Approaching the Management Strategy of Cause Related Marketing in SME

Transcription

1 Approaching the Management Strategy of Cause Related Marketing in SME ZHOU Yong 1, 2, HUANG Cheng 2 1. School of management, Wuhan University of Science and Technology, Wuhan, P.R.China, Hubei University, Wuhan, P.R.China, zhouyong7817@163.com Abstract: Cause Related Marketing (CRM) is a kind of effective win-win Marketing Model that develops rapidly in recent years. Not only is it an effective competitive strategy which can strengthen the competitiveness of the small and medium-sized enterprises (SME), but also it can bring better social effect. Nonetheless, the win-win effect can only be acquired through effective planning, organizing and controlling of CRM. Planning is the premise of carrying out CRM effectively. Organization is the key of an effective CRM. Controlling is the guarantee of an effective CRM. Keywords: CRM, Enterprise competitiveness, Management strategy, Management innovation 1 Introduction The modern economy has entered the era of economic globalization, and modern SME are facing with the pressure of global competition. How to attract consumers attention so that they can feel good and be loyal to the enterprises has become the mission of SME. In the western countries, the enterprises have taken CRM as a powerful marketing method to increase the awareness and affinity of the enterprises and the brand, and to keep good long-term relationship with specific target groups. Foreign scholars have done a relatively systematic research on CRM. Alsop Ronald (2002)) said that CRM was first put into use by American Express in 1981, which is the first company to use marketing strategy combined with public commonweal service, i.e. by matching the use of credit cards with business donation, in the nationwide marketing campaigns. [1] Varadarajan and Menon (1998) defined CRM as the process of developing and implementing marketing activities which is characterized by the certain amount of business donations given to a specific charity, in which the process of consumers participation in products exchange achieves organizational and personal goals. [2] Joe Marconi(2004) defined it is a way for businesses, nonprofit organizations or other similar organizations to achieve mutually beneficial marketing image, products, services and information. [3] Although CRM was put into use in China relatively later than in the West, many Chinese SMEs have taken CRM as a marketing method to keep them constantly in stable condition. Chinese scholars researched on definition, function and strategy of CRM by considering the status quo of the enterprises. Yu Yang and Wang Guocheng (2007) pointed out that CRM is a kind of marketing method in which the enterprises consider the human s survival and development and social progress as the starting point, establish a good corporate image by communicating with consumers through public commonweal services, and influence consumers could consider their products as the priority choice when making decisions. [4] Gao Dingji (2004)described four functions of CRM: improving corporate image and reputation; clarifying the employees purposes towards making contributions; promoting the enterprises products sales and making public relations in harmony. [5] Tao Chuanjin (2005) pointed out that there is a deviation in the understanding of CRM as a result of China s special issues. On participating in public commonweal services, the Chinese enterprises, influenced by traditional Chinese thinking, meet more restraints in propaganda and neglect to turn Cause Marketing into a win-win result. [6] In our opinion, CRM is also known as cause-related marketing or public marketing. It can be defined as follows: the process of developing and implementing marketing activities is characterized by the certain amount of business donations given to a specific charity, in which the process of consumers participation in products exchange achieves organizational and personal goals. It is a way for companies, 270

2 nonprofit organizations, or other similar organizations to develop mutual beneficial cooperation, and to promote their visual merchandising, products, services and information. 2 CRM: Effective Marketing Campaigns to Strengthen SME s Competitiveness Today, price and quality tend to be equal to each other, and the technical differences of products tend to be the same. To increase sales, it is necessary for the SME to establish emotional and spiritual loyalty to the customers in the target market. A survey released by British Business Community organization showed that 88% of consumers know about CRM, 67% of consumers believe that the enterprises should pay more attention to community, social needs and consider CRM as a routine activity, and 86% of consumers that they adopt a positive attitude towards the enterprises even after the CRM activities. [7] In CRM, the enterprises, on protecting consumers and enhancing social welfare, link public commonweal service and marketing tasks with target market demand, establish a good reputation, arouse extensive market recognition and strong resonances among the customers, and