Environmental and social issues have become important strategic concerns for businesses (Fellman, 1999). Simply by using the Internet or other news sources, interested consumers can easily monitor businesses and their corporate citizenship activities. In fact, surveys reveal an increasing number of consumers who either reward or intend to reward firms that are proactive regarding environmental and social issues in their business and marketing practices (Carlson et al.,1993). For example, in 1998 the Domini Social Index (400 public companies selected for using sound environmental practices and the development of socially responsible products) outperformed the S & P 500 (McBride, 1999).
In 1994, companies spent more than $1 billion on CRM campaigns, a 150 per cent increase compared to 1990 (Strahilevitz and Myers, 1998). A 1998 survey showed that 70 per cent of interviewed CEOs and marketing directors in the UK expected continued growth in their CRM practices (Ellen et al., 2000).
According to Business in the Community (1998), about 81 per cent of consumers are more likely to buy a product or service that is associated with a cause they care about. Americans are significantly more receptive to CRM than ever before. 76% believe it's acceptable for companies to engage in CRM - a 10% increase since 1993. Cynicism towards CRM is quite low. Only 21% of those surveyed questioned the motives of companies that help good causes. A large number of firms have implemented CRM and have found it extremely successful and the trend is increasing at a phenomenal rate. In 1997, Coca-Cola donated 15 cents to mothers against drunk driving for every case of Coca-Cola bought during a 6-week promotion in more than 400 Wal-Mart stores. Coke sales in these stores increased 490% during the promotion. (Friel, 2004).In 1999, $630 million was spent on marketing deals that benefited charities (Meyer, 1999).
Get your grade
or your money back
using our Essay Writing Service!
Cause-related marketing activity can be either strategic or tactical. With tactical cause-related marketing activity, a brand may tie-in with a cause for a limited time for a fairly narrow purpose. For example, ClickRewards, a shopping portal that awards shoppers ``ClickMiles'' redeemable at ten airlines, ran a holiday charity program that awarded miles for donations to seven affiliated charities. On the other hand, some brands view the cause related activity as a strategic component - the essence of the brand's positioning or personality. In these cases, the cause tie-in becomes a fundamental element of the embodiment of the brand. For example, since 1991 Sprint has been donating cash and services to the Starbright Foundation, which connects hospitalized kids via videoconferencing and the Internet. Starbright is installing the voice, video, and data system in 100 hospitals and Sprint is picking up the entire cost. The system gives Sprint an opportunity to showcase its newest technology while associating itself with a feel-good kind of cause.
Whether the cause-related marketing activity is strategic or tactical, marketers must go to the customer to determine which causes will generate the desired consumer reaction. The importance of social and environmental issues varies with each target market, and only through careful research and concept-testing will a good match of customer, brand, and cause be ascertained.
Barone et al. (2000) found that in the case of homogeneous products, the extent to which cause related marketing affects consumer choice was shown to depend on product performance and price trade-offs. Cause-related marketing appeared to be most effective when the consumer was required to make no trade-offs in exchange for selecting the brand undertaking the cause-related marketing activities. However, many people were still willing to accept lower performance or higher price in return for perceived corporate social responsibility if the consumers trusted the underlying motivations regarding the company's cause-related marketing efforts.
cause-related marketing (CRM) has received particular corporate interest. This is due to the fact that especially CRM might have positive effects on consumer behavior (Sen and Bhattacharya, 2001). During the early 1990s, CRM was the fastest growing type of marketing (Smith, 1994).
Recently, consumers of TESCO were offered the "Computers-for-Schools-program", a CRM program launched by TESCO to increase computer literacy of school leavers subsidised through an annual voucher redemption promotion. AVON rose over £10 million through a CRM campaign, which was donated to the Breakthrough Breast Cancer program. PERCOL introduced the CoffeeKids Charity Program in favour of children in the coffee growing communities, which is subsidized by means of a percentage of PERCOL's coffee sales (Business in the Community, 2004).
Always on Time
Marked to Standard
A focus on brand loyalty is legitimate considering the significant impact of brand loyalty on a company's financial performance (Chaudhuri and Holbrook, 2001). For example, brand loyalty allows companies to charge premium prices and to increase market share (Chaudhuri and Holbrook, 2001). Loyal customers are inclined to spend more on a product or service, their expenditures grow over time and they are a source of positive word-of-mouth advertising (Aaker, 1996; Kapferer, 1997). As brand loyalty is one of the most prominent marketing performance variables (Dick and Basu, 1994), we consider it as a key evaluative instrument for the marketing contribution of CRM.
