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

International Journal of Marketing and OF MARKETING AND (IJMHRM),
INTERNATIONAL JOURNAL Human Resource Management HUMAN
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
RESOURCE MANAGEMENT (IJMHRM)

ISSN 0976 – 6421 (Print)
ISSN 0976 – 643X (Online)
IJMHRM
Volume 4, Issue 1, January- April (2013), pp. 28-39
© IAEME: www.iaeme.com/ijmhrm.asp
©IAEME
Journal Impact Factor (2013): 4.6901 (Calculated by GISI)
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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

28

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

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.

29


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
30


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 19th 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.

31


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 Positive Attitude Change Attitude
& Sponsorship towards (CRM) 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

Consumers Buy Products if
Change Attitude linked with SP & Consumers Buy Products
From - To + Sponsorship 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
32


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

33


Table 2
Z-test: Two Sample for Means

Positive Attitude towards SP & Positive Attitude towards
Sponsorship (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.

H2 o: µ1 ≠ µ2
H2 A: µ1 = µ2
Table 3
Z-test: Two Sample for Means

Use of CRM can change Use of SP & Sponsorship can Change
Attitude From + To - 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

34


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
H3 o: µ1 ≠ µ2
H3 A: µ1 = µ2
Table 4
F-test Two-Sample for Variances

Consumers prefer buying Consumers prefer buying products if
products linked with SP 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).

H4 o: µ1 ≠ µ2 ≠ µ3 ≠ µ4
H4 A: µ1 = µ2 = µ3 = µ4

35


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
P-
Source of Variation SS df MS F 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”.

36


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.

37


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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