The issue of choosing and presenting the donation amount

Transcription

1 The issue of choosing and presenting the donation amount The influence of donation size in Cause-Related Marketing campaigns and the mediating role of donation quantifiers Martijn Spoelstra ANR: Bachelor Thesis Marketing 2010 Supervisor: E.A.A. Dreezens 1

2 Summary This study is a literature research to answer the following problem statement: How does donation size influence the effectiveness of CRM campaigns, and how do Donation Quantifiers mediate this relationship? The donation size in Cause-Related Marketing (CRM) campaigns is the donation per product relative to the price of the product. From a marketers perspective it is hard to determine the donation size. A high donation size can be seen as generous, and the opposite is true for a low donation size. Previous research examined that the height of the donation size really matters to the costumers. A low donation size can result in skeptical consumers, something a company just wants to avoid. In chapter three there are four donation quantifiers distinguished, namely exact, calculable, estimable, and abstract quantifiers. A donation quantifier is the way a company presented the donation amount to the consumer. Every quantifier has its own consequences; exact quantifiers rated most positively by consumers (75% of the consumers favor this quantifier), which results in high consumer trust, and stronger purchase intentions. Calculable quantifiers rated much worse than exact quantifiers (only 4% favor this quantifier), which leads to a negative consumer evaluation. Estimable quantifiers are favored by 17% of the consumers; these quantifiers can lead to overestimation of the donation amount, but can also result in skeptical consumers. At last, the abstract quantifiers were not favored by any of the consumers, this quantifier therefore lead to negative consumer evaluation en skeptical consumers. Previous research examined that product price moderates the relationship between donation quantifiers, and the effectiveness of a CRM campaign. A concrete quantifier is more effective with a low product price, and for a high product price, a calculable or estimable is more effective. In case of a high donation size, the exact quantifier is favored, because it leads to high consumer trust, and stronger purchase intentions. With a high product price, an estimable quantifier is also an interesting option, since a quantifier in percentage terms is more effective in case of a high priced item. The disadvantage of an estimable quantifier is that it leads to more skeptical consumers. 2

3 In case of a low donation size, both the exact, and estimable quantifiers are interesting. Where an exact quantifier leads to higher consumer trust, in contrast, an estimable quantifier can result in overestimation of the amount being donated, which leads to enhanced consumer response. In addition, product price is an important element in the choice of a donation quantifier. In case of a low donation size, it seems that an exact quantifier is the best option for a low priced item, and an estimable quantifier for a high priced item. Therefore it can be concluded that donation quantifiers partially mediate the relationship between donation size and the effectiveness of a CRM campaign. In addition, product price moderates the relationship between donation quantifiers and the effectiveness of a CRM campaign. 3

4 Table of Contents Summary... 2 Table of Contents... 4 Chapter 1: Introduction Introduction Problem statement Research Questions Relevance Structure of the thesis... 8 Chapter 2: Donation Size in the effectiveness of CRM Campaigns Cause-Related Marketing Donation Size Relationship between donation size and CRM Conclusion Chapter 3: Donation quantifiers in CRM Campaigns Donation Quantifiers Overestimation of the donation amount Consumer skepticism Product price Conclusion Chapter 4: Influence of Donation Size in the choice of Donation Quantifiers The relationship between donation size and donation quantifiers Conclusion Chapter 5 Conclusion Conclusion Discussion and recommendation for future research References

5 Chapter 1: Introduction 1.1 Introduction Cause-related Marketing (CRM) is a technique whereby the contribution of an advertiser to a cause is linked to customers engaging in revenue-producing transactions with the firm (Menon and Varadarajan 1988, p. 60). CRM is very popular at the moment; business firms are increasingly linking their brands with causes/charities. An actual example is the red laces campaign of Nike. When a costumer buys a pair of red laces, Nike is contributing 100% of its profits from the sale to the Global Fund and to soccerbased programs that help fight AIDS in Africa 1. When considering CRM campaigns as part of companies marketing and promotional strategy, marketers are faced with a variety of decisions about how to make their campaign successful. An important element is to decide the size of contribution donated to the cause, also called donation size. The donation size is the donation per product relative to the price of the product. Size of the donation relative to purchase price may cause consumers to see firms as being more or less generous (Garretson, Grau, and Pirsch 2007). This thesis takes a closer look on the relationship between donation size and the effectiveness of CRM campaigns. In the example of Nike, the donation size is not very clear. How much does Nike really donate to the Global Fund and soccer-based programs (like Grassroots Soccer) that help fight AIDS in Africa? Hundred percent of its profits from the sale is a vague donation quantifier, because a costumer does not know anything about the profit from the sales. A donation quantifier describes how the donation amount is presented to the costumer; does the costumer prefer concrete communication in cents, or do they prefer communication in an estimable way, like communication of donation amount in percentages of profits? There are different donation quantifiers that a company can use, like concrete, estimable and abstract quantifiers (Brown, Olsen, and Pracejus 2004; Garretson et al. 2007). In the example of the red laces campaign of Nike the donation amount is presented in an 1 NIKE 2010, 5