tactfully break through the users psychological defense. Simply put, CRM is the inter-filtration between public service and marketing. Thus, the SME should attach great importance to the conduct of CRM as a business strategy for long-term stable development of the corporation. The CRM, the concrete application of social marketing, achieved multiple winning among the enterprises, the commonweal organizations and the interests of special groups. Compared with traditional marketing, cause-related marketing take social responsibilities and is characterized by features such as win-win, mutual benefits and relevance. CRM makes the mutual promotion and harmonious development between public commonweal service and private interest possible. Only by giving full consideration to the win-win situation among all stakeholders in the process of carrying out CRM can we improve the corporate reputation while improving the enterprises visibility, and achieve short-term interests as well as long-term interests of the enterprises at the same time. 3 Planning Management: the Premise of Carrying Out CRM Effectively 3.1 Selecting the public commonweal service From Western business experiences and lessons, we learned that selecting the appropriate public service activities and finding out the appropriate public theme of CRM are the key points for the enterprises to avoid blind investment. When resources are limited, selecting an appropriate public-commonweal activity so as to help those who are in bad need of help while getting rewarded at the same time have become the primary tasks. Different societies are faced with different social problems at different times, and the theme of public commonweal service also varies. In Western countries, the themes can vary from environmental protection, gay rights, diet and obesity, gun control, reducing infant with congenital defects and anti-drug to anti-excessive consumption of alcoholic drinks. In China, by considering the current actual situations, we can choose the theme in these fields such as poverty relief, environmental protection, health, education, social development, Samaritan deeds and so on. While carrying out CRM, the SME should take the feature of relevance into consideration while selecting the public commonweal service. That is to say, the public commonweal service selected should be in consistent with the nature of the business and the characteristics of the products. There is no need for SME to participate in all public activities for not all public activities and brand image are related to the interests of the enterprises. The selected non-profit organizations should be related to the main business of the enterprises and be in consistent with business-related values since it is only in this case can the enterprises gain easy access to the target group identification. For example, Johnson & Johnson, a children's product manufacturer, has been sponsoring the national safe children projects that are designed to protect children from hurt in the United States. Avon consider the prevention and education of breast cancer as its theme because its products buyers and sellers are mostly women. 271

3 3.2 Choosing the right partners CRM should be carried out with a good partner. In Western countries, many organizations engaged in public welfare activities. For instance, in France, every ten thousand people have public service organizations; in the United States, the number is In China, the non-profit organizations or public organizations such as the China Charity Federation, China Youth Development Foundation, the China Council for NGO Cooperation Organization developed with China's reform and opening up policy. The number of public organizations rose from 4446 in 1989 to 380,000 in 2007 with the average annual growth rate of 34%, but every ten thousand have only 1.45 public service organizations. As the society develops, there will be more and more similar institutions, and the roles they played will be more and more important, and in that way, there will be more opportunities for the SME to find partners. Certain requirements and standards of the collaborators should be adopted to ensure the selection of the best partners. Nike has a set of selection criteria for their partners in CRM activities. It requires that the partners should be experienced in designing and implementing related activities, have experiences of cooperating with Fortune 500, have a good reputation to the major stakeholders, have the skills to deal with celebrities, have responsibilities loyal cooperation, and professional flexible capacities. Taking the above criteria into account in selecting partners provided a good foundation for the effective implementation of the activities. 