A study on effectiveness of cause related marketing [crm] as a strategic philanthropy

International Journal of Marketing and Human Resource Management (IJMHRM),

ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)

28

A STUDY ON EFFECTIVENESS OF CAUSE RELATED MARKETING

[CRM] AS A STRATEGIC PHILANTHROPY IN TERMS OF BRAND

POPULARITY & SALES

Mr. Sandip Dhakecha

Asst. Professor,

School of Management,

RK.University

ABSTRACT

Cause-related marketing is an emerging area within the marketing discipline,

originating in the United States in the 1980s’. There has been a growing concern for cause

related marketing over the last two decades. A growing number of firms are entering into

commercial partnerships with nonprofit organizations to achieve specific business objectives.

Cause-related marketing is one example of such a partnership. Cause-related marketing is a

marketing strategy whereby the firm makes a contribution, financial or otherwise, to a

nonprofit organization(s) contingent upon the customer engaging in a revenue-providing

exchange that satisfies business and individual objectives. The main objective of this research

paper is to gather more understanding of CRM in terms of brand popularity & sales as

compare to sales promotion and sponsorship. This paper explored the following questions:

1. Do consumers respond more positively toward Cause-related marketing than towards

other marketing strategy?

2. What is the impact of Cause-related marketing on the consumer’s response in terms of

attitude towards the brand, attitude to the strategy and purchase intention?

Key Words: Cause Related Marketing [CRM], Strategic Philanthropy, Sales Promotion,

Sponsorship

INTERNATIONAL JOURNAL OF MARKETING AND HUMAN

RESOURCE MANAGEMENT (IJMHRM)

ISSN 0976 – 6421 (Print)

ISSN 0976 – 643X (Online)

Volume 4, Issue 1, January- April (2013), pp. 28-39

© IAEME: www.iaeme.com/ijmhrm.asp

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IJMHRM

© I A E M E



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1.0.0 OBJECTIVE

The main objective of this paper is to understand the impact of CRM on brand popularity and

sales in comparison of other marketing strategies like Sales promotions and Sponsorships”.

1.1.0 INTRODUCTION

A growing number of firms are entering into commercial partnerships with nonprofit

organizations to achieve specific business objectives. Cause-related marketing is one example of such

a partnership. Cause-related marketing is a marketing strategy whereby the firm makes a contribution,

financial or otherwise, to a nonprofit organization(s) contingent upon the customer engaging in a

revenue-providing exchange that satisfies business and individual objectives (Varadarajan and Menon

1988). It has emerged relatively recently and its origins have been attributed to a promotion

undertaken by American Express in the early 1980s (Cunningham 1997).

In an environment of increasing competition, the objective of every organization on the globe includes

two common elements, first to keep improving consumer attitude towards brand and second to keep

stimulating consumer purchase intension of that brand. In this regard a strategy known as Cause

Related Marketing (CRM) is emerging on a fast pace and attracting increasing consumer interest.

Considering the importance of this trend in our country efforts have been made not only to provide an

understanding about this concept but also to compare its effectiveness with other marketing strategies.

As CRM is an independent variable, variables which are dependent in this report are:

• Consumer attitude towards CRM strategy.

• Change in consumer attitude towards brand after CRM.

• Consumer purchase intention after CRM.

I believe that this paper will provide a considerable justification for organization to undertake the

CRM as an innovative yet effective strategy for changing customer attitude and shaping their

purchase intention towards their brands.

1.2.0 LITERATURE SURVEY

Marketing communication is one of the four ‘Ps’ of marketing mix and its role is to create

brand awareness, generate favorable brand attitudes and stimulate purchase intention (Belch and

Belch 1998; Rossiter and Percy 1998). These objectives are pursued using a range of communications

strategies including advertising, sales promotion, direct marketing, public relations, sponsorship and

personal selling.

Sales promotion is an important form of marketing communications. Price promotion,

coupons, feature advertising and end-of-aisle displays have been identified as the most commonly

used consumer promotions (Chandon, Wansink and Laurant 2000; Lemon and Nowlis 2002).