Cause-related marketing is to be situated in the context of corporate social responsibility (CSR). Here, we define CSR as: Within this notion of CSR, CRM is a specific marketing activity in which the firm promises its consumers to donate company resources to a worthy cause for each sold product or service.
A CRM campaign aims at two objectives: to support a social cause, and to improve marketing performance (Varadarajan and Menon, 1988). This way, CRM programs take a responsibility towards at least three stakeholders: the firm's consumers, its shareholders and one stakeholder not directly related to the commercial activity of the firm.
There is an increasing body of knowledge on the impact of CRM and CSR on marketing performance variables. While Sen and Bhattacharya (2001) report positive effects of CSR initiatives on consumers' perceptions of corporate image, Webb and Mohr (1998) found that 50 per cent of the consumers in their sample had non-positive attitudes toward companies that engage in CRM. A study by Creyer and Ross (1997) demonstrates that consumers are willing to reward companies for ethical behavior and punish them for unethical behaviour by paying higher and lower prices respectively. Furthermore, Barone et al. (2000) found that consumer choice only migrates towards the product of the company that engages in CRM in case of minor competitive product and price trade-offs. Favourable effects of CSR in general were found for consumers' evaluations of new products through enhanced impressions of the company that launched these products (Brown and Dacin, 1997). Finally, Mohr et al. (2001) examined the effects of CSR on consumers' purchase decisions, but could not find a significant relationship. As it is clear from the previous overview, the impact of CRM and CSR on marketing performance variables is mixed and depends on the particularities of the campaign as well as on the marketing context.
After the recent 2004 tsunami in Asia, the Washington Post profiled a number of companies who donated money to the relief effort. For example, Starbucks chose to donate two dollars to disaster relief in Indonesia for each pound of Sumatran coffee purchased, while Avon agreed to donate three dollars to reconstruction efforts for each "Heart of Asia" pin purchased by its customers (Cooperman, 2005). This type of corporate charitable donation is an example of cause related marketing: a program designed to create a partnership between a sponsoring firm and a non-profit cause to raise money through product sales (Varadarajan and Menon, 1988).
The increasing strategic importance and consumer relevance of such socially responsible marketing initiatives is evidenced in the results of a Cone and Roper consumer survey (Cone Inc., 2004). Approximately 80 percent of consumers surveyed stated corporations who support a cause generate greater trust, 86 percent said they would switch brands to a cause-supporting product when faced with a choice of equal product price and quality, and 85 percent said the company's commitment to a social cause was important when deciding whom to do business with in their local community.
These results suggest that while marketing in general is focused on the process of selling, influencing and persuading the end user to purchase a product, companies feel compelled to serve and satisfy the human needs of their customers (Kotler and Levy, 1969) and of their other internal and external publics (Kotler, 1972), both out of obligation to society, and to achieve positive consumer rewards.
CRM partnerships also allow customers to contribute directly to the solution of a problem with the specific good cause being promoted often tapping cultural or individually held values or concerns (Hawkins et al., 2001, p. 94). Evidence to date suggests that CRM may provide better results than discounting prices or increasing promotional spend by up to 20 per cent (Mason, 2002).
This Essay is
a Student's Work
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.Examples of our work
However, other less tangible reasons for a business entering into a CRM partnership are identified as being seen as a good corporate citizen; helping the local community (where appropriate); communicating the essence of the company's mission; and motivating staff (Nonprofit World, 1998; Mason, 2002; Goodsall, 2001; Keeler, 1999; Drumwright, 1996; Cavill & Co, 1997, 2001).
The drive for businesses to look more closely at their corporate social responsibility has been gaining momentum. An Action Plan launched by the European Business Campaign 2005 on Corporate Social Responsibility (CSR) highlights the need for businesses to engage in community partnerships (CSR Europe et al., 2001). The DOW Jones Sustainable Group Index was launched in America in 1999 to track companies' performance on social and environmental issues.
In Australia the top 100 companies are ranked by a Good Reputation Index, and in the UK the first Business in the Community Corporate Responsibility Index was announced in March 2003. However, even within these initiatives, consumer opinions appear to play a limited role.
