Cause-Related Marketing - Report Example

Cause-Related Marketing (CRM) Introduction Cause-Related Marketing (CRM) is a business undertaking in which a business goes into a partnership with charities or causes with the aim of marketing their image, products or services to the market for their mutual benefit. Through this partnership, both brand awareness and money is raised. The most common means through which these partnerships are beneficial to charities and causes is donations from companies that comprise of monies contributed by customers, suppliers or employees (Business in the Community 102). Through CRM, a business has the capacity to utilize the brand to demonstrate to the public that the business is committed to addressing the social and corporate issues being experienced through provision of donations in form of resources and funds and at the same time meet its marketing objectives. A good example is the American Express. In the year 1983, the company promised to make donations towards the renovation of the Statue of Liberty for each dollar that was collected from the use of its charge card. As a result, the company received a total contribution of $ 1.7 million, which was donated to the renovation project and at the same time, increased its card usage by 23% as a result of the cause-related campaign (Lane, King and Russell 781). Companies often perceive CRM as a gateway to improve their brand image, raise awareness, build customer loyalty, raise sales and increase media coverage. The advantage of having a well-implemented and promoted CRM programs is that the programs have the potential of bringing a host of benefits to the company. On the other hand, a poorly implemented CRM program may fail to take off and therefore bring devastating effects to the company’s reputation (Kotler 27). Cause marketing may be viewed from different perspectives depending on the company’s activities. The following are the main forms as far as five different retailers are concerned; the first one is proud supporter. Under this arrangement, a company comes out in the public and state the product that they have donated for a specific cause. The other type of CSR is Buy One, Get One (BOGO). This approach is formed on the base of “Buy one, get one free”, were the extra ‘one” goes to a worthy cause. The third one is Volunteerism Rally were customers are encouraged to volunteer some of their time for a good cause for example, visit an orphanage home in exchange for some type of benefit that the company behind the sponsorship provides. The fourth is Consumer-Directed Donation where customers are given a chance to choose causes to donate their funds to. Finally, the Consumer Pledge Drives is where companies encourage their customers to pledge support for specific social issues or specific nonprofits (Adkins 248). Instructions: Tick appropriately. NAME OF COMPANY ……………………………..…………………………… TYPE OF BUSINESS …………………………………………………………… Type of CRM undertaking YES NO 1. Proud Supporter YES NO 2. Buy One, Give One (BOGO) YES NO 3. Volunteerism Rally YES NO 4. Consumer-Directed Donation YES NO 5. Consumer Pledge Drives Table 1, Retailers Questionnaire Successful Cause Marketing Campaigns Procter & Gamble and Special Olympics have had one of the longest cause-related marketing partnerships from 1987 to date. During this period, Procter & Gamble has been sending out billions of coupons for retarded children on behalf of the Special Olympics. Because of the partnership, Procter & Gamble’s sales percentage, market share and retail activation has been on the rise. Some of its branches have even gone ahead to record as high as 14% increase in its sales. The success of the partnership to both the Special Olympics and Procter & Gamble has been so enormous consequently prompting further support for Special Olympics Programs each year. The National Childrens Accident Prevention Campaign under Children’s National Medical Center was started in 1986 by a surgeon named Martin R. Eichelberger, M.D. and Herta Feely, a PR professional. In 1987, the two managed to secure funding from Johnson & Johnson, which is the organizations founding sponsor, after which the National SAFE KIDS Campaign was officially launched in 1988. The partnership between Johnson & Johnson and the Children’s Hospital Medical Center and the National Safety Council, was aimed at sponsoring a five-year CRM Program to reduce preventable children’s injuries. After this partnership was formed, a total of 42 non-profit organizations helped to promote the campaign. Some of the organizations included the National Parent Teachers Association, American Red Cross, and the Boy and Girl Scouts of America. Through the campaign, consumers were offered a free safety kit for children and a Child’s Safety Video in exchange for proofs of purchase. The promotional campaign gave Johnson & Johnson Company a lot of exposure as almost 50 million advertising inserts in daily newspapers were included therefore increasing its sales volume (Adkins 250). Tesco is a chain supermarket retailer with branches in Britain, Ireland, and Poland. Over the years, Tesco Supermarket has been running an initiative called Tesco for schools and clubs. In this initiative, customers save vouchers, which can later be redeemed for computers for schools of their choice. Within a ten-week promotional period each year, customers usually received one voucher for every £10 spent in a Tesco store, which they donate to schools or clubs of their choice. The selected schools or clubs then pick the vouchers to redeem them for computers and other equipment from a catalogue. The benefit that Tesco receives is increased customer loyalty, better community relationships because of the positive image and an increase in the number of new customers (Adkins 254). The Levi-Strauss Foundation is a charity organization that was established in 1952 to address social issues and award grants to worthwhile causes that include community development and anti-racism programs. The initiative discovered through focus group studies that some young parents due to lack of experience had problems getting their young children dressed for school. As a result, the initiative sponsored the publishing of a booklet entitled “Let’s Get Dressed!” by the Bank Street College of Education that provided tips to parents. This campaign was a success as it received enormous publicity coverage on TV through talk shows and women’s magazines and as a result, the company recorded a triple increase in Levi’s children’s product sales (Kotler and Armstrong 94). BT Group Plc is one of the world’s leading communications solutions provider serving customers in Europe, the United States of America and Asia Pacific. In 2002, the company went into partnership with Child Line, launching the BT ‘Am I Listening?’ campaign. This campaign has been aiming at ensuring that every young voice is heard. In the campaign, BT donated £1 for every person signing their 1574 answer service, £1 from the completion of a customer survey, and the rest was collected through its employees give as you earn scheme. Donation of both technical and financial support for the Child Line telephone counseling service has led to contribution of £ 2.8 million to help the charity increase the number of calls it can respond to each year. This has also increased employee motivation and won the corporation many awards (Kotler 95). Green Cause-Related Marketing Over the years, there has been an increase in the number of company’s adopting green marketing. This is because companies that adopt the concept of green marketing tend to benefit from a host of advantages that include the emergence of green consumer segment, the greening stakeholder groups and finally the increase in responsible business development (Zinkhan and Carlson 24). Some of the companies that have implemented the concept of green marketing effectively include Tom’s of Maine, Toyota Prius, and Tide cold water. These companies have continued to benefit tremendously. Recent surveys concerning consumers’ general attitudes towards products show that there is an increasing number of customers that consider themselves “green” (Ottman 190). Tom’s of Maine This is a full line of personal care products and was engineered by Tom and Kate Chappell some 25 years ago. After about ten years, Tom’s of Maine broke out of the “deep green” niche and started distribution in CVS, Duane Reade and other mainstream drug outlets. Currently, Tom’s of Maine is owned by Colgate-Palmolive, which is one of the many “deep green” brands that are increasingly on demand from mainstream marketers. This company has continued to enjoy a high number of customers for over 15years now because customers often tend to be loyal to organizations that prioritize their “environmental needs” (Ottman 192). Toyota Prius This is likely one of the most successful green products in the U.S. unlike the other vehicles produced by other manufacturers, the Toyota Prius provides consumers features such as attractive appearance, fuel efficiency, ability to drive for unlimited amount of time without the need to stop and a quite ride courtesy of the a hybrid engine. When the car was introduced, advertisements concentrated on its superior performance as a result of the quite ride, while others focused on its environment friendly features. It has been reported that some consumers buy the car for “Conspicuous Conservation” to pass out the message that they are environmentally astute (Ottman 192). Tide Cold Water This Tides’ line extension is helping it build brand equity and increase market share. A “Life Cycle Assessment” sponsored by Procter & Gamble found that around 85% of the energy is used to heat water for washing clothes. Procter & Gamble estimated that U.S. consumers could save $65 each year by using cold water to wash in place of hot water. With that knowledge , they could convince consumers that cold-water washing was efficient, Tide positioned the product as a way to save on energy bills. The company created a special website that allowed consumers to calculate the amount of energy they could save using cold water yearly personally and together with the others who participated in the “Tide Coldwater Challenge”. Advertisements were run that showed how long the energy saved when using cold could light major U.S. landmarks for example, the Empire State Building. The ability to calculate saving by customers really empowered them and at the same time, reassured them of the products performance. Ottman (192) notes that using the internet through the Tide Coldwater Challenge enabled the consumers to interact with the company and therefore barriers such as skepticism were eliminated. Conclusion From the above examples of companies that practice CRM, it is evident that there is an increase in the number of companies that have realized that giving back to the community is good for business. Increasing sales margins, expanding market shares and spreading goodwill, however, need not be mutually exclusive objectives of the CRMPs (Mescon and Tilson 45). Some noticeable features of CRMPs that have come out clearly from the above examples include the following: funding for a CRMP comes from the company’s advertising or marketing budget and not the corporate philanthropy budget. This means that CRMPs can be established along and not in the place of other corporate giving programs. A recent survey of 32 companies found out that CRM revenues usually add to rather than reduce the company’s earnings (Schiller 54). The future of cause related markets is guaranteed, as it is a win-win arrangement in which both the charity and the company benefit. The charity benefits in the form of contributions while the business benefits from the positive image that it receives. However, companies need to be keen before getting into partnerships because some social causes are established for collecting funds and therefore the outcomes of the partnership may be tragic to the image of the company. In the spirit of giving, compassions and charity, organizations that practice CRM have transformed these partnerships into well functioning branding strategies and therefore are guaranteed of a fruitful future. Some of these companies that are guaranteed of a future as a result of CRM include the Coca Cola Company, Procter & Gamble and Toyota Company just to mention a few. Works Cited Adkins, Sue. Why cause-related marketing is a winning business formula. Marketing News, 25.3 (2000):240-260 Business in the Community. Business in the community stands for Responsible Business. Business in the Community. 2005. Web. 12 Nov. 2012. . Kotler, Philip. Marketing Management. 11 edn. New Jersey: Prentice Hall, 2005. Print. Kotler, Philip and Armstrong, Gary. Principles of marketing. 4 edn. New York: Prentice-Hall: 1995. Lane, Ronald, King, Karen and Russell, Thomas. Kleppner’s advertising procedures. 16 edn. New Jersey: Prentice Hall, 2004. Print. Print. Mescon, Timothy and Donn, Tilson. Corporate philanthropy: a strategic approach to the bottom-line. California Management Review, 29 (1987): 49- 61. Ottman, Jacquelyn. (2012). Green marketing: opportunity for innovation. 2 edn. New York: NTC Business Books. Print. Schiller, Zachary. Doing well by doing good: should business link philanthropy to promotional schemes? Business Week 5 December 1998: 53-54. Print. Varadarajan, Rajan and Menon, Anil. Cause-related marketing: a co alignment of marketing strategy and corporate philanthropy. Journal of Marketing 52.31 (1988): 58-74. Zinkhan, George and Carlson, Lee. Green advertising and the reluctant consumer. Journal of Advertising 24.2(1995):1-6. Read More