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.