The ambitions identified by the European Business Campaign provide a list of measurable targets for 2005 including: 500,000 business people mobilized on CSR; 50 per cent of European Heads of State and Government expressing a clear view on CSR; a communication campaign spreading 1,500 media inserts, 10,000 posters and 30,000 brochures throughout Europe about CSR (CSR Europe et al., 2001); and many more, but identifying and measuring consumers opinions on the subject appears much more limited. So what does existing consumer research suggest? Cavill & Co., a specialist CRM consultancy firm in Australia, have initiated two consumer attitude surveys: the first in 1997 entitled "The new bottom line" (Cavill & Co., 1997) and the latest in 2001 called "Heart and sold" (Cavill & Co., 2001). The "Heart and sold"
findings suggest more than half the Australian population (54 per cent) are prepared to switch brands for one that supports a good cause, providing quality and price are equal - an increase of 6 per cent between the two studies. A similar number of consumers (56 per cent) also suggest they are prepared to switch retailers where an appropriate good cause will benefit (Cavill & Co., 2001). These findings are not unique to the Australian population (see Table I). While the weight of public opinion might still not be enough to persuade traditional company management regimes that CRM is more than a passing gimmick and not just "point of sale" advertising that is fuelling the public perception that businesses are supporting good causes, additional figures reveal that the public expect companies to partner a good cause as a matter of course (see Table II).
Consumer research also suggests that consumers believe it is in the companies own interest to support a good cause and consider they have a social responsibility to do so (see Table III).
The data in Tables I-III suggest a positive trend of consumers' attitudes, on a global scale, towards CRM. The three sets of figures from the USA are of interest as they show a marked increase post- September 11, 2001; it has been suggested that this change may be due to "patriotic fervour", (McCambridge, 2002). However, if this trend is
mirrored globally a greater number of companies are likely to consider aligning their name with a good cause to gain a strategic marketing advantage.
From a global perspective it is difficult to be specific about which good causes consumers believe are the most important, as they differ from country to country and over time. In Mexico consumers most frequently cited security issues as the top priority that companies should support (30.9 per cent) followed by education (23.4 per cent), combating poverty (22.3 per cent), and health (12.3 per cent) (Promoting Public Causes Inc. et al., 1999). In the USA, pre-September 11 the top five issues in order of priority were listed as: crime, medical research, hunger/poverty, drug/ alcohol abuse, and the environment. However, post-September 11 American opinions changed on which social issues business should support; these were then listed as: national tragedy, medical research, education, support for military, and homelessness (Cone, 2002). In Australia the spread of opinion as to which good causes businesses should support is very wide. The top five are listed as: medical research (22 per cent), health/medical care for children (18 per cent), child protection (15 per cent), homelessness/ poverty/ hunger (15 per cent), and aged care (13 per cent) (Cavill & Co., 2001). In South Africa a study commissioned by Nedbank and undertaken by Market Support Associates (2002), identified the top five good causes that consumers feel should be supported by businesses as: crime/personal safety (36 per cent), poverty (23 per cent), Aids (22 per cent), unemployment (20 per cent), and the economy (depreciation/inflation) (18 per cent).
GroÂ¨nroos (1990, p. 5) suggests "relationship marketing is about establishing, maintaining and enhancing relationships with customers and other parties at a profit so that the objectives of the parties involved are met. This is done by a mutual exchange and fulfilment of promises". However, relationship marketing will have no positive effect unless upper management accepts relationship values as a natural vantage point (Gummesson, 1999, p. 9). A 5 per cent increase in the retention rate of customers can lead to an increase of between 25 per cent and 85 per cent in the net present value of customers (Dawkins and Reichheld, 1990), but few organizations measure the economic value of their customer retention strategies. The traditional marketing approach states that firms should determine customers needs and wants (Ahmad and Buttle, 2001), but if companies do not have access to the appropriate information regarding customer opinions and expectations how can they meet these basic requirements to keep existing customers or win new ones. It is also suggested that CRM only works for firms that have nothing to feel guilty about and social responsibility starts with being a good employer (Glenn, 2003).
Roper Centre surveys in the USA found that employees of corporations with CRM programmes are 38 per cent more likely to say they are proud of their employer and its values than employees of corporations without CRM programmes (Higgins, 2002). The findings of the 2000 Cone/Roper Executive Study in the USA also confirmed the importance of CRM programmes in the race to hire and retain the best employees in today's highly competitive marketplace.
In 2002, CRM programs in the USA contributed over $700 million to a variety of charitable organizations (Higgins, 2002). For example, the Yoplait Yogurt campaign "Save Lids to Save Lives" asked consumers to become involved in the fight against breast cancer by sending in the pink foil lid from every container of Yoplait purchased. The firm pledged to donate 10 cents for every lid received. As a result, Yoplait has given more than $1.5 million to the Susan G. Komen Breast Cancer Foundation since 2001 (www.Yoplait.com).