6 estimable quantifier, because Nike gives the costumer only a piece of the information needed to calculate the donation amount. Donation quantifiers are the mediating variable in the relationship of donation size and effectiveness of a CRM campaign. Besides the relationship between donation size and the effectiveness of CRM, this study will look at different donation quantifiers, and the influence of those quantifiers in the effectiveness of CRM campaigns, and finally it will present how donation size influences the choice of donation quantifiers. While previous studies have examined the impact of donation quantifiers (Brown, Olsen, and Pracejus 2004; Garretson et al. 2007) and the role of donation size (Dahl and Lavack 1995; Hajjat 2003; Kim and Lee 2009) in CRM campaigns, this paper goes a step further in suggesting that donation size influences the choice of donation quantifiers. 1.2 Problem statement The goal of this thesis is to find out how donation size effects the choice of donation quantifiers, and how both will influence the effectiveness of CRM campaigns. The problem statement is: How does donation size influence the effectiveness of CRM campaigns and how do Donation Quantifiers mediate this relationship? Donation Size Ch. 2 Effectiveness of CRM Campaigns Ch. 4 Ch. 3 Donation Quantifiers (Mediator) 6

7 1.3 Research Questions The following research questions will be addressed in order to answer the problem statement: 1. What is donation size, and how does donation size influence the effectiveness of a CRM campaign? 2. What are donation quantifiers, and how do donation quantifiers influence the effectiveness of a CRM campaign? 3. What is the influence of donation size in the choice of donation quantifiers? 1.4 Relevance While earlier studies have examined the impact of donation quantifiers (Brown et al. 2004; Garretson et al. 2007) and the role of donation size (Dahl and Lavack 1995; Hajjat 2003; Kim and Lee 2009) in CRM campaigns, this paper suggests that donation size influences the choice of donation quantifiers. Garretson, Grau, and Pirsch (2007) suggest future research on the relationship between the product price and various types of donation quantifiers. Instead of the product price, this paper will take a look on the donation size since there is an expectation that donation size influences the choice of donation quantifiers. Different kind of quantifiers can be more interesting for one company than for another; a vague quantifier is perhaps more interesting for a low donation size because its gives only a little information about the actual donation. Otherwise, a company will choose a concrete quantifier when the donation size is relatively high because the company is proud to donate this amount. The research of donation size, donation quantifiers, and CRM campaigns will therefore be an addition to the existing literature. From a managerial perspective, this thesis will help a manager to choose a better donation quantifier to make a CRM campaign more successful. A more successful CRM campaign is positive for all stakeholders. Consumers feel they are making a difference, because they are making a donation. Firms benefit form improved pubic image and increased sales, and the cause receives increased publicity and funding (Garretson et al. 2007). 7

8 1.5 Structure of the thesis The first chapter introduced Cause-Related Marketing, and the problem statement. The research questions were formulated as well. In chapter two the relationship between donation size, and the effectiveness of CRM campaigns are explored. Subsequently, the relationship between donation quantifiers, and the effectiveness of CRM campaigns are explored in chapter three. In chapter four is the influence of donation size in the choice of donation quantifiers presented. The study will end with a conclusion and discussion in chapter five. 8

9 Chapter 2: Donation Size in the effectiveness of CRM Campaigns In this chapter the variables donation size and cause-related marketing will be explained. In the paragraph 2.1 cause-related marketing will be explained, and there will be two actual examples of CRM campaigns. In paragraph 2.2 the variable donation size is described. Subsequently, the relationship between donation size, and the effectiveness of CRM campaigns is explored in paragraph 2.3. Chapter two will be closed with a conclusion in paragraph Cause-Related Marketing Cause-related marketing (CRM) is a very popular form of promotion. Menon and Varandarajan (1988, p. 60) defined CRM as a technique whereby the contribution of an advertiser to a cause is linked to customers engaging in revenue-producing transactions with the firm. CRM is not a type of corporate philanthropy but it s a type of marketing (Porter and Kramer 2002). In other words; CRM is a marketing tool which links a brand with a social cause; it actually is a form of donation, however, there will only be a gift when sales are made for the company. Mohr and Webb (1998) find that one-third of their sample reports that CRM impacts their purchases, Ross, Stutts and Patterson (1991) found that more than 50 percent of their respondents said they would be willing to try a new brand as a result of a CRM promotion, Cone and Roper (1999) find that even twothirds of their respondents would be influenced by the presence of CRM, all else being equal, and Barone, Miyazaki, and Taylor (2000) also found that a company s support to a cause can influence consumers choice. Two actual examples of CRM are the campaigns of NIKE and SCA. NIKE sells red laces to contribute money for programs that help fight AIDS in Africa 2. SCA, with its brands Edet, Tork, Libresse, and Tena, contributes money to Oxfam Novib to create a better hygiene in the countries South Soudan and Niger 3. To create a more effective CRM campaign, CRM has received a lot of attention in 2 NIKE 2010, 3 SCA Hygiene Products 2010, 9

