ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Cause-Related Marketing and Brand Differentiationin Iran Hassan, Golkar

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1 Cause-Related Marketing and Brand Differentiationin Iran Hassan, Golkar Department of Management, Shahid Bahonar University, Kerman, Iran. Sina, Zeynali (Corresponding author) Master of Business Managemen, Department of Management, Shahid Bahonar Univresity, Kerman, Iran Abstract Previous research on corporate social responsibility generally acknowledges that consumers develop more favourable perceptions of responsible firms. Yet few empirical works have focused on the effects of the program s Cause-Related Marketing and of its characteristics on Brand Differentiationin. For companies, CRM has been noted to increase sales and enhance companies image. As for causes, they received greater funding and publicity. Overall the impacts of cause-related marketing on Brand Differentiationin are significant. This study uses a fictitious CRM advertisement to determine the impact of CRM on attitude toward CRM and consumers response. The study shows that CRM has significant positive impact on Brand Differentiationin well as purchase intention. Also The findings suggest that societal communication supports Brand Differentiationin building Results of this study can be directly or indirectly used as guidelines for manufacturing companies or firms, service, advertising and commerce firms. Keywords: Cause-related marketing, Brand Differentiationin, Iran Introduction As a multi-disciplinary concept, definitions of Corporate Social Responsibility (CSR) abound. In this research, we adopt the broad perspective proposed by the European Commission defining CSR as the firms voluntary integration of social and environmental concerns to their commercial activities and relationships with their stakeholders (see Lapeyre & Bonnefont, 2005). The interest for CSR has already had a 50-year long tradition (Bowen, 1953) but has recently gained an important renewal. The evolutions of the legal context in certain countries (France, 2001) and consumers increasing demand urge companies to think about a potential involvement in societal initiatives. According to a 2005 Sociovision Survey, 68% of people (vs. 55% in 1993) think firms should pay more attention to the impact of their actions on the environment, on social harmony, and on their employees well-being, and 42% of them (vs. 39% in 2003) buy environmentally-friendly products in priority. In recent years, marketing campaigns and promotions with a social dimension have become more visible. Cause-related marketing (CRM) is an increasingly common form of promotion. Expenditures on this form of communicating with customers are expected to surpass $828 million in North America in 2002 (IEG, 2001). As defined here, CRM involves the contribution to a cause by a firm which is linked to customers engaging in revenueproducingtransactions with the firm (Varandarajan and Menon, 1988, p. 60).We adopt this definition, and only refer to promotions in which the amount given to a charity by a firm is somehowtied to the purchase behaviour of consumers. To illustrate our basic proposition, consider a consumer surfing through an Internet mall. In one case, the consumer first encounters a wine retailing website, where s/he encounters sensory-laden descriptions of wines, with photographs of beautiful vineyards and/or receives recommendations about the perfect wine to pair with a special dinner entree. In another case, the consumer first encounters a site offering paper towels and reads about the available sizes, thickness and prices. We propose that the characteristics of these initially encountered products or websites (similar to the effects of traditional atmospherics) will affect the degree of pleasure and arousal that a consumer experiences. Further, we propose that these induced states will influence the subsequent choice of websites and shopping behavior. A woman would have to eat three containers of Yoplait every day during the four-month campaign to raise $36 for the cause and research suggests a number of health risks, including cancer, associated with the consumption of dairy products from cows given rbgh (recombinant bovine growth hormone). COPY RIGHT 2013 Institute of Interdisciplinary Business Research 186

2 The Think Before You Pink assertion reflects the kinds of questions CRM campaigns tend to raise: Is the CRM program a diversionary tactic, hiding a product problem through a public relations spin? Is the amount donated to the cause disproportionately small relative to the sales generated for the product? And, most of all, is the CRM campaign a clever manipulation to enrich a corporation s coffers (generating a buck), or is it a sincere way of assisting a charity (creating a bang or social impact)? Fit between brand extensions and core brands, for example, has been found to enhance the evaluation of the extension when the core brand is well liked (Aaker and Keller, 1990, 1993). Likewise, in the context of composite branding alliances, Park et al. (1996) find that when the two brands in the composite have greater fit in terms of attribute complementary, success is facilitated. Also for celebrity