The Role of Brand/Cause Fit in the Effectiveness of Cause-Related Marketing Campaigns

EXTENDED ABSTRACT - Cause-related marketing (CRM) is an increasingly common form of promotion. Expenditures on this form of communicating with customers were expected to surpass $630 million in the United States last year (Meyers, 1999). As defined here, cause related marketing involves the contribution to a cause by a firm which is Alinked to customers’ engaging in revenue-producing transactions with the firm@ (Varandarajan and Menon, 1988 p. 60). We adopt this definition, and only refer to promotions in which the amount given to a charity by a firm is somehow tied to the purchase behaviour of consumers.

Citation:

John W. Pracejus and G. Douglas Olsen (2003) ,"The Role of Brand/Cause Fit in the Effectiveness of Cause-Related Marketing Campaigns", in NA - Advances in Consumer Research Volume 30, eds. Punam Anand Keller and Dennis W. Rook, Valdosta, GA : Association for Consumer Research, Pages: 381.

Advances in Consumer Research Volume 30, 2003     Page 381

THE ROLE OF BRAND/CAUSE FIT IN THE EFFECTIVENESS OF CAUSE-RELATED MARKETING CAMPAIGNS

John W. Pracejus, University of Alberta

G. Douglas Olsen, University of Alberta

EXTENDED ABSTRACT -

Cause-related marketing (CRM) is an increasingly common form of promotion. Expenditures on this form of communicating with customers were expected to surpass $630 million in the United States last year (Meyers, 1999). As defined here, cause related marketing involves the contribution to a cause by a firm which is "linked to customers’ engaging in revenue-producing transactions with the firm" (Varandarajan and Menon, 1988 p. 60). We adopt this definition, and only refer to promotions in which the amount given to a charity by a firm is somehow tied to the purchase behaviour of consumers.

Previous studies of cause-related marketing (CRM) have demonstrated that it can impact consumer choice, and that price and quality trade-offs can diminish or eliminate the positive impacts of CRM. We replicate and extend these findings by exploring the impact of brand/cause fit on consumer choice. We do this by using choice-based conjoint, a method which provides much richer information for decision makers than the methods used previously to study CRM.

We intend to elevate current knowledge about CRM by (1) replicating the finding that CRM can impact choice, and (2) extending these finding by demonstrating that perceived fit between sponsoring brand and cause can also impact consumer choice. Additionally, we use choice-based conjoint to calculate the actual tradeoffs consumers are willing to make in order to support a brand that supports a cause.

Pretesting was done to determine two charities which were equally liked, but differed in fit with a product category. The product category chosen for study one was theme parks. The high fit charity was the Children’s Miracle Network (CMN). The low fit charity was the Kennedy Center for the Performing Arts. In study two, we tried to find a product category for which the Kennedy Center would be high fit and the Children’s Miracle Network would be low fit. Washington DC hotels met this criterion. Study I

Prior to beginning the discrete choice task, respondents were presented with sample advertising copy for the two theme parks. Embedded within the copy for one of the parks (either "Hudson" or "Davis") was the sentence "As part of our continuing support of the Children’s Miracle Network (Kennedy Center for the Performing Arts), we’ll donate five dollars to this worthy cause for every ticket sold until the end of the month". Therefore, each subject was randomly assigned to one of four cells in the 2(fit: high/low) x 2(Name: Hudson/Davis) between-subjects design. Pretesting for an unrelated study found "Hudson" and "Davis" to be neutral and equivalently liked "brand names" in general. However, due to the possibility of category specific associations, "name" was included in the design so as to provide a check that within the context of the choice task, there was no confound between CRM and the specific name used (i.e. Hudson vs. Davis).

Following the description of the theme park and the charity to which the donation would be made, respondents completed a series of 16 discrete-choice tasks. All choice tasks required the respondent to choose between the "Hudson" and "Davis" theme park alternatives. These alternatives were described along five different characteristics: admission price ($24.95 and $34.95); driving distance (45 minutes vs. 90 minutes); number of rides available (32 or 46); food quality (fair vs. good); and hours of operation (8 am to 8 PM versus 7 am to 11 PM). Subjects were told to consider what they had read about the two hotels in the advertisements, as well as the attribute information, which changed from task to task, in arriving at each of their 16 choices.

Multinomial Logistic Regression was employed to arrive at parameter estimates. The rho-square value for the model as a whole was 0.70, indicating that it was very effective at explaining the choices made by respondents. The Donation Intercept parameter is based on using a dummy code to represent the amusement park that offered the charitable donation, and reflects the additional amount that an individual would be willing to pay for the low-fit donation.

By dividing the coefficient for the Donation Intercept by the Admission Price coefficient, it is possible to directly determine the point at which a consumer would be ambivalent between an amusement park that offered the promotion, but charged more, and an amusement park that offered no promotion. In this particular case, results suggest that the dollar value of offering the low-fit donation is equivalent to $0.62.

In order to examine the value of offering a charity that is of high-fit, a similar calculation may be performed by first summing the parameter estimates for Donation Intercept and Fit * Donation Intercept, then dividing this value by the parameter estimate for the Amusement Park Admission Price. This calculation suggests that if the high-fit donation alternative was present, an amusement park could charge an additional $3.01. Hence, the dollar value of the high-fit alternative, relative to the low-fit alternative is $2.39. Study 2

Study two essentially replicates study one, but uses Washington DC hotels as the product category. Therefore the CMN becomes low fit and the Kennedy Center becomes high fit. The impact of offering a charitable donation promotion in general, and under high fit was calculated as in study one. In this case, the value associated with donation to the low-fit charity was $0.38. The value associated with donation to a high fit charity was $3.88, which equates to $3.50 more than they could charge if the donation was of low-fit

The two studies demonstrate that fit between the brand and the charity can have a substantial, positive impact on choice. In terms of trade-offs against price discounts, donation to a high fit charity can result in 5 to 10 times the value of donation to a low fit charity. We also find, however, that in both studies, the value of CRM does not justify its cost, at least in terms of short-term sales. Implications for the selection of optimal donation levels for CRM campaigns are discussed.

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