Cause-related Marketing - Relevance and Application in British Cancer Charities

Table of Content

1. Introduction
1.1 Scope and Objectives of the Paper
1.2 Structure of the Study

2. Methodology
2.1 Secondary Research
2.2 Primary Research
2.3 Case Study Approach

PART I - CAUSE-RELATED MARKETING AS A MARKETING TOOL

3. Background and Implications of Cause-related Marketing
3.1 The Rise of Corporate Social Responsibility
3.2 The History and Development of Cause-related Marketing
3.3 The Definition of Cause-related Marketing
3.4 Different Types of CRM Activities
3.4.1 Product Endorsement
3.4.2 Non-sales Orientated CRM
3.4.3 CRM Advertising and Sponsorship
3.4.4 CRM Community Partnerships

4. Cause-related Marketing and Consumer Behaviour
4.1 Maslow’s Hierarchy of Needs and the Evolution of Branding
4.2 Motivations and Barriers to Charitable Giving
4.3 Charitable Giving and Cognitive Dissonance
4.4 The Relevance of Cause-related Marketing

5. Conclusion Part I

PART II - UK CANCER CHARITIES AND CHARITY MARKETING

6. Cancer Charities in Britain – A General Overview
6.1 The Concept of Charity
6.2 Cancer Charities in Context
6.3 Cancer Research UK

7. Charity Marketing
7.1 Objectives and Issues in Charity Marketing
7.2 The Charity Marketing Mix
7.2.1 An Overview
7.2.2 Promotional Tools
7.3 The Increasing Competition in Charity Marketing
7.3.1 Reasons for Increasing Competition in Charity Marketing
7.3.2 Areas of Competition
7.4 Developments in Charity Marketing
7.4.1 More Sophisticated Marketing
7.4.2 Changes in Marketing and Fundraising Techniques

8. Conclusion Part II

PART III - THE APPLICATION OF CAUSE-RELATED MARKETING

9. Benefits and Problems for Charities
9.1 Benefits
9.1.1 Increase in Charity Funds
9.1.2 Publicity and Awareness
9.1.3 The Wide Scope of Cause-related Marketing
9.2. Potential Problems
9.2.1 Loss of Independence and Reputation
9.2.2 Exploiting Beneficiary’s Dignity
9.2.3 Problems in the Partnership with Companies
9.3 Overcoming Problems
9.3.1 Improving the Partnership with Companies
9.3.2 Addressing Other Problems

10. Case Studies
10.1 Cancer Research UK
10.2 Examples of Other Cancer Charities

11. Summary and Recommendations
11.1 Conclusion
11.2 Recommendations

12. Future Outlook
12.1 Further Research
12.2 The Future of Cause-related Marketing

13. Bibliography
13.1 Books
13.2 Newspapers and Journals
13.3 Reports and Corporate Material
13.4 Interviewee
13.5 Internet Resources

14. Appendices
Appendix I – Business in the Community Involvement
Appendix II – Maslow’s Hierarchy of Needs
Appendix III – Raw Data for Diagrams
Appendix IV – Interview Transcript

Table of Figures and Diagrams

Figures*

Figure 1. Maslow’s Hierarchy of Needs and the Evolution of Marketing

Figure 2. Cognitive Dissonance in Motivation for Charitable Giving

Figure 3. CRM – A Win-Win-Win Situation

Figure 4. Cancer Research UK Logo

Figure 5. The Charity Marketing Mix

Figure 6. Increasing Competition in Charity Marketing

Figure 7. Five Ps Model of Business in the Community

Figure 8. Maslow’s Hierarchy of Needs

Diagrams

Diagram 1. UK Charities by Type

Diagram 2. Attitudes towards Charities and Donations

*NB. All figures except Figure 8 designed by the author

1. Introduction

On April 19th 2002, Lloyd Scott completed the London Marathon after five days and eight hours. He was walking the 26.2 miles in a 120lb sea-diving suit to raise £100,000 for the charity Cancer and Leukaemia in Childhood. (see BBC News, 19/04/02)

1.1 Scope and Objectives of the Paper

Cause-related marketing (CRM) has become an increasingly popular technique, mirrored in extensive discussions in specialised literature as well as in the growing number of CRM campaigns. Usually, this topic is examined from the company’s point of view.