endorsers, increased spokesperson/product fit results in a more favorable product attitude (Kamins and Gupta, 1994) and allows information to be processed in a shorter time (Speck et al., 1988). CRM is similar to these other domains in that brands are intentionally associating themselves with some other object in order to improve brand performance along some dimension. Across all the domains mentioned above, fit has generally been found to facilitate transfer of positives from an object (celebrity, core brand, etc.) to the objectassociated brand. That is, fit is necessary, but not sufficient for success. In keeping with this theoretical tradition, we explore the role of fit between brand and cause on choice when the cause is well liked. CRM trends: Up and away Since the American Express campaign of 1983, CRMs have taken off. CRM is one of the fastest growing forms of marketing, as reflected in increased spending (Webb & Mohr, 1998). CRM expenditures went from practically zero in 1983 to an estimated $922 million in Companies invested approximately $991 million in cause campaigns in 2004, a rise of 57% since 1999 (Gard, 2004). In 1983, philanthropic giving totaled $100 billion, and then rose to $241 billion by 2003, representing a 6% annual growth rate. However, CRM donations increased more than twice as quickly, from $630 million in 2000 to $828 million in 2002; a 14% annual growth rate. Corporate giving is also expanding more quickly than any other source of charitable donation (Giving USA Foundation, 2003). In that light, it is little wonder that NPOs see corporations and CRMs as vital sources of funding. CONSUMER EVALUATIONS OF CAUSE MARKETING Overall, consumers approve of cause marketing and other community outreach activities by companies (Ross et al., ; 1992). According to the Cone/Roper Cause Related Trends Report (1999), 83% of consumers surveyed said they have a more positive image of a company that supports a cause they care about. Approximately two-thirds of these U.S. consumers report that if price and quality were equal they would consider switching retailers or brands associated with a cause. Similarly, in the U.K., 86% of consumers said they would be prone to buy a product associated with a cause and view the company more positively (Business in the Community, 1996). However, cause marketing programs have been criticized (Drumwright, 1996; Varadarajan and Menon, 1988) and may run the risk of consumer backlash (Osterhus, 1997) if households question the validity, relevance, or appropriateness of a firm s offer (Schwartz, 1977). When consumers focus upon specific cause marketing programs, rather than cause marketing in general, the attributions they make of the company s motives for conducting the program may influence how they respond. Varadarajan and Menon (1988) warned that firms making CRM offers could be perceived as primarily selfinterested and experience negative outcomes. The managers in Drumwright s (1994) study were keenly aware of the potential for a negative impact of cause marketing communications, promotions that consumers might interpret as selfinterested. From in-depth interviews with consumers on their views of CRM, Webb and Mohr (1998) found a group who is highly skeptical of this marketing tactic. The negative attitudes stem from these consumers distrust of either the honesty or fairness of the amount donated to the nonprofit organization. A central tenet of this research is that a consumer s experience in one consumption situation is likely to affect his/her behavior in immediately following situation. This dynamic focus distinguishes the present research from the previous work done in environmental psychology (e.g., Donovan & Rossiter, 1982; Holbrook & Gardner, 1993; Mehrabian & Russell, 1974). In the previous work, researchers showed that the atmospheric variables associated with a stimulus influenced concurrent behavior towards that stimulus. For instance, the researchers showed that if a supermarket atmosphere was pleasant, it could influence consumers to exhibit more approach behavior in that supermarket. In this research, we propose that a pleasant or arousing experience will have carryover effects on the next experience encountered. We believe that these carry-over effects may be especially significant in Internet browsing as consumption experiences closely follow each other (e.g., switching from one website to another). COPY RIGHT 2013 Institute of Interdisciplinary Business Research 187