Promotional tools in general are designed to stimulate short-term sales but frequent promotions can

alter the customer’s reference price and negatively impact on brand equity (Mela, Gupta and Lehmann

1997).

Sponsorship’s importance as a form of marketing communications is also not negligible. It

has increased in comparison to traditional advertising (Erdogan and Kitchen 1998; Harvey 2001). The

popularity of sponsorship has also been attributed to its ability to avoid the clutter; as it attempts to

enhance consumers’ perceptions of the brand by creating a link between the brand and a sponsored

event or organization that is valued by the consumer. However, the ultimate objective is to influence

consumer preference and purchase.

Despite the availability of several marketing tools, marketing communication is changing the

communication practices and has provided the bases for the development of new forms of

communication and marketing strategies, such as cause-related marketing.



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1.2.1 Brand Attitude

Attitudes are not innate; they are learned and plays a critical role in influencing behavior

therefore can be created or changed through marketing communications strategies. Attitudes act

as a key link in the causal chain between attribute perceptions on the one hand and intentions and

behaviors on the other. Thus marketers who understand that causal sequence, and who use it in

decision making, can have a powerful ally in their battle for superiority in the marketplace (Lutz

1991)

To generate a positive attitude toward the brand, the consumer must believe that the brand has the

attributes and benefits that will satisfy his or her wants or needs (Keller 1993). These attributes or

benefits can be product-related or non-product related, but must be important to the consumer to

have an impact. Attitudes toward a brand can also be altered by ‘…pointing out their

relationships to particular social groups, events or causes’ (Rossiter and Percy 1998). In this

context, marketing communications must be designed to create these favorable attitudes,

reinforce existing favorable attitudes and/or change negative attitudes.

1.2.2 Purchase Intension

In terms of measuring the impact of marketing communications, it has been found that,

although the attitudes of customers are important, they are less relevant than what the consumer

actually does in the marketplace’ (Schultz 1998, p.410). The ability to influence purchase

intention is therefore a critical objective for marketing communication. In this context, In addition

to the existence of a favorable brand attitude, a number of other factors such as habit, corporate

credibility, endorsement of a product by an association and/or sport sponsorship can have a

positive effect on purchase intention (Daneshvary and Schwer 2000). Similarly, high involvement

with the sponsored activity will impact on a consumer’s preference for a sponsor’s product due to

the level of goodwill generated (Meenaghan 2001).

The origin of the phrase ‘cause-related marketing’ has been attributed to American Express in

relation to a marketing campaign undertaken in 1983 (Cunningham 1997). With the objectives of

increasing new cardholders as well as usage of the card, American Express developed a

marketing strategy that linked those objectives with a commitment to contribute funds for the

restoration of the Statue of Liberty. AMEX achieved a 28 percent increase in card usage as well

as a substantial increase in new cardholders.

According to Varadarajan and Menon (1988): Cause-related marketing is the process of

formulating and implementing marketing activities that are characterized by an offer from the

firm to contribute a specified amount to a designated cause when customers engage in revenue-

providing exchanges that satisfy organizational and individual objectives.

Cause-related marketing has also been referred to as ‘strategic philanthropy’ and a way for

business to ‘…do well while doing well. It is also suggested that the strategic use of philanthropy

is an important component in building long-term competitiveness (Simon 1995).

Sponsorship has been described as ‘…the underwriting of a special event to support corporate

objectives by enhancing corporate image, increasing awareness of brands, or directly stimulating

sales of products and services’ (Javalgi et al. 1994, p.48). In the case of sponsorship, the

contribution to the nonprofit organization precedes the generation of sales revenue and is made in

anticipation of an outcome. In contrast, with a cause-related marketing strategy, the contribution

is a direct consequence of revenue generation. Therefore, cause-related marketing and

sponsorship are perceived as different strategies (Cornwell and Maignan 1998).

Sales promotion has been defined as ‘…short term incentives to encourage purchase or sales of a

product or service’ (Kotler et al. 2001). Incentives used in sales promotions generally relate to



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discounts, cash-back offers, additional product for the same cost or free gifts; that is, a tangible

utilitarian benefit for the consumer. Cause-related marketing, conversely, does not necessarily offer a

personal benefit to the consumer, but instead provides a benefit to a third party via the cause or

charity. Sales promotion however can be used in conjunction with cause-related marketing.