In this paper, on the contrary, the subject of cause-related marketing shall be analysed from the perspective of charities. To focus the research subject more precisely, the author will concentrate on examining the case of British cancer charities, reflecting her personal interest in cancer research.

As the main objective, this study seeks to answer the following questions:

1. In which context has cause-related marketing developed and can it be regarded as a relevant marketing tool?
2. How are CRM techniques employed by British cancer charities in the light of current marketing issue?
3. Which suggestions and future prospects can be given for CRM application in British cancer charities?

In the course of investigation, past developments and current discussions will be explained. Where necessary, theoretical models will be employed as means of illustration, validated by empirical data and relevant case examples.

This paper is of interest for a variety of readers and will be beneficial for individuals and organisations alike. First and foremost, cancer charities can intensify and correlate their knowledge about different aspects of cause-related marketing and its application. In addition to using this study for reference when initiating CRM campaigns, they can apply it as a basis for future research. Other charities will certainly notice interesting parallels to their own organisation. Companies should find it favourable to scrutinise the subject from the charities’ viewpoint, which will lead to better mutual understanding and, consequently, more successful partnerships between charities and businesses.

Furthermore, this study can provide stimulating perspectives to marketing students and lecturers by revealing ideas still rarely discussed in universities. Finally, the paper aims to educate the public about the topic and, thereby, support the admirable work of charitable organisations.

1.2 Structure of the Study

To answer the questions outlined above, the paper is divided into three main parts.

In the first part, the origin and development of cause-related marketing will be described, leading to a definition of the term as such. In the following, the concept will be analysed in the context of consumer behaviour to provide a stable basis for subsequent practical application.

The second section will examine issues and trends in charity marketing, concentrating on examples in cancer charities. In particular, the increasing competition in this sector and resulting effects are considered in some detail.

In the final part, the focus is laid on cause-related marketing techniques and their application by charities. Advantages and drawbacks are clarified, and various case examples presented. In conclusion, the findings will critically be assessed and recommendations shall be given in the last section of this study.

2. Methodology

To accomplish the objectives of this paper, comprehensive secondary research was conducted and complemented with primary data. Reflecting the controversial and subjective nature of the topic, the main research of this study is qualitative, emphasised by some quantitative data.

The following paragraphs give a brief overview about the methodological approach employed in this study.

2.1 Secondary Research

The study of secondary sources included published material, such as books, articles and reports, as well as extensive Internet research. Most of the literature used was published from end-1990s onwards to reflect the topical significance of cause-related marketing.

The literature review comprised the APU University Library, the British Library and other sources. The range of books covered not only cause-related marketing itself, but also relevant subjects like charities and charity marketing, relationship marketing and branding. For the theoretical background, literature on consumer behaviour was examined and applied to the argument.

Articles from journals, magazines and newspapers served as another fundamental source of information. These involved both American and British publications in marketing, business press and other relevant areas. Additionally, the investigation included business reports and corporate material to gain an overview about cancer charities in the UK.

Two Mintel reports, highly relevant to the topic, were analysed and incorporated with other research findings. Statistical data of the Mintel surveys supplied the basis of the diagrams illustrating important points within the discussion.

The Internet was utilised as an important point of reference in order to observe the latest developments within the subject area. Besides company and other organisational websites, the search contained the latest articles and reports .

In order to portray and summarise important points of discussion, the author developed a number of original illustrations not used by other writers before.

2.2 Primary Research

In compliance with the objectives, an interview was conducted to complement the findings of secondary sources and to introduce a more realistic perspective on the discussion.

Details of the interview are given in Appendix IV.

The author carried out a semi-structured interview with open-end questions, as the main purpose of this conversation was to understand the interviewee’s experience and opinion about the subject matter. Although semi-structured interviews are associated with potential problems of analysing relevant data, this approach was preferred because interesting issues could be explored in more depth (see Hussey and Hussey, 1997:156f).

2.3 Case Study Approach

To illustrate fundamental points made about cause-related marketing, the example of British cancer charities was employed. Cancer Research UK was used as the primary case, since it is the largest cancer research organisation world-wide.

Rather than attempting statistical generalisations, the cases aim to present descriptive and explanatory examples by indicating how the findings apply to real-life situations.

Information for the case studies was gathered from both primary and secondary sources.