3.3 Selecting a good time A valid CRM means a grasp of good marketing opportunity as well as marketing locations. Grasping the opportunity is referred to as choosing the right time for appropriate sponsorship. In general, the public and media show the greatest concern to the major events or major incidents happened in the society, and those companies that take the initiative in responding to these events will inevitably attract more attention from the public. Mengniu group, in carrying out Olympic Bid sponsorship, grasped the opportunity to significantly enhance the value of its brand after careful deliberation. The right time is 3 days before the successful Olympic Bid and it is during this time that Olympic Committee is going to be set up. During the Golden Week holidays of National Day in 2005, while the other competitors are busy launching new products and making price competition, the Little Swan launched a full range of water saving power-saving fine washing machine shaped like water cube. Launching nationwide public environmental-protection marketing activities helps Little Swan win the market easily. Selecting the appropriate marketing locations is also important in the effective implementation of CRM because many products have their specific user groups. Therefore, the users-clustered places should be selected as the locations for effective CRM. 3.4 Attaching importance to the selection of the media and conclude an agreement In carrying out CRM, SMEs should attract media coverage. The content, such as the programs content, how to cooperate with non-profit agencies, the mission of the activities, and the proportion extracted from the volume of transactions for donations can be reported through newspapers and radio. The intermediate stage of activities and the final donation ceremony can be publicized through television media. The two parties can appear on media in the form of an interview. All the above strategies can help SMEs to maximize the impact of activities. The agreement should include common goals, the nature and procedures of the activities, opportunities and risk assessment, and their respective legal rights and obligations. The SME should focus on achieving a win-win situation between business profits and the society, at the same time between the enterprises and non-profit organizations. It is worth emphasizing that the implementation of the agreement and plan needs resources input and dedicated staff. For example, SOS Inc. appointed three senior executives and assistants who had devoted themselves to the CRM activities. 4 Organization Management: the Key of an Effective CRM 272

4 4.1 Staff participation is the focus of the CRM organization The CRM activities should start within the enterprise. That is, let the staff know about CRM, encourage them to participate in the activities, arouse their interests, and raise their enthusiasm. The Managers must take great responsibilities to inspire all the employees and volunteers. According to a longitudinal trend analysis report released by American Roper institutions (Roper Organization), 90% of the total staff participated in the CRM activities said they felt proud of their company, and more than half of the employees expressed their wish that the employers shall take more opportunities to participate in public welfare undertakings. Therefore, to mobilize employees to participate in CRM activities can save HR as well as increase employees pride, and stimulate the enthusiasm of the staff. 4.2 The target group dialogue is the key point of CRM Consumers are the object and the ultimate goals of CRM. The consumers brand loyalty is the core of the brand equity. High brand loyalty means that the enterprises own advantages such as lower marketing costs, easy distribution, easy access to new consumers, greater flexibility when faced with other competitors. High brand loyalty also means that the consumers have confidence in the brand. If consumers trust the brand, they will continue to purchase. In this sense, the purpose of CRM is the bond to the confidence-building with consumers. The core of CRM is trust marketing. 4.3 Strengthening the sense of innovation is the difficult point of CRM Innovation refers to the innovation in the content and the form rather than that in choosing the field and the theme. The innovation carried out around the relatively stable theme would be conducive to keep the consumers enthusiasm over the enterprise information, and thus create an overall, multilevel influential propagative system. The CRM of SMEs should be innovative in both form and content to enhance the competitiveness of the enterprises. 5 Controlling Management: the Guarantee of an Effective CRM 5.1 First, we shall adhere to the win-win principle, which are to achieve common benefits of the society, the enterprises and nonprofit organizations CRM should achieve the win-win goal that the society can benefit because of the behavior of enterprises, and enterprises can benefit by being paid more attention to by the public simultaneously. According to Philip Kotler, marketing is a mutually beneficial exchange between both parties, which is a win-win situation. This win-win business requires that the enterprises should consider not only the win-win situation with customers, but also a win-win situation with other stakeholders such as government, non-governmental organizations, and the general public, especially the cooperation organizations of public commonweal service. It is by fully considering the win-win situation in carrying out CRM can enhance the enterprises reputation and visibility, and achieve short-term interests as well as long-term interests of the enterprise at the same time. Colgate s being the biggest toothpaste sales brand in China lies in the constant cooperation with Anti-Dental Group of China in promoting the prevention of tooth decay. Meanwhile, the Anti-Dental Group of China also gained a stable source of funding. 