3 Choice-based conjoint Conjoint analysis has now come to refer to a broad class of decompositional models that determine utility (part worth) estimates of individual attribute levels from global responses to a series of alternatives (e.g., a rating of each alternative) or set of alternatives (e.g., a ranking of profiles, or a choice of one from among a set). These techniques allow researchers to (1) present people with novel attribute combinations; (2) obtain demand estimates and price elasticities; and (3) calculate main effects for, and interactions among, product attributes. Discrete choice tasks are analysed using Multinomial Logistic (MNL) regression. While this method may be more difficult to use than regression programs designed for interval data (e.g., Ordinary Least Squares regression), a number of benefits exist, including: (1) the ability to estimate market share predictions directly, rather than passing them through a choice simulator (thereby eliminating one stage of the process and the introduction of more error); and (2) market share estimates are based on choice data, which is what people do in the real world (for a thorough review of the history of discrete choice, see Batsell and Louviere, 1991). We draw on the cognitive customer-based approach proposed by Aaker (1994) and Keller (2003) and define brand equity as the differential effect that brand knowledge has on consumer response to the marketing of that brand (Keller, 2003). Brand knowledge is composed of brand attention and brand image (Keller, 2003), as well as brand loyalty and perceived quality in Aaker s close perspective (1994). Any change in the marketing-mix that influence brand attention or brand associations (e.g., communication activities and possible alliances with other brands, events, causes or endorsers) can therefore modify their brand equity (Krishnan, 1996; Keller, 2003; Yoo, Donthu, & Lee, 2000). In the present research, we study the impact of societal communication and of its characteristics on brand equity. Relying on the general mechanism of brand equity building through communication and brand alliances described earlier (Keller, 2003), Hoeffler & Keller (2002) specifically discuss, at a pure theoretical level, the impact of corporate societal marketing (CSM) on cognitive customerbased brand equity. They argue that CSM can bolster brand awareness, at least brand recognition, such as with sponsorship or other indirect brand-building communications by making brand more prominent in the consumer s mind. More important, CSM can enhance brand image by generating new abstract associations, associations to the cause itself, associations related to an idealized brand user, or associations related to brand personality (the brand may appear as more sincere, caring, genuine). Abstract associations are particularly important to build brand equity as they exhibit a better transferability (Park, Milberg, & Lawson, 1991). What makes a successful Cause branding program? Another benefit of CRM to companies is brand building. Firms select causes for which, they believe, their customers have an affinity, hoping this will translate into higher brand memorability, preference, and purchasing. Studies have shown that consumers have more favorable attitudes toward brands that are tied to a cause than those that are not (Webb & Mohr, 1998). For Levis and other companies targeting the youth market, it is also important to know that three-fifths of teens (60%) are more positively disposed toward and likely to buy brands that support charitable causes (Gard, 2004). Ben & Jerry s, under its founders, applied CRM as a brand building tool. The premium ice cream maker positioned its brand as socially sensitive by giving a portion of sales to preserve rainforests and support independent farmers. The cause may be a secondary consideration in the purchase decision; taste, after all, is the most important quality in this category. Yet, the idea that the company is giving back to the community strengthens customer loyalty and elevates sales. Footwear maker Timberland recognized the brand building value of CRM when it recently placed an ad in Vanity Fair to drive people to its website and match would-be donors with causes. Last year, 8000 people were paired with community projects in 36 states, reinforcing the environmentally attuned image of the brand. CRM can also generate goodwill for a business. In times of crisis, goodwill may be crucial to prevent long-term damage. bcrisisq describes any number of negative events that may befall a company, from accounting scandals and bad business practices to cases of product liability and product tampering. When a crisis occurs, customers are less likely to abandon a company that has built a reputation as a socially responsible organization, suggesting CRM may be a useful long-term investment. Research shows CRM creates positive attitudes toward a company that has engaged in unethical practices (Creyer & Ross, 1992). Nike, which has worked hard to overcome negative publicity on purported use of sweatshop labor, last year gave $1 million to the Lance Armstrong Foundation and sold bracelets for $1 to generate additional donations. Thus far, over $20 million worth of bracelets have been sold. Moreover, the bracelets are considered so cool and desirable that they are even passed out as wedding reception favors (Gard, 2004). The business objectives of cause-related marketing programs can be anything from increasing sales, forging new business relationships, enhancing corporate stature, improving customer loyalty, thwarting negative publicity, COPY RIGHT 2013 Institute of Interdisciplinary Business Research 188