(For details about case study approaches, see Yin, 1994:3ff and Hussey and Hussey, 1997:65ff)

Through the wide extent of research conducted in the light of the underlying objectives, the author compiled a variety of opinions, information and evidence. Thus, a sound basis for this study is supplied, serving as an original foundation for conclusions and future suggestions.

PART I

CAUSE-RELATED MARKETING AS A MARKETING TOOL

“In cause-related marketing,

capitalism has actually become a philanthropic tool“

(Steckel, R. and Simons, R., cited in Clutterbuck and Dearlove, 1996:120)

illustration not visible in this excerpt

3. Background and Implications of Cause-related Marketing

3.1 The Rise of Corporate Social Responsibility

Corporate social responsibility (CSR), or corporate citizenship, refers to the obligation companies have to a wide range of stakeholders, including customers, employees, the broader community as well as the environment (see Adkins, 2000:17).

In the last decade, companies began to realise their impact not only on their direct stakeholders, but on society as such. This influence springs from the ever-growing economic power of global firms, some of which make revenues far exceeding the Gross Domestic Product of many countries. For instance, in 1997 the sales revenue of General Motors was approximately equal to the combined GDP of Tanzania, Ethiopia, Nepal, Nigeria, Kenya and Pakistan (see Adkins, 2000:17f). The power of companies and their brands is impressively illustrated in the results of a survey, where “more people trusted Kellogg’s to be honest and fair than trusted the Church“ (The Henley Centre, cited in Lury, 1998:20).

However, this business influence is coupled with rising concern about social and ethical issues. Consumers have become greatly aware of business practices and, nowadays, are much more willing to take action against companies than ten years ago, which is also reason for the rise of organisations like The Consumers’ Association. (see Mintel, 2000) As a consequence, consumers today expect more than value-for-money; they scrutinise firms on the way they do business and demand socially responsible behaviour. Empirical surveys verify that many consumers take ethical issues into consideration when making a purchase decision (see Business and Society, 2001:4).

Besides the above-mentioned growing expectations of customers and other stakeholders, key drivers towards increasing corporate social responsibility include

- Revolution of communications, especially the Internet, turning reputation and public standing into crucial factors of a company’s success;
- Greater labour mobility, demanding social commitment to employees in order to retain qualified workforce;
- Dynamic markets and fierce competition, resulting in businesses’ increasing dependency on their environment.

(see Mintel, 2000; Business and Society, 2001:5)

illustration not visible in this excerpt

In March 2000, a Minister for Corporate Social Responsibility was appointed, a fact that reveals the importance government assigns to the issue. The government’s role includes raising awareness of CSR, promotion of ethical frameworks as well as provision of advice along with fiscal incentives and co-funding. (see Business and Society, 2001:6) It also encourages and supports promotion of causes, such as drink-driving campaigns (see Richards, 1998).

Besides these issues, companies are faced with a growing pressure to distinguish themselves from competitors offering similar goods or services. As brands are getting more and more alike even in quality and price, and traditional marketing tools are becoming more costly and ineffective, firms are searching for alternative strategies. (see Mintel, 2000) In this context, a social image can support the unique identity of a company and its products.

Hence, today CSR is “a major component of company’s intangible assets” (Business and Society, 2001:1). There are a great number of examples proving that companies can truly benefit from corporate social responsibility:

Asda supermarkets have built excellent reputation among customers, suppliers and staff by establishing and maintaining social relationships with local communities.

The printing company Bovince Ltd differentiates itself by voluntarily reporting on environ- mental performance, thus gaining competitive advantage and new business partners.

BT continues to benefit from positive PR and word-of-mouth through various community activities, thereby achieving customer and staff loyalty built on trust.

(see Business and Society, 2001:14ff)

Appendix I summarises business involvement in the community.

An interesting proof of the rising importance of corporate social responsibility is the existence of Business in the Community, an organisation of more than 700 UK companies “committed to continually improving their positive impact on society” (Business in the Community website, 2002).

Thus, emotional and social commitment have become a powerful means for companies to differentiate themselves, gain customer and employee loyalty as well as maintain a good reputation in the public (see Mitchell, 2001:276).

It is in this light of corporate social responsibility that cause-related marketing developed.

3.2 The History and Development of Cause-related Marketing

Before defining cause-related marketing as a term, some insight into the history of the concept shall give an overview of how it developed.

