose their preferred cause from a list of causes (see Amazon Smile campaign). Alternatively, the increasing implementation of gamification techniques and reward systems in marketing provides another customer engagement opportunity with the goal of generating additional donations for the cause (Lafferty et al. 2016).

Last, the consumption philanthropy discourse has raised a number of critical concerns that still lack empirical support beyond discourse analyses. For instance, does CrM truly neglect less marketable causes? Does it change giving motives in the long run or crowd out conventional forms of philanthropy? Does its transaction-based nature hinder the fostering of more long-term cross-sector initiatives to solve social issues? Empirical knowledge on these questions would provide valuable insights for a better understanding of the societal implications of CrM and business-nonprofit partnerships more broadly.

Cross-References

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Faculty of Business, Economics, and Social SciencesUniversität HamburgHamburgGermany

Section editors and affiliations

  • Regina A. List
    • 1
  1. 1.HamburgGermany