4 pacifying customers and easing market entry (Cone et al., 2003; Martinez and Pina, 2005; Varadarajan and Menon, 1988). Many companies attribute cause-related marketing as a major factor in their success (Balabanis et al., 1998; Embley, 1993). While recent studies have explored the fit between a company, the cause and consumers (Gupta and Pirsch, 2006), no studies could be identified which focused on participants in a causerelated program. A consumer s attitude toward a company is closely linked to corporate image, as corporate image is the net result of the interaction of a person s beliefs, ideas, feelings and impressions about a company (Van Rekom, 1997). While no universally accepted definition of corporate image exists, this research defines corporate image as the totality of a stakeholder s perceptions of the way an organization presents itself through its corporate identity mix either deliberately by controllable sources or accidentally by uncontrollable sources (Chattananon et al., 2004). While corporate image has been shown to play a key role in decisions such as employment and investment, it also plays a key role in influencing consumer behavior (Balmer and Gray, 2003). Lafferty and Goldsmith (2005) analyzed potential benefits to non-profit and for-profit organizations entering into CRM. Others have specifically examined CRM effects on non-profit causes. For example, Basil and Herr (2003) analyzed how fit impacts attitudes towards charitable organizations involved in CRM. Their results suggest the effect of fit is very strong, and can compensate for problems with poor attitudes toward a corporate partner being transferred to the charity. Specifically, subjects compensated for poor attitudes toward a firm if they thought the firm and cause were logically linked. Additionally, with the proliferation of charitable causes, charities must work very hard to gain the public s attention (Warneke, 2005). An alliance with a for-profit corporation can give a charity another angle to gain access to more donors. As early as 1996, Andreason studied how non-profits benefit from partnering with a for-profit organization, and he urges non-profits to become proactive strategists seeking out corporate partners that have brands that match well with their cause. Additionally, he suggests that most corporations look to partner with a cause in hopes that the cause s positive image will transfer to the brand or firm. However, non-profits have more to offer than just image. Corporations also benefit from publicity garnered from the relationship and access to the charitable donor base. Further, Andreason warns non-profits about potential pitfalls for nonprofits entering into CRM partnerships. Non-profits with limited resources need to be careful not to waste resources on CRM relationships that have high potential to fail. Additionally, they need to be aware of potential cannibalism of existing donations. CRM will increase donations, but if current donors cut back because of perceptions that overall donations will increase due to CRM, the potential exists for total donations to actually decline. Other issues of note are the loss of non-profit organizational flexibility that may result from ties with non-profits; problems associated with being partnered with an unethical corporation; and over-reliance on corporate funding. Brand Image The path parameter, brand image to brand/cause link, was significant supporting the structural model, and both indicators were significant indicating significant differences between the treatment groups. Additionally, the magnitudes of the means for the groups were in the hypothesized order. However, the fact that the two high fit groups were substantially higher than the two low fit groups along with the fact that both high fit groups had similar means, and both low fit groups had similar means indicates that fit, rather than longevity is driving this result. However, the order of the treatment group mean magnitudes also indicates that longevity has some impact. Conclusions CRM has received considerable attention in the literature as it has been ever more embraced by practitioners. The numerous studies have enriched our understanding of the subject as well as contributed to practitioner success. This study builds on past research by using associative learning theory as a foundation for combining previously discussed antecedents and consequences for successful CRM partnering into an overarching model to explain the phenomena. In fact, it is possible that the optimal value for CRM donation may not be a number at all. A recent study of actual wording of CRM promotions finds that a minuscule fraction of CRM campaigns reveals an actual dollar amount given for each purchase (Olsen and Pracejus, 2002). The vast majority of campaigns utilise a vague quantifier (e.g., A portion of the proceeds ) to describe how much will be given. Many others state the amount in terms of a percent of profits, which consumers may confuse with percent of price. Finally, many CRM campaigns have a cap such that a percent of each sale is donated up to some maximum amount (e.g., 50 cents from each box sold will be donated, up to $10,000 ). Future research should explore the degree to which consumers are capable of understanding and processing CRM donation amounts stated in these ways, as well as the impact of such promotional verbiage on choice. Clearly, such studies would have important managerial and public policy implications. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 189

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