The phrase itself was coined by American Express in 1983, although the idea had been in existence for much longer. In fact, features of cause-related marketing can be found in an American gift scheme of the 1890s, where consumers could help charities win money by sending tokens from Sunlight cartons. (see Adkins, 2000:11ff)

However, CRM itself became popular after a campaign linking American Express with a project for restoration of the Statue of Liberty in 1983. During the three months of the campaign, card use increased by 28% and $1.7 million were raised for the cause. In addition, it attracted the interest of media, customers and businesses. (see Clutterbuck and Dearlove, 1996:123)

In the United Kingdom, the concept took off much slower and only gained interest after the mid-1990s. Nevertheless, innovative campaigns were launched much earlier. Pizza Express is referred to as the “godfather of CRM in the UK” (Pringle and Thompson, 2001:4). Its appeal has been present for over 25 years and supports the Venice in Peril

Fund by donating 25p for each Venezian pizza sold. (see Pringle and Thompson, 2001:99)

The best-known cause-related marketing scheme in the UK is Tesco’s ‘Computer for Schools’ campaign, launched in 1992, which gained awareness more than 50% among adults. For a certain amount of money spent, shoppers receive vouchers which they donate to a school of their choice. Schools can then exchange the vouchers for computers and related equipment. (see Mintel, 2000; Pringle and Thompson, 2001:16ff)

Other successful CRM campaigns in the UK include, among many others, Cadbury’s partnership with Save the Children (see Adkins, 2000:144ff); Andrex’s ‘Guide Dogs for The Blind’ (see Pringle and Thompson, 2001:53ff); and a number of companies working together with NSPCC (National Society for the Prevention of Cruelty to Children), such as Microsoft, Mars and The Early Learning Centre (see Gray, 2001).

Attention paid to cause-related marketing campaigns increased rapidly. In May 2001, the Marketing magazine devoted a special report to this topic, responding to the great interest and growing number of CRM programmes.

3.3 The Definition of Cause-related Marketing

Despite its popularity, ‘cause-related marketing’ is a rather diffuse term and, since it has almost become a buzzword in recent years, it is difficult to precisely define its meaning.

Authors often refer to CRM as a company’s promotional activities undertaken to support a cause, or a licensing agreement with a non-profit organisation, such as use of logo or name (see Swaminathan and Reddy, 2000:387). Others concentrate on the charity’s perspective and stress the philanthropic image being associated with a product or service for financial return and publicity (see Allford, 1992:238).

In its report, Mintel describes cause-related marketing as “a situation in which a cause, which may or may not be connected to the work of a specific charity, can be used to increase the commercial potency of an existing company or brand” (Mintel, 2000).

The Cause-related Marketing Campaign of Business in the Community started in 1995, and “has helped CRM get off the ground in the UK” (Mintel, 2000). The development of their term definition during the last five years is subtle, yet significant.

In 1995, cause-related marketing was defined as “a commercial activity by which a business with a product, service or image to market builds a relationship with a cause or a number of causes for mutual benefit” (Adkins, 2000:11).

In contrast, the definition now used refers to CRM as “a commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit ” (Adkins, 2000:11).

As can be seen from the differing definitions, cause-related marketing has moved towards a much stronger emphasis on mutuality. It is now understood as more than a marketing tool to boost short-term sales, reflected in the change of focus from ‘what the cause does for the brand’ to ‘what the brand can do for cause’ (see Mitchell, 2001:279).

Consequently, the discussions in this paper will be based on the latest definition of Business in the Community above, since it indicates the most balanced approach to the topic.

3.4 Different Types of CRM Activities

Cause-related marketing embraces a much broader range of activities than might at first be obvious. In this paper, the term is therefore used with a very wide scope, including the main categories outlined below.

(in the following, see Mintel, 2000)

3.4.1 Product Endorsement

Product endorsement, labelled the ‘purest form’ of cause-related marketing, is character- ised by an explicit link between consumers’ purchase of goods or services and a donation to a charity or cause. In other words, the charity will receive a fixed share of revenue for display of its logo on the product. This CRM category also comprises subscription services, such as charity credit cards, where every usage of the card generates a donation from the company to the cause.