CRM is not without critics. It may be criticized as having selfish motives of improving image and sales by relating to a cause but a firm can overcome this criticism by making a long-term commitment to the cause (Arnott, 1994). A long-term commitment may allow better positioning and imaging of the brand and the company (Meyer, 1999). In 1998, Ariel launched its "Help the Needy" campaign in Pakistan that Procter & Gamble runs in several Muslim countries during the month of Ramadan. Since it inception, the objective of this campaign has been to assist the less fortunate children in the society by providing for their most exigent needs.
Consumers increasingly agree that companies have a civic duty to support social causes, and their perceptions of a company's efforts impact the consumers' image of the company and their subsequent purchasing decisions. Companies that show concern for social causes and contribute more to those causes than other firms are viewed more favorably by consumers (Till and Nowak, 2000). Similarly, companies that engage in social causes that are relevant to consumers receive a more positive image (Ellen et al., 2000). According to a 2001 survey, 80 percent of consumers in the USA believe that companies are obligated to contribute to social causes, while 81 percent of those surveyed indicated that they would purchase brands that supported social causes provided that price and quality were unchanged (Szykman, 2004). In some instances, a majority of consumers prefers a corporate donation to a price reduction of the same dollar amount (Strahilevitz and Meyers, 1998).
Brand awareness and purchase intentions
In order to answer the primary questions being empirically set forth in this paper, brand awareness is seen as an important concept for two reasons: first, brand awareness is one of the factors which affect the attitude of the consumers towards the purchase of products; second, the relationship between CRM and brand awareness had been established in previous research. Nedungad (1990) argued that consumers' inclination to purchase a brand in the market place depends upon the prior knowledge about the brand. Keller (2003) defines brand awareness as the ability of customers to recall a brand among the clutter of rival brands. In the same vein, Radder and Huang (2008) hold that, especially in highly competitive markets, awareness can strongly influence a customer while buying a product. Consequently, to better exploit the contributions of brand awareness companies are using different strategies to create brand awareness among the consumers (Schmitt and Geus, 2006). Using cause related marketing to create brand awareness (Varadarajan and Menon, 1988) leads to enhanced purchase intentions (Hoyer and Brown, 1990; Grewal, 1998). Accordingly, Kotler and Keller (2006) regard Cause Related Marketing as just one opportunity for the companies to enhance the brand awareness. Implying the importance of experience on memory building (Kaufmann, 2004), Skory et al (2004) argued that most of the companies use CRM to increase brand awareness among the consumers through their participation. So companies use the cause-related marketing campaigns consistently over time to change the overall attitude of consumers towards the company and its brands (Till and Nowak, 2000).
Corporate image and purchase intentions
Corporate image can be defined as the perception/feelings of customers regarding the company's products and activities (Webb and Mohr, 1998). It requires a lot of time and enormous resources to build a positive corporate image but, on the other hand, it can help the companies not only in introducing new brands but also to pick up the sales of existing brands (Markwick and Fill, 1997). In order to build a positive corporate image in the minds of customers, companies are using cause related marketing as a strategy (Varadarajan and Menon, 1988; Chattananon et al., 2008) to gain a competitive edge in market place (Anselmsson and Johansson, 2007). As a result of their studies, Webb and Mohr (1998) as well as Anselmsson and Johannson (2007) argued that customers' purchase intentions are influenced by the corporate image of a company involved in cause related marketing.
The mediating role of brand awareness and corporate image
This paper investigates the nature of the relationship between cause related marketing, brand awareness, corporate image and consumer purchase intentions. As mentioned earlier, previous research has shown that cause related marketing campaigns can help the companies in increasing brand awareness and building positive corporate image in the minds of customers (Varadarajan and Menon, 1988; Adkins, 2004). These two benefits can be achieved due to increased affective customer affiliations with the company achieved by CRM. But on the other hand consumer purchase intentions are
pre-established, that is consumers are purchasing the existing products of the company before the company is executing the cause related marketing campaigns. This paper hypothesizes that consumer purchase intentions may not be increased through CRM campaigns in Pakistan or other developing countries unless consumers are not able to recognize the products (advertised in cause related marketing campaigns). Implicitly, the purchase stimulating effect of CRM requires pre-existing brand awareness and positive corporate image.
Generating feelings of goodwill
Companies certainly look to associate with causes that generate feelings of goodwill among their target audience. From an associative learning perspective, attitude toward the company and/or the company's brands can be positively enhanced via pairing with positive causes, even though specific beliefs about the company and/or brand may not have changed.