To summarize, the literature suggests that cause-related marketing can create positive implication as

this strategy actively engages the customer. This engagement is an advantage over other marketing

activities such as sponsorship and sales promotions as these activities are generally short-term in

nature and can be useful for encouraging product trail, rewarding existing customer or increase usage.

2.0.0 RESEARCH QUESTION

In the context of literature survey and the objective of report as well as taking into

consideration, the specific research question comes out as follows.

1. Dose CRM as a strategy effect on consumer’s response in terms of attitude to the strategy,

change consumer attitude towards brand and stimulate purchase intensions?

2. Do sales promotions and sponsorships generate more positive consumer response than CRM?

3.0.0 METHODOLOGY

In this paper efforts have been made to investigate the effectiveness of cause-related

marketing, in terms of consumer attitude to the strategy, brand attitude and purchase intention. It also

explores consumer response to cause-related marketing as compared to sponsorship and sales

promotion. The findings I believe shall provide knowledge and assistance to marketing managers in

the development of more effective cause-related marketing strategies.

The convenience sample based on 275 respondents has been drawn from both undergraduate and

postgraduate Teachers of RK University representing all disciplines. It was believed that these

respondents would provide more rational opinion as they know and understand more deeply the

subject matter as compare to common men.

• Data was collected using self-administered survey in which questionnaire was the key

instrument. Survey was administered during the third week of January 2013 i.e. between 17th,

18th, and 19

th as before these dates respondents were not easily available because of

University exams.

• The data was then analyzed using statistical techniques given in MS Excel which includes

analysis of variance (ANOVA). Z-TEST, T-TEST and measure of Central Tendencies and

Dispersion.

4.0.0 HYPOTHESIS

Keeping in mind the objective along with the research question, number of hypothesis have

been developed which are as follows:

H1. A Consumer will have more positive attitude towards CRM as an image enhancing marketing

strategy, than they will towards Sales promotions and Sponsorships.

H2. A Consumer opinion will be significantly different in terms of their change of attitude

towards brands which undertake CRM as compare to Sales promotions and Sponsorships.

H3. A Consumer purchase intention will not be more positive as a result of exposure to CRM

strategy than the exposure to Sales promotions and Sponsorships.

H4. A Respondents’ opinion will not be significantly different in terms of all determinants

(Overall) taken to measure the impact of cause related marketing as compare to sales

promotion & promotion towards brand popularity and sales.



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5.0.0 SURVEY FINDINGS

The major survey findings were analyzed below in order to have a better understanding and

comprehension of respondents’ opinion towards the impact of CRM viz-a-viz Sales promotion and

Sponsorship.

5.1.0 Measures of Central tendencies & dispersions

The measure of central tendencies and measure of dispersion for the dimensions related to the

impact of cause related marketing on brand popularity and sales are presented below:

Table 1

Positive Attitude towards SP

& Sponsorship

Positive Attitude

towards (CRM)

Change Attitude

From + To -

Mean 2.00 2.55 2.54

Standard

Error 0.04 0.05 0.06

Median 2.01 2.52 2.54

Mode 1.00 1.00 2.00

Standard

Dev. 0.64 0.84 0.94

Sample Var. 0.41 0.71 0.88

Kurtosis -1.28 -1.12 -0.57

Skewness -0.08 -0.06 0.23

Range 2.00 3.00 4.00

Minimum 1.00 1.00 1.00

Maximum 3.00 4.00 5.00

Sum 549.95 701.33 697.55

Count 275.00 275.00 275.00

Change Attitude

From - To +

Consumers Buy Products if

linked with SP &

Sponsorship

Consumers Buy Products

if linked with CRM

Mean 3.02 1.99 2.88

Standard Error 0.07 0.04 0.07

Median 3.00 1.95 2.88

Mode 4.00 1.00 1.00

Standard Dev. 1.15 0.63 1.16

Sample Var. 1.32 0.39 1.36

Kurtosis -1.11 -1.29 -1.17

Skewness -0.03 0.02 0.05

Range 4.00 2.00 4.00

Minimum 1.00 1.00 1.00

Maximum 5.00 3.00 5.00

Sum 830.20 547.35 793.25

Count 275.00 275.00 275.00



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The above analysis shows that the respondents opinion towards impact of cause

related marketing on brand popularity & sales as compare to sales promotion and sponsorship

for all the surveyed determinants was as high as 3.02 for “CRM change attitude from

negative to positive” and as low as 1.99 for “Consumers will buy products if linked with sales

promotion & sponsorship”.