5.2 Second, keeping to it constantly, that means to consider public commonweal service as a part of business strategy A good public image of the enterprises cannot be established in a short time. In carrying out CRM, the enterprises should consider CRM as an indispensable part of the brand strategy, incorporate it into strategic planning perspective, and keep it relatively stable. Sustained investment and sustained return will motivate the enterprises to continuously carry out philanthropy. In this premise, SME will build up a solid brand reputation, gain access to constant coverage and interest from the media, which will gain enough space for the development. Through the ongoing CRM activities, the enterprises has delivered to consumers a message that we are charities full of compassion and caring and socially responsible for the 273

5 public commonweal service rather than ruthless enterprises. The SME can get great recognition and sustained attention from the government and the media by constantly sponsoring a public commonweal service. In recent years, Avon has earned a global reputation and development by continuing sponsoring Avon Breast Cancer Jihad program which is aimed to raise the awareness of breast cancer in the U.S. and around the world. 5.3 Being stable, which means CRM activities should be carried out by focusing on a core strategy The roles that public commonweal service played in brand-building have been greatly recognized by the SME. However, it is never Ok for the enterprises to do social good whenever they see one. No matter what the size of it, no enterprise can manage multi-faceted public commonweal service by using its own resources. The effect will be better if the enterprises could choose one and do it well. As Drucker has warned businesses, the managers and staff will be cynical if the enterprises donate money for its own sake and philanthropy is not about the CEO s feeling good about donation. The donation should only be the government s and charities mission if it is not linked with the competitiveness and skills of the company. Therefore, all marketing advertising and promotional activities must be carried out around the theme. Brand strategy has to be continuously spread once established, and all the spreading actions, including public service activities, shall follow this main line, and ensure uniformity and continuity of business topics. Esprit U.S. companies has always adhered to world peace and self-expression as its brand's main purpose since the 1960s, and has been enhancing the company's brand image in a meaningful way. From the numerous lessons we have learned if the CRM activities are not in consistent with the core strategy of the brand and the theme are kept changing constantly, the brand will be made fuzzy, and will eventually result in brand dilution. Therefore, CRM activities shall comply with the core strategy of the enterprises and the brand, and maintain certain degrees of stability and continuity. 6 Conclusion The traditional market operation can no longer draw consumers interests in today s marketing environment which is filled with information overload. Therefore, the SME should set aside the simple sales acts, and, starting from consumers mind, build a platform which are both identified and grounded on social credit and on which we can carry out CRM activities to combine cause marketing with marketing activities. CRM has achieved the win-win situation between enterprises and society, and gained great involvement and support of the consumers. However, due to the lack of understanding of CRM by SMEs, the results they got in carrying out CRM are always counterproductive. Therefore, the Chinese SMEs must: improve their understanding of CRM, attach importance to the effective management of CRM activities, choose the right service by considering their own situation, grasp the practicing principles and take CRM as a long-term stable strategy for enterprises. References [1]. Alsop Ronald. Perils of Corporate Philanthropy. Wall Street Journal, 7(2002), p20-22 [2]. Varadarajan, P.Rajan, Menon, Anil. Cause-Related Marketing: A Coalignment of Marketing Strategy. Journal of Marketing, 3(1988), p58-74 [3]. Joe Marconi. Cause Marketing.Dearborn Trade Publishing, 2004:16 [4]. Yu Yang & Wang Guocheng. Cause Marketing: Our Enterprises Reflect the Win-win Choice of Social Responsibility. Journal of Capital University of E&B, 2(2007), p64~67(in Chinese) [5]. Gao Dingji. Cause-Related Marketing[J]. Marketing China, 2004,(4):53~59(In Chinese) [6]. Tao Chuanjin. Public Welfare Supply[M]. Tsinghua University Press, ~137(In Chinese) [7]. Michael J.Barone, Andrew T. Norman and Anthony D. Miyazaki. Consumer response to retailer use of cause-related marketing: Is more fit better? Journal of Retailing, 9(2007), p