Important components of a company's reputation:
Three-quarters of consumers say they will switch brands to a company involved with a charitable cause, if price and quality are equal (Lorge, 1998). Product quality, competitive pricing and customer service are all important components of a company's reputation. However, a business which is the best at providing quality products and services at competitive prices may not be doing enough in the eyes of the consumer (Mason, 1993). A business which demonstrates responsiveness to social concerns and gives proportionately more to charity than other firms receives higher reputation ratings by its publics (Fombrun and Shanley, 1990). According to Shapiro (1982), as a firm's reputation improves, so does its sales.
One of the major goals of cause marketing is to build brand image by enhancing the parent company's reputation as a corporate good citizen. The cause should be consistent with the image the company is seeking to build or sustain for its brand.
Target Consumer Segment
Target consumer segments should be matched with causes by product type, demographics, and geographic location. According to the 1999 Cone/Roper Cause-Related Marketing Report (Spethman, 1999), 83 percent of Americans have a more positive image of a company that supports a cause they care about.
In the past, brand loyalty has been conceptualized both in a behavioral and in an attitudinal way. The former captures more the patronage behavior and focuses on repeated purchasing of a certain brand by a consumer over time (Bloemer and Kasper, 1995; Traylor, 1981). An advantage of the behavioral approach is that it measures observable behaviors, instead of (self-reported) intentions and declarations (Odin et al., 2001). Observable behavior is also easier and less costly to measure (Dekimpe et al., 1997). However, despite the consensus that brand loyalty leads to repeated purchasing, it may not be its sole antecedent. Moreover, the underlying motivations for repeat purchasing remain unknown (Jacoby and Chestnut, 1978; Jacoby and Kyner, 1973; Quester and Lim, 2003).
Indeed, patronage may emerge from alternative consumer motivations and dispositions. The attitudinal conceptualization of brand loyalty counters this drawback. A consumer's attitude towards a brand is a multidimensional construct that relies upon an affective, cognitive and conative component (Oliver, 1997). The affective component is concerned with (positive/negative) emotions that consumers have toward the brand. The cognitive component refers to particular knowledge about that brand. The conative component embeds consumers' behavioral disposition or an intention to buy the brand. In their seminal article, Dick and Basu (1994) distinguish between loyalty, latent loyalty, spurious loyalty and no loyalty. They define customer loyalty as: The relationship between the relative attitude toward an entity (brand/ service/store/vendor) and patronage behavior (Dick and Basu, 1994, p. 100).
Moreover, they claim: Loyalty, the most preferred of the four conditions, signifies a favorable correspondence between relative attitude and repeat patronage (Dick and
Basu, 1994, p. 102). Therefore, conceptual models that theories both attitudinal and behavioral components of brand loyalty gained strong precedence in the existing literature (e.g. Fournier and Yao, 1997).
Trust in advertising and source credibility
Trust can have a significant effect on the consumers' intentions to support a corporation adopting a social or environmental cause (Nowak et al., 1999; Osterhus, 1997). Consumers may become skeptical of cause-related marketing claims when advertising and source credibility are questioned (Thorson et al., 1995). For example, business and industry, usually because of their conflicts of interest, are considered the least believable sources of information on environmental issues (Ottman, 1992; Stisser, 1994). If the corporation already has a negative image, consumers may not trust the business's motives for professing pro-social or pro-environmental policies.
2.2 Theoretical Framework
Consumer Purchase Intention
Access to new Audience
Company Good Will
2.3 Hypotheses and initial conceptualization
Based upon the literature it is observed that CRM activities that are implemented after deep research on specified target consumer segment gives access to new audience that would our potential consumer have positive effect on consumer purchase intention that eventually increase sales along with it gives an edge, competitive advantage, over its competitor in the form of it involvement in cause related marketing activities.
While CRM activities also have influence on company goodwill that also increase brand loyalty of consumers. in most of the previous literature which provided the direct link between CRM and sales and ignoring the role of mediating factors like access to new audience, consumer purchase intention, brand loyalty and company goodwill . To overcome the gap, the current study intended to confirm some previously established
relationships in the setting of Pakistan. Following hypothesis can be drawn based on the
1) Cause related marketing campaigns have a positive impact on in accessing new audience.
2) Higher level access to new customer is associated with the higher level of customer purchase intention which increases sales.
3.) Cause related marketing campaigns have a positive impact on the goodwill of the company.
4) Good perception regarding the goodwill of company is associated with the higher level of brand loyalty which again increases sales.
5) The impact of cause related marketing campaigns on sales is mediated by company goodwill, brand loyalty, access to new audience and consumer purchase intention.