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Study: Cause Marketing Lowers Donations

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Charitable organizations may want to think twice before allowing a marketer to link its product to their cause, says a researcher at the University of Michigan's Ross School of Business.

Cause marketing -- when firms share proceeds from the sale of products with a social cause -- reduces overall charitable giving by consumers, according to Aradhna Krishna, the Dwight F. Benton Professor of Marketing.

Krishna conducted various studies involving 300 college students to see whether consumers who bought products linked to a social cause would reduce subsequent donations to that cause. She found that charitable giving is lower if consumers buy a cause-related product -- even if the consumer planned to buy it, anyway, regardless of its link to a cause.

Charitable firms should demand transparency from the marketers they plan to engage with, Krishna tells Marketing Daily. Such products should be required to clearly identify to consumers how much exactly will be donated to the cause from each item sold.

"Right now, there is a lot of opaqueness," she says. "'Part' of the proceeds are donated to the cause is the typical statement. One does not know what part. Or x% of profits, but one does not know whether what exactly that means and also whether it's gross profit or net profit."

Some cause-related campaigns have received consumer backlash because the products being associated with the cause are unhealthy and seem to fly in the face of the pro-health message the charity encourages. For example, "Think Before You Pink," a project of Breast Cancer Action, was launched in 2002 in response to the growing concern about the number of pink ribbon products on the market.

The campaign calls for more transparency and accountability by companies that take part in breast cancer fund-raising, and encourages consumers to ask critical questions about pink ribbon promotions. One campaign that came under particular scrutiny was when Kentucky Fried Chicken hosted "Buckets for the Cure."

Cause marketing also can decrease consumer happiness, Krishna says.

"Consumers appear to realize that participating in cause marketing is inherently more selfish than direct charitable donation, reducing their subsequent happiness (versus a direct donation)," Krishna says. "Unfortunately, this doesn't prevent them from substituting it for charitable giving, which reduces the overall charitable donation."

Overall, the results raise concerns about the practice of cause marketing and suggest that consumers and policy-making bodies should be more vigilant about what cause marketing can do to individuals' direct donations, to total donations and to consumer happiness, Krishna says.

6 comments about "Study: Cause Marketing Lowers Donations ".
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  1. David Hessekiel from Cause Marketing Forum, Inc., April 4, 2011 at 9:06 a.m.

    Whoa! This very limited study does not merit the kind of headlines it is generating.

    If you read the actual study you see it engages college students in making choices in very artificial scenarios. In fact, Professor Krishna, the study's author, points out in her write-up: "The pilot field study is very small scale and needs to be replicated before any generalizations can be drawn from it."

    It's unfortunate Professor Krishna is not heeding her own cautions on that point and is making inflammatory statements about damaging effects transactional cause marketing campaigns could have on fundraising and human happiness.

    Based on this and her previous work -- which resulted in a press release entitled "Cause Marketing: Altruism or Greed?" -- it is clear to me that Professor Krishna approaches her research with a predisposition to find fault with cause marketing.

    It's absolutely fine for Professor Krishna to be opposed to cause marketing -- it's a free country. But it is not appropriate for her to exaggerate the implications of her study findings to amplify her personal opinion.

    One point on which Professor Krishna and I do agree is that cause marketers should adhere to best practices of transparency in their efforts to do well by doing good.

    David Hessekiel
    President
    Cause Marketing Forum

  2. Kathy Broniecki from Envoy, Inc., April 4, 2011 at 10:47 a.m.

    I agree with the two previous comments. I do think that the typical donor is generally an affluent individual, passionate about their cause. And cause marketing allows those that that might not be affluent or even developed in "community spirit" to engage and support a charity. So I would conclude that everyone benefits when the spirit of giving is available to all.

  3. Paula Lynn from Who Else Unlimited, April 4, 2011 at 12:11 p.m.

    1, Who gets the tax write off? The marketer or the contributor? The prices usually reflects the difference, or so they say. 2. A direct contribution to the charity goes umpteen further than a filter. Charities contribute to the fiasco. 3. Which brings the next round....What percentage goes for administration including the paid charity workers? 4. A larger study should be demanded by consumers and then caveat emptor when signs clearly displayed, formatted and spelled out specifically how much and where the money goes. Personally, I see these practices as ruses.

  4. Jay Samit from SVnetwork, April 4, 2011 at 5:19 p.m.

    This study is rubbish. I can show you actual campaigns involving hundreds of thousands of donors where the result is greater giving. SocialVibe increases Brand awareness and intent to purchase while maximizing revenue for non-profits. Presently 14,000 charities are benefiting from our cause-marketing programs.

  5. Harry Webber from Smart Communications, Inc., April 4, 2011 at 8:02 p.m.

    In what world is a 300 sample considered projectable to something as expansive as cause marketing or charitable giving. Professor Krishna is obviously promoting herself at the expense of her students and her school. This is irresponsible journalism at best and certainly unbefitting the professionalism expected from an industry publication. It will certainly cause me to take anything I read in Marketing Daily with a grain of salt, if not ignore it all together.

  6. Joe Waters from Selfishgiving.com, April 5, 2011 at 5:29 p.m.

    Three points on this study, which I elaborate on here:in

    http://selfishgiving.com/cause-practices/cause-marketing-selfishness-good

    First, there's a lot of evidence to support that people are actually quite happy and more generous after they support a cause via a cause marketing promotion. According to a 2010 Cone Study that involved a larger sample than the Michigan study, 86% of Americans say purchasing a cause-related product did not replace their traditional donation(s) to their favorite charity.

    Second, the study points out that consumers are often unclear of how much of their money is going where. This is a problem. Fortunately, transparency is getting better with cause marketing and mobile giving, location-based services and QR codes promise a new level of openness and accountability.

    Finally, the study's lead researcher warns causes to be wary of unscrupulous companies. Always good advice, but you need to understand how purchase-triggered cause marketing--the ONLY type of cause marketing examined in the study--works. Companies are working with causes to help and to earn favorability, not damage their reputations. You can't steal a halo. Also, the type of cause marketing the study examined is generally used by larger causes that know how to work with companies and protect their interests. Smaller companies and causes prefer direct donation programs like point-of-sale.

    The overriding theme of the study is that selfishness in philanthropy is harmful. I'm not sure that's completely true as there are many non-altruistic reasons for giving. A little selfishness might just be good for the greater good.

    Joe
    @joewaters

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