The standard deviation of respondents’ opinions towards impact of cause related

marketing on brand popularity and sales as compare to sales promotion and sponsorship was

highest for dimension ---consumers will buy products if linked with CRM ‘1.16’ ---- and

least for dimension consumers will buy products if linked with sales promotion &

sponsorship ‘0.63’. Dimension CRM change attitude from negative to positive is second in

terms of high standard deviation ‘1.15’. These high standard deviations indicates that there is

a high polarization of the respondent’s on the dimension “consumer will buy products if

linked with CRM”, and CRM CHANGE ATTITUDE FROM negative to positive whereas

least on the “CONSUMERS will buy products if linked with sales promotion & sponsorship’.

The skewness of dimension for “consumers will buy products if linked with sales promotion

& sponsorship”, “ Consumers will buy products if linked with CRM” , change in attitude

from negative to positive through sales promotion & sponsorship was found positive , which

were 0.02, 0.05, and 0.23 respectively . It indicates that the normal distribution curve is

positively skewed and that the majority of the respondents’ opinions were above than the

mean.

The skewness was found negative for negative to positive change in attitude through

CRM, positive attitude towards sales promotion & sponsorship and for positive attitude

towards CRM respectively -0.03, -0.08 and -0.06. This indicates that the normal distribution

curve is negatively skewed and that the majority of the respondents’ opinions were lower

than the mean.

6.0.0 HYPOTHESIS TESTING

Based on literature survey different hypotheses were developed and tested which are

presented as follows:

6.1.0 Hypothesis One

H1O: Consumer will not have more positive attitude towards CRM as an image

enhancing marketing strategy, than they will towards Sales promotions and Sponsorships.

H1A: Consumer will have more positive attitude towards CRM as an image enhancing

marketing strategy, than they will towards Sales promotions and Sponsorships.

Statically Representation:

H1 o: µ1 ≠ µ2

H1 A: µ1 = µ2



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Table 2 Z-test: Two Sample for Means

Positive Attitude towards SP &

Sponsorship

Positive Attitude towards

(CRM)

Mean 2.00 2.55

Known Variance 0.41 0.71

Observations 275.00 275.00

Hypothesized Mean

Diff. 0.00

Z -8.63

P(Z<=z) one-tail 0.00

z Critical one-tail 1.64

P(Z<=z) two-tail 0.00

z Critical two-tail 1.96

Decision

The hypotheses related with consumers will not have more positive attitude towards CRM

as an image enhancing marketing strategy, than they will towards Sales promotions and

Sponsorships was rejected. At 95% confidence level the z-calculated value of -8.63 is

higher than the Z-critical value of 1.96, which apparently falls under critical zone.

6.2.0 Hypothesis Two

H2O: Consumer opinion will not be significantly different in terms of their change of

attitude towards brands which undertake CRM as compare to Sales promotions and

Sponsorships.

H2A: Consumer opinion will be significantly different in terms of their change of attitude

towards brands which undertake CRM as compare to Sales promotions and Sponsorships.

Statically Representation: H2 o: µ1 ≠ µ2

H2 A: µ1 = µ2

Table 3 Z-test: Two Sample for Means

Use of CRM can change

Attitude From + To -

Use of SP & Sponsorship can Change

Attitude From - To +

Mean 2.55 2.54

Known Variance 0.88 1.32


Hypothesized

Mean Diff. 0.00

Z 0.15

P(Z<=z) one-tail 0.44

z Critical one-tail 1.64

P(Z<=z) two-tail 0.88

z Critical two-tail 1.96



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Decision

The hypotheses related to respondent’s opinions of no significant difference on the two

dimensions that is “use of CRM can change of attitude towards brands from positive to negative

as compare to Sales promotions and Sponsorships was accepted. At 95% confidence level, the z-

critical value of 1.96 is higher than the calculated Z value of 0.15.

