By Sandra Miniutti
June 1, 2004
Pink breast cancer ribbons appear on just about everything these days--from kitchen appliances, to shoes, to makeup, to candy. Affinity credit cards declare our personal charitable interests by allowing consumers to direct a percentage of their purchases to charity. And some charities' identities, like the Ronald McDonald House, are synonymous with the firms that support their endeavors. All of these represent examples of cause-related marketing. Simply put--it is a partnership in which a charity and for-profit organization work together to promote a product or service for mutual benefit.
In these types of relationships, the company benefits by borrowing the charity's image in order to improve their own. By demonstrating their commitment to a specific cause, the corporation is able to build considerable good will among shareholders, consumers, regulators, employees, vendors and the greater community. Firms also employ this strategy to increase sales by differentiating themselves in a crowded market, reaching a niche market, increasing brand loyalty and retaining prior customers. How effective is this marketing strategy? 84% of the respondents in the 2002 Cone Corporate Citizenship Study said they'd switch brands to one associated with a charitable cause if price and quality were the same. It certainly helped Ben & Jerry's sell ice cream, to the tune of several billion dollars.
On the other end of the partnership, charities can benefit by generating tremendous awareness of their cause and by offering potential donors a convenient method for making a contribution. They are able to reach audiences to which they never would have had access with their typically limited marketing and advertising budgets. However, for the charity to make the most of this type of partnership, it must be savvy enough to negotiate an agreement which requires the firm to share its increased profits. Furthermore, the charity must carefully consider which firms it chooses to align itself with. Obviously, while a cigarette manufacturer might jump at the chance to improve its reputation by working with a charity that seeks to prevent cancer, this would certainly compromise the credibility of the charity. Alternatively, a charity promoting public health could benefit from a relationship with a company selling a nicotine patch.
Many of us are guilty of being swayed by these flashy campaigns and their promises to make the world a better place. We buy the item emblazed with an enormous charity logo and leave the store feeling altruistic. We might even continue to choose a specific brand in the future because of the firm's philanthropic commitments. But just how charitable are you if you buy a product affiliated with a charitable cause?
You might be surprised to learn that this type of giving isn't very charitable at all. We've all examined a product's label only to find an ambiguous statement such as 'a portion of the proceeds go to charity.' As an informed donor don't you want to know how much? Would you still buy the product if only a penny was going to charity? What if the charity was only receiving a set amount, pre-determined by the licensing agreement, no matter how much the firm's sales increased as a result of the marketing campaign?
While cause-related marketing brings recognition to a charitable cause, makes us feel good, and might even contribute some revenue to the charity, it isn't representative of responsible giving. If you really care about the issue, you'll make a more significant impact by first conducting research to identify the best performing charity. Then make a direct contribution to that organization. A committed donor sending a check for $25 to a charity does much more to help that organization fulfill its mission, then if you were to make a onetime purchase of a $100 product for which the organization only received $0.50.
If you're still passionate about your consumer purchases making a philanthropic impact, then you should at least try to discern if the charity is receiving a percentage of the profits or a set monetary gift regardless of the level of sales. Research the charity's finances and accomplishments. Ask yourself if you'd be willing to make a direct contribution to that organization. If the answer is no, then don't buy the product affiliated with that charity. If the answer is yes, then make a donation to the charity and purchase from companies that support that charity.