3.4.2 Non-sales Orientated CRM

This term describes situations with no specific connection between sales and donation. Instead, other forms of activities are used to contribute to a charity or cause, which will subsequently upgrade the company’s image. An example of this method is Tesco’s Healthy Eating Campaign with Cancer Research UK, detailed in paragraph 10.1.

3.4.3 CRM Advertising and Sponsorship

Companies also have the option to run advertisements on behalf of a charity. This method is sometimes called cause-related advertising and should comply with charity objectives, like raising awareness, appealing for memberships or donations.

Even though sponsorship is a traditional marketing tool, it also comes under the heading of cause-related marketing since it likewise correlates a company and a good cause.

3.4.4 CRM Community Partnerships

Finally, cause-related marketing activities can also involve employees at different levels within the company, for example by introducing payroll giving schemes and other staff fund-raising programmes. These activities usually assume a more strategic and long-term approach to CRM.

4. Cause-related Marketing and Consumer Behaviour

In order to develop effective marketing strategies, it is vital to understand consumers’ motivation (see Lovelock and Weinberg, 1989:443). In the following, some models of consumer behaviour theory will be used to explain consumers’ response to situations of charitable giving, and consequently, implications to cause-related marketing.

It should be noted that for interaction with voluntary organisations, the alternative term ‘customer take-up behaviour’ has been suggested (see Bruce, 1994:40ff and 1996:196); however, for purpose of consistency, ‘consumer behaviour’ shall be used throughout.

4.1 Maslow’s Hierarchy of Needs and the Evolution of Branding

The ‘evolution of branding’ or, indeed, marketing as such, has been described in the light of Maslow’s Hierarchy of Needs.

Maslow suggests that humans seek to fulfil a progressive series of needs, starting with the most basic ones, such as hunger and thirst. (for more detail, see Appendix II)

Empirical evidence accentuates that consumer behaviour has followed this pattern over time; since material wealth becomes more widespread in Western societies, people seek to fulfil other wants, such as social needs and the desire for self-actualisation. (see Pringle and Thompson, 2001:28ff)

Some authors have suggested that this development is reflected in the approach to marketing over the last decades, identifying three main ‘waves’ of branding.

(in the following, see Pringle and Thompson, 2001:64ff)

The first stage is described as rational approach, where functionality and cost are at the centre of marketing messages.

The second step in this progress has a much more emotional focus, often using humour, metaphors and other emotional triggers to get consumers’ attention.

Finally, a spiritual approach to marketing advanced in recent years as a response to changing consumer demands (see 3.1). While rational and emotional appeals could be characterised as the ‘head’ and ‘heart’ of a brand, spiritual appeal refers to the brand’s ‘soul’.

The following illustration shows the evolution of marketing approaches in accordance with Maslow’s advancing pyramid of needs.

illustration not visible in this excerpt

Figure 1. Maslow’s Hierarchy of Needs and the Evolution of Marketing

Adapted from Schiffman and Kanuk, 1997:97f; Solomon et al., 1999:97f; Pringle and Thompson, 2001:64ff

It is on the grounds of this development that cause-related marketing evolved as a marketing technique conforming with a superior level of consumer needs and the growing desire for emotional and spiritual brand values.

Emotional (and spiritual) appeal is often used in marketing “to establish a connection between the product and the consumer” (Solomon et al, 1999:164). This strategy, also known as bonding, is hoped to increase the consumer’s involvement with the product, which means the consumer will have an increased personal interest and is more motivated to seek and process information related to the product (see Solomon et al., 1999:99ff).

4.2 Motivations and Barriers to Charitable Giving

In this context, the behavioural concept of motivation plays an important role. It refers to the reasons why people act as they do, and tries to explain behaviour with underlying needs. In the context of charitable giving, the associated needs are hedonic – referring to experience and emotions – rather than utilitarian – meaning practical or functional. (see Solomon et al., 1999:91).

Motivations and barriers to giving have been summarised by Lovelock and Weinberg – an illustration which portrays the conflicting elements associated with charitable donation. It should be noted that these factors vary significantly among individual donors and different situations. (in the following, see Lovelock and Weinberg, 1989:443f)

Benefits for individual donors could be direct favours, like tickets for charity events. Much more likely, however, are motives such as public recognition, reduction of feelings of guilt or responsibility towards people in need, or the satisfaction from helping these people. On top, a number of other factors might also play a role, for example personal interest in the cause, or social pressure.

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