10 past research. Olsen and Pracejus (2004), for example, found that a high fit between brand and cause can positively impact choice. Ellen, Mohr, and Webb (1996) found that consumers prefer local causes to national ones. More recently, Garretson, Grau, and Pirsch (2007) explored which category of donation quantifier maximizes consumer trust (more about donation quantifiers in chapter three). A more effective CRM campaign results in more positive outcome for all stakeholders. Consumers feel they are making a difference, because they are making a donation. Firms benefit from improved pubic image and increased sales, and the cause receives increased publicity and funding (Garretson et al. 2007). In this study, a more effective CRM campaign means an increasing number of products sold, which results in more donations to the cause. 2.2 Donation Size When considering CRM campaigns as part of company s marketing and promotional strategy, marketers face a variety of decisions about how to make their campaign successful. An important element is to decide the amount of money donated to the cause, also called donation size. The donation size is the donation per product relative to the price of the product. Size of the donation relative to purchase price may cause consumers to see firms as being more or less generous (Garretson et al. 2007). The donation size is very different in CRM campaigns. For example, Nike contributes 100% of their profit of the sale, where as The Nature Biscuit donates only 0,05% of its profits to their sponsored charities. From a marketer s perspective, a higher donation amount means less company incomes per product. The issue of how much should be donated involves consideration of both the costs and benefits of making more substantial donations. To decide the limits of a low or high donation size is very difficult. For example, consumers experience a donation size of 10,- per product sold are exceptional high, but with a product price of 1000,- the donation size is only 1% of the price. Firms experience a donation of 0,20 as very low, but with a product price of 2,- the donation size is 10% of the price. In other words, a high or low donation size is hard to determine. In past research there are no clear standards to determine donation sizes as high or low, so donation size should be examined case by case, since the product price plays an 10

11 essential role in perceiving the donation size. The terms high and low donation will be used for consistency. 2.3 Relationship between donation size and CRM Garretson, Grau, and Pirsch (2007) examined the importance of donation size in causerelated marketing. Sixty-five percent of their respondents claimed that the donation relative to the price of the product matters to the costumer, and also Brown, Olsen, and Pracejus (2004) found that the donation amount can impact choice. For most respondents price does have a role in perception of CRM campaigns. Small donations relative to the price are often seen as skimpy and might lead to consumer skepticism, a reaction most firms would prefer to avoid (Garretson et al. 2007). Consumers may observe small donations as cheap, in an extreme case; a relatively small donation could do the sponsoring firm more harm than good (Strahilevtiz 1999). Nevertheless, in CRM, a small donation can make the consumer feel good, because when the consumer buys another product (without a donation amount) they donate nothing at all. Consumers feel they are making a difference in CRM campaigns, since consumers like the idea of contributing to a cause while satisfying their individual needs (Polonsky and Wood 2001). Additionally, the consumer is not likely to feel accountable for the amount donated since the company determined the amount, so the consumer won t have the bad feeling that they are not giving more. In other words, when consumers do not feel accountable for the amount donated, a small donation size will be enough to satisfy consumer individual needs. In past research Myers and Strahilevitz (1998) examined when a consumer can choose between receiving money and donation, the consumers were more likely to choose for donation, instead of receiving money, by small amounts compared to relatively large ones. Or while, consumers choose for receiving money instead of donation when the amount becomes larger. One explanation may be that in CRM campaigns the consumer is seldom able to experience the consumption of this money. In contrast with other donation types, were people can experience the utility of the final consumption, it will give more pleasure of the money spent (Strahelivtiz 1999). For example, someone donates money to a charity that saves a local petting zoo, the 11

12 consumer experience the utility of his donation by seeing children enjoying themselves. In this case, the consumer has more pleasure of the money spent, than in a normal CRM campaigns. However, Dahl and Lavack (1995) found that consumers are more skeptical of small donation sizes, and also Hajjat (2003) found that, especially high-involved consumers expect high donations to be contributed. If the donation size is low, (highinvolved) consumers will be frustrated and their frustration will be reflected negatively on their attitudes and purchase intentions. The main reason for this frustration is that the consumers believe that the firm is using the cause only for egoistic motives. Deciding the donation amount is not easy. It takes a lot of discussion and considerations with management, but also with the cause involved. CRM campaigns can have positive results for all three parties involved, the company, the cause and the consumer, as long as the company openly discusses their intentions and restrictions with their potential consumer. 2.4 Conclusion In the conclusion of this chapter the first research question will be answered. The research question is: What is donation size and how does donation size influence the effectiveness of a CRM campaign? The donation size is the donation per product relative to the price of the product. From a marketers perspective it is hard to decide the amount being donated. The size of the donation relative to the purchase price may cause consumers to see firms as being more or less generous, but a high donation amount means less company incomes. Past research examined that donation size matters to the consumer, consumers may consider a small donation as cheap. However, the consumer is not likely to feel accountable for the amount being donated, since the company determined the amount. From that perspective, a small donation may also satisfy consumer individual needs, but will not prevent consumer skepticism (Dahl and Lavack 1995; Garretson et al. 2007; Strahilevitz 1999). 12

13 Chapter 3: Donation quantifiers in CRM Campaigns In this chapter the variable donation quantifiers will be explained. In paragraph 3.1 an explanation, and an overview of the different donation quantifiers will be provided. In paragraph 3.2 the relationship between donation quantifiers and the effectiveness of CRM campaigns are explored. Overestimation of the donation amount and consumer skepticism will also be explained in this paragraph. Chapter three will be closed with a conclusion in paragraph Donation Quantifiers If the amount donated through CRM were always stated in a transparent, clear way, there would be little concern about potential confusion. However, transparency of donation amounts is far from universal in actual CRM cases. There are different ways a company can present the donation amount to the consumer; the way the company presents the donation amount is called the donation quantifier. Brown, Olsen, and Pracejus (2004) found three different kinds of quantifiers that were used in CRM campaigns, namely: calculable, estimable, and abstract quantifiers. Calculable quantifiers refer to descriptions of the donation amount that allow consumers to calculate the actual amount being donated. For example, a common calculable format is X% of the price. An actual case with a calculable quantifier is a campaign of a company called Arena Flowers. Arena Flowers sells flowers on the Internet and donates 20% of the price to a foundation doing research against cancer. Estimable quantifiers give only a piece of the information needed to calculate the donation amount, a common estimable quantifier is X% of profits. An actual example of a CRM campaign with an estimable quantifier is the case of the red laces campaign of Nike, 100% of their profits will be donated to programs that help fight AIDS in Africa. Abstract quantifiers provide consumers with almost no idea as to the actual amount being donated, for example, a portion of the proceeds will be donated. An actual example of a campaign with an abstract quantifier is the case of SCA, where SCA contributes money for Oxfam Novib, but the amount of money donating is unknown. 13

14 Garretson, Grau, and Pirsch (2007) introduced a fourth quantifier: the exact donation quantifier. The exact quantifier is the most concrete option; it gives the exact amount of the donation given for each product sold, for example, 1, - will be donated per product sold. An example of a campaign with a exact quantifier is IKEA: in Christmas time, cuddly toys are sold in their stores from which 1,- will be donated to UNICEF. Figure 3.1 shows an overview of the four different quantifiers. Figure 3.1 Overview of Donation Quantifiers Donation Quantifier Exact Quantifier Calculable Quantifier Estimable Quantifier Abstract Quantifier Description The most concrete option; it gives the exact amount of the donation given for each product sold. Description of the donation amount that allows consumers to calculate the actual amount being donated. Estimable quantifiers give only a piece of information needed to calculate the donation amount. The most vague option. Abstract quantifiers provide consumers with almost no idea as to the actual amount being donated. Brown, Olsen, and Pracejus (2004) conducted a Cause-Related Marketing Web Search in The Web search was employed to find out how many times the different quantifiers were used. In total 3414 Websites with a CRM campaign were found, about 70% of the formats was completely abstract in nature, 25,6% of the formats was estimable, and only 4,5% was calculable (in this study, the exact quantifier was excluded). 14

15 3.2 Relationship between Donation Quantifiers and the effectiveness of CRM Campaigns Garretson, Grau, and Pirsch (2007) examined which category of donation quantifier maximizes consumer trust, and which quantifier leads to the most positive consumer evaluation of the company s CRM effort. For both consumer trust and consumer evaluation there were significant differences among all options. The exact option rated most positively (75% of consumers favor this quantifier), followed by estimable (17%), than calculable (4%), and last the abstract quantifier (0%). Furthermore, Brown, Olsen, and Pracejus (2003, 2004) indicate that consumers express stronger purchase intentions and more favorable attitudes when the donation amount is presented in a concrete way rather than in a calculable or estimable way. This makes clear that consumers prefer more tangible information regarding the donation amount. The main reason for this preference is that concrete quantifiers are more readily and accurately interpretable by consumers Overestimation of the donation amount Consumