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Cause Related Marketing In Fmcg Sector In India Marketing Essay

3364 words (13 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Background / Literature Review

Docherty and Hibbins examined the attitude of commercial organizations towards the benefits of non- profit or cause related marketing and the reach of benefits. The study revealed that mainly the benefits involved wider recognition from the media along with a brand building activity for the sake of clean reputation. Income for charities generally comes from three ways: spontaneous or planned donations by individuals, trusts and corporate funds. The Corporate donations can take a number of forms like grants, donations of goods and services. Though the approach to the same has changed substantially through the decades, it still defines one of the marketing strategies of the organization.

The key benefits for the organizations derived out of the Corporate Social Responsibility can include better image portrayal among the existing as well as potential consumers, better image may lead to brand loyalty or even better share prices in the market. Also reaching new consumer segments, but a very important fact that comes to light here is that this magnanimous attitude is not taken as genuine act most of the times as many stakeholders again see it as just publicity stunt. So, now companies have definitely moved up and reflecting CRM as a strategy of integrating the corporate goals with the social goals, what C.K. Prahlad put as moving from CSR to CSI i.e. Corporate Social Integration.

Owing to the rise in public concern over environmental and social issues, corporations have started developing their products with around a number of popular causes, including social and ecological issues (Farache et.al 2008). These corporations are continuously looking to link themselves to good causes. This trend has become attractive to many businesses, especially those engaged in dealings closely with consumers (Till & Nowak, 2000). These associations in turn can enhance a company’s goodwill and, consequently, have an effect on how consumers evaluate products or services offered by the company (Brown & Dacin, 1997). In this scenario, Cause Related Marketing [CRM] is a means of demonstrating a company’s social commitment. Over the years CRM has evolved as a marketing strategy that business firms are deliberately using to form a partnership for mutual benefit with a charity organization or a good cause (Pringle & Thompson, 1999). Since the beginning of CRM in the early 1980’s, there has been an observable increase in strategic alliances between big business corporations and non-profit organisations (Adkins, 2000). The Business in the Community (2003), states that in 2003 over £58 million was raised by over 60 businesses benefiting over 60 charities and good causes through more than 80 CRM programs in the UK. In the United States, American corporations dedicated U$ 9 billion to social causes in 2001 alone (Cone, Feldman, & DaSilva, 2003).

From the consumer perspective, increased demand for a particular product or service is a far more responsible action from corporations. They are asking the corporations to be at least partially motivated by helping a cause and not to act completely out of self-interest (Mohr, Webb, & Harris, 2001). While being aware of the importance of consumers in this role, this study will focus on consumer perception regarding CRM and the impact it has on corporate reputation, thus adding further to the knowledge in this field. Given the increasing level of interest from consumers, society and business in the area of CRM, this study aims at examine how consumers respond to these campaigns.

Lafferty and Edmonson (2009) conducted a study which compared two ads, one that portrayed the cause as the visual element and one that portrayed the brand, to determine which execution technique produced a greater effect on advertising outcome variables. By comparing two models using 495 nonstudent consumers, the study shows the brand photo had a greater effect on purchase intentions than the cause photo. The study also shows that attitude toward the cause-brand alliance is influenced by the familiarity of the brand supporting other research on brand familiarity’s influence on attitude formation.

Also, compatibility in terms of what the company stands for and what does it sponsor or associates with for fulfilling its social responsibility. So, the company needs to understand its ‘fit’ with its core competencies and the social cause it picks. (Trimble & Rifon, 2006)

In order to narrow down the research it has been proposed that the research is going to be carried out in India mainly in the FMCG sector. In India, most marketers believe that it is very difficult to please consumers like a company’s proven commitment to a worthy cause. Other things being equal many consumers would buy products from a company that stands for something beyond profits. In nutshell, causer elated marketing results in increased sales, visibility, and consumer loyalty and enhanced company image along with positive media coverage. All these are extremely pivotal when it comes to the success of a FMCG brand in India (Garg 2007). Over the years there have been a number of noticeable campaigns observed in Indian companies that have proved to be successful. For example The HUL announced a contribution of fifty paisa to a diarrhoea project on sale of each of its LIFEBUOY brand soap. It helped to improve market share for ‘lifebuoy’. HUL has also taken strides in to CRM programmes by collaboration with other NGO’s. For example The HLL announced a Rs. 5/- contribution to SOS children’s village, a social service organization working for educating every little heart by inserting coupons in its Brook bond Taj Mahal tea powder packs. The customer has to tell the coupon number to the company through a toll free telephone number. On similar grounds P&G has also entered into practice of CRM in India. Project SHIKSHA is a unique CRM initiative in association with Sony Entertainment Television. By purchasing packs of Vicks, Whisper, Ariel, Tide, Head & Shoulders and Pantene between 21st April – 12th June 2003, this unique education promotion allowed a mother to win Rs. 2 lakhs towards Graduate Education Fee of one child (24 such Prizes), or Rs. 5,000 towards next Year’s Tuition fee for one child (96 such Prizes), and a number of Consolation Prizes, all courtesy P&G (Trivedi & Kaur, 2007). Over the years company’s like Tata Salt which forms a part of the large Tata Group has also upheld its brand image through CRM campaigns. TATA Salt’s Desh Ko Arpan programme was launched by the pioneers and undisputed leaders in the packaged and

iodized salt category – Tata Salt in association with CRY in 2002 and raised around Rs. 33 lakhs in a period of one month. Through the Desh Ko Arpan programme, Tata Chemicals Limited contributes 10 paise for every kilo of Tata Salt, sold during specific periods, to the education of underprivileged children and enable underprivileged children have an opportunity to develop their sports ability and pursue higher education (Trivedi & Kaur, 2007).

Types of “Cause- Related Marketing”

CRM can be divided into three broad categories: transactional, message promotion, and licensing. In transactional CRM, firms adopt programs that contribute to a cause from sales of specific products. Message promotion is a joint campaign between a firm and a cause to raise awareness of the cause’s message (e.g., preventing skin cancer). In a licensing agreement, a corporation is permitted to use a charity’s logo on its products or services. In this paper, we focus on transactional CRM.

The seven main types of CRM arrangements are:

ADVERTISING where a business aligns itself to a particular cause and uses advertisements to communicate the cause’s message.

PUBLIC RELATIONS where a business calls press and public attention to a strategic partnership between itself and a non-profit group.

SPONSORSHIP where a business helps fund a particular program or event.

LICENSING where a business pays to use a charity logo on its products and services.

DIRECT MARKETING where a business and non-profit raise funds and promote brand awareness.

FACILITATED GIVING where a business facilitates customer donations to the charity or to them.

PURCHASE- TRIGGERED DONATIONS where a company pledges to contribute a percentage or a set amount of the product price to a charitable cause or organisations.

Gaps in reviewed literature:

The current literature is very much vivid in dealing with the concept of CRM and also the issues that surround the area time to time regarding its actual benefits, either to the company or other stakeholders. Yet, there is not any particular framework that may help the organizations to understand the concept better from the organizations’ perspective (tangible or intangible benefits). Also, there must be some way to develop the idea into a more tailored form to suit specific budgets and returns for a sector or industry. This gap seems to be more of a concern in today’s era as companies are struggling to create a unique place for themselves and CRM can prove beneficial if applied in a desired manner and could contribute to the betterment of the society as well.

A crucial point arises as a gap that academics have so far been unsuccessful in establishing the marginal difference between CSR AND CRM. Most of the authors have drawn similar conclusions about CSR and CRM, making them moreover synonymous to each other, which may or may not be true. Also, not much has been said and written about the Indian version of the scenario as most of the literature available is for the UK and USA market.

Industry/ Country Background

CRM is such an issue which is not restricted to a particular sector Companies all over the world are now compelled to think beyond profits and redesign their business models. The Tatas have been following the practice of CSR from a long period of time, since CRM was not even a buzzword in the market, with other family business giants like Mahindra and Godrej following the path. But the concept of CRM as a model to fulfill both the objectives of profit making and socially sensitivity is not completely understood yet in the Indian market.

Companies like ITC have made it a significant part of their business strategy to contribute towards farmer development and made major efforts to improve the livelihood standards of rural communities. Similarly, Unilever is making use of micro enterprises to strategically develop the penetration of consumer products in rural markets of India. With 90% of the big Indian companies, majorly belonging to the private sector is involved in such activities. There are diverse areas that corporations are involved in, starting from livelihood promotion, education, health, environment to women empowerment. As per Crisil, the Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of $13.1 billion. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. The market is also estimated to treble from $11.6bn in 2003 to $33.4bn by 2015. Also the sector is hugely dependent on the massive rural consumer base of the nation. Therefore we find that amongst this massive market there is a huge potential for FMCG companies to build a reputation and strengthen their brand image on the lines of Cause Related Marketing.

Research Aim, Research Questions or Hypothesis and Research Objectives

Research Aim: This paper aims to explore the concept of Cause related marketing in various stakeholders’ aspects and to investigate its Return on Investment and profitability in the business in India.

Research Hypothesis:

H1- Cause Related Marketing delivers sustainable profits in the business over a period of time.

H2- Cause Related Marketing is unable to substantial returns in the business and is just a publicity activity for the organizations in India.

Research Objectives:

To explore various factors that determine the success of a Cause related Marketing campaign in India.

To identify the perception of various stakeholders towards a Cause Related Marketing activity in India.

To identify the Return on Investment for the Cause Related Marketing programme in a generic sense in India.

Research Methodology

Information, in any form, is useful when it reflects itself as a genuine piece of work. This research would focus mainly in Indian scenario where recently Cause Related Marketing campaigns have caught wide attention and is widely adopted by various organizations. Though the practice has been there for a long time, but due to global awareness towards the concept of Corporate Social Responsibility, the subject has taken a wider stage, especially in India, due to various reasons as illustrated before.

This piece of work is proposed to be done with the help of both quantitative and qualitative methods. In narrower terms, secondary data would be collected from various sources like online libraries, university knowledge centre, newspapers, books articles etc. and the data would be analysed to reach a rationale point where the research aim can be met. Primary data would be vital as sometimes the books and articles written a period before may lose some relevance and may not be up-to-date as required by the subject. So, real-time information from people working in the related organizations in India and some of the other stakeholders like customers and media people can be involved. For the same, questionnaires (structured and semi- structured) would be developed which would have variety of questions including close ended and open ended. Interviews would follow mainly the same pattern in terms of the structure, where some interviews can be face- to- face or telephonic or even video conferencing as per the convenience of the interviewee. This would help attain a holistic view towards achieving the research objective.

Analysis of the data can be done with the help of Excel and SPSS softwares. Diagrams and models would be used wherever necessary as pictorial depiction would make the interpretation part easier for assessment and reviewing. Information written in the report can contain some confidential information from various organizations that would be printed with the permission of the organizations in concern. Thus, analysing it and deducting useful information, it can be seen that the researcher intends to go through a Deductive approach of research. It means that the information is gathered on a wider platform, with data relevant to the topic, but it is narrowed down filtering unwanted information and reaching a conclusion prudently which is most pertinent in achieving the research aim and objectives. Thus one of the hypothesis stands proven and accepted and drawing a valid conclusion. This research would be then able to contribute to the current literature and enable future researchers to gain some more insight in the subject.

The main purpose of the research would revolve around attaining a valid conclusion and agreeing to one of the hypothesis mentioned. The research work enjoys good reliability and validity because the secondary data can be verified through the references mentioned at the end of the research that would be done according to the Harvard Referencing System. The final research would contain the complete information the form of appendices about the primary data. That means the sources can be verified if needed, as it would be a strong attempt to keep the data as much legitimate and undisputable as possible.

The choice of method is justified because Cause Related Marketing is a topic which finds great relevance and application in the Indian corporate arena. But it is still a point of controversy as the real benefits are still not calculable and a bit of mistrust arises in the mind of stakeholders whether the activity is really done out of responsibility or is just a publicity gimmick. An array of companies, across the industry would be chosen so that a plethora of ideas and opinions can be gathered. These industries would include HUL, P&G, ITC, Tata, Jyothi Labs etc doing interviews with people who are known well to the researcher.

It is also important to analyse the other side of the picture in the CRM perspective. Hence an exploratory research would also be conducted on the non profit organisations, charitable trusts and NGO’s that complement the different FMCG corporations for the successful conduction of a Cause Related Marketing campaign.

India, as mentioned previously, stays the focal point of the study in this research due to many reasons. Firstly, it is well understood that a growing nation like India is attracting gigantic number of companies from overseas. So, it is inevitable that the domestic companies also need to stay in the competition and make their own space. So, it would be a lucrative place to carry out a research. Also, being the researcher’s mother country, it becomes easier to collect wider range of data and information and do a research work which may be helpful for some organizations to understand if the cause related marketing programme is a real need to attract and retain customers and create buzz in the media or it can fetch profits in the real monetary terms.

Relationship between research aim, research objectives and research methodology can be seen clearly in sync with each other. As the topic is suggestive of the fact that the researcher needs to focus equally on the past works of different authors, as well as the perspectives of people working in the companies who do so along with who are affected by these campaigns. The triangulation of the research aim, research objectives and research hypothesis is appropriate because all of the three move around to create synergy in the research

Time Scale

A research, however detailed and great remains unproductive if it does not get completed in a specified timeline. This research work is proposed to be done in a period of 10-12 weeks. It would be successfully accomplished by assigning the whole work in the following manner:

As soon as the proposal gets approval from the University, the activities would broadly be information collection from various resources, collaboration of the literature and reviewing it in the period of first three weeks. Questionnaires and interviews would be framed in the period of next one week. The questionnaires would be sent to the specified people and organizations for the purpose of responding in the next two weeks. Interviews can be done in the next one week.

Data once retrieved, would be interpreted and developed into informative piece of work in the next two weeks. Along with the whole of this process, more of in- depth literature background would keep on happening. The whole work would then be converted in to a report format in the next one week. Formatting, proof reading and binding activity can be completed in the next one week. Submission may be done by the end of 12th week. Contingency of 10 days is kept in case of delays of respondents or scheduling for interviews or any other issue that may crop up at the last moment. A diagrammatic representation can be reflected in the following manner:

Resources

It is important to identify the right resources for making the research precisely genuine and compatible for future research. Though a mix of online and offline resources would be used, it would be kept in mind to use authentic sources of information. The offline resources to be used can be various newspaper articles, books from authors of related subjects and previous research papers; libraries in India and London would be visited to gather wider information base. Live interviews with the expertise of the field would help to gain understanding of the real market scenario. Also, while trying to assort the data from the questionnaire responses, perception of the consumers on the ground level can be assessed.

The online resources that would be used:-

University of Wales Online Library

Pro Quest

Ebsco Host

Online published papers and newspaper articles

Various companies’ official releases and websites

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