6.3.0 Hypothesis Three

H3O: Consumer purchase intention will be more positive as a result of exposure to CRM


H3A: Consumer purchase intention will not be more positive as a result of exposure to CRM


Statically Representation: H3 o: µ1 ≠ µ2

H3 A: µ1 = µ2

Table 4

F-test Two-Sample for Variances

Consumers prefer buying

products linked with SP

Consumers prefer buying products if

linked with CRM

Mean 1.99 2.88

Variance 0.39 1.36


df 274.00 274.00

F 0.29

P(F<=f) one-tail 0.00

F Critical one-tail 0.82

Decision

The hypotheses related to respondents opinions of significant difference for determinant

“customer prefer buying products linked with CRM products linked with sales promotions &

sponsorship was accepted; At 95% confidence level, and 274 degrees of freedom; the F-critical

value was 0.82 and the F-calculated value was 0.29 that fall under non-critical region and shows

that there is high significance.

6.4.0 Hypothesis Four

H4O: There is no significant difference in respondents’ opinion in terms of measuring the

impact of CRM viz-a-viz Sales promotion & sponsorship towards all determinants (overall).

H4A: There is significant difference in respondents’ opinion in terms of measuring the impact

of CRM viz-a-viz Sales promotion & sponsorship towards all determinants (overall).

Statically Representation: H4 o: µ1 ≠ µ2 ≠ µ3 ≠ µ4

H4 A: µ1 = µ2 = µ3 = µ4



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Table 5 Anova: Single Factor

SUMMARY

Groups Count Sum Average Variance

Positive Attitude towards SP

& Sponsorship 275.00 547.73 2.00 0.41

Positive Attitude towards

(CRM) 275.00 697.40 2.55 0.70

Change Attitude From + To - 275.00 695.55 2.54 0.88

Change Attitude From - To + 275.00 826.86 3.02 1.32

Buy Products if linked with SP

& Sponsorship 275.00 545.35 1.99 0.40

Buy Products if linked with

CRM 275.00 791.44 2.89 1.36

ANOVA

Source of Variation SS df MS F

P-

value F crit

Between Groups 255.69 6.00 51.14 60.54 0.00 2.22

Within Groups 1383.68 1638.00 0.84

Total 1639.36 1643.00

Decision: The hypothesis related to no significant difference in respondents’ opinion over the all six

determinants was rejected. At 95% confidence level and (6, 1638) degree of freedom, the F-

critical value is 1.79 and the F-calculated values is 60.54 which apparently falls under the

critical zone.

7.0.0 CONCLUSION

Cause-related marketing activities, although emerged relatively recent, are useful for

actively involving the customer with the brand. In an environment of increasing competition,

product parity and demanding consumers, it has been suggested that cause-related marketing

is a unique win-win-win strategy. That is to say, this marketing strategy benefits the

community, generates goodwill and revenue for the company and creates positive feelings for

the consumer as a result of their purchase decision. Furthermore, cause-related marketing is

an attractive proposition to nonprofit organizations facing decreased government funding and

increased competition for contributions from individual donors.

Based on the literature survey a questionnaire was developed that was administered to

a sample size of 275. The major findings are discussed below:

Respondents opinion towards impact of cause related marketing on brand popularity

& sales as compare to sales promotion and sponsorship for all the surveyed determinants was

as high as 3.02 for “CRM change attitude from negative to positive” and as low as 1.99 for

“Consumers will buy products if linked with sales promotion & sponsorship”.



37

The standard deviation of respondents’ opinions towards impact of cause related marketing

on brand popularity and sales as compare to sales promotion and sponsorship negative to

positive is second in terms of high standard deviation ‘1.15’.

These high standard deviations indicates that there is a high polarization of the

respondent’s on the dimension “consumer will buy products if linked with CRM”, and CRM

CHANGE ATTITUDE FROM negative to positive whereas least on the “CONSUMERS will

buy products if linked with sales promotion & sponsorship’.

The skewness of dimension for “consumers will buy products if linked with sales

promotion & sponsorship”, “ Consumers will buy products if linked with CRM” , change in

attitude from negative to positive through sales promotion & sponsorship was found positive ,

which were 0.02, 0.05, and 0.23 respectively . It indicates that the normal distribution curve

is positively skewed and that the majority of the respondents’ opinions were above than the

mean.

The skewness was found negative for negative to positive change in attitude through

CRM, positive attitude towards sales promotion & sponsorship and for positive attitude

towards CRM respectively -0.03, -0.08 and -0.06. This indicates that the normal distribution

curve is negatively skewed and that the majority of the respondents’ opinions were lower

than the mean.

The standard deviation of respondents’ opinions towards impact of cause related

marketing on brand popularity and sales as compare to sales promotion and sponsorship was

highest for dimension ---consumers will buy products if linked with CRM ‘1.16’ ---- and

least for dimension consumers will buy products if linked with sales promotion &

sponsorship ‘0.63’. Dimension CRM change attitude from negative to positive is second in

terms of high standard deviation ‘1.15’. These high standard deviations indicates that there is

a high polarization of the respondent’s on the dimension “consumer will buy products if

linked with CRM”, and CRM CHANGE ATTITUDE FROM negative to positive whereas

least on the “CONSUMERS will buy products if linked with sales promotion & sponsorship’.

Based on literature survey four hypotheses were developed and tested; the summarized

results are presented below: a) The hypotheses related with consumers will not have more positive attitude towards CRM as an

image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships was

rejected. At 95% confidence level the z-calculated value of -8.63 is higher than the Z-critical

value of 1.96, which apparently falls under critical zone.

b) The hypotheses related to respondent’s opinions of no significant difference on the two

dimensions that is “use of CRM can change of attitude towards brands from positive to negative

as compare to Sales promotions and Sponsorships” was accepted. At 95% confidence level, the z-

critical value of 1.96 is higher than the calculated Z value of 0.15. This shows that there is no/low

significant difference.

c) The hypotheses related to respondents opinions of significant difference for determinant

“customer prefer buying products linked with CRM products linked with sales promotions &

sponsorship was accepted; At 95% confidence level, and 274 degrees of freedom; the F-critical

value was 0.82 and the F-calculated value was 0.29 that fall under non-critical region and shows

that there is high significance.

d) The hypothesis related to no significant difference in respondents’ opinion over the all six

determinants was rejected. At 95% confidence level and (6, 1638) degree of freedom, the F-

critical value is 1.79 and the F-calculated values is 60.54 which apparently falls under the critical

zone.



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Appendix1

QUESTIONNAIRE

(Demographical Data)

Q-1. Age O 18 - 25 O 26 - 30 O 31 – Above

Q-2. Qualification O Undergraduate O Graduate O Postgraduate O Other

Q-3. Gender O Male O Female

Q-4. Area of Profession O Marketing O Finance O Computer Science O Engineering

QUESTIONNAIRE

(Subject Data)

[Encircle the numbers where 5 is strongly agree and 1 is strongly disagree]

Q-5. Your attitude will be more positive if an organization use cause related marketing

strategy for their brand popularity and sales development? 5 4 3 2 1

Q-6. Your attitude will be more positive if an organization use sales promotion and

sponsorship for their brand popularity and sales development? 5 4 3 2 1

Q-7. Use of CRM for brand popularity and sales development can change your attitude

from negative to positive: 5 4 3 2 1

Q-8. Use of sales promotion and sponsorship for brand popularity and sales development

can change your attitude from negative to positive:5 4 3 2 1

Q-9. You would like to buy brands which are linked with the cause related marketing

campaign and generating funds for some specific cause: 5 4 3 2 1

Q-10. You would like to buy brands which are linked with sales promotion and

sponsorship: 5 4 3 2 1

Q-11. Overall you like organization expediting CRM strategy: 5 4 3 2 1

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Documents

A study on effectiveness of cause related marketing [crm] as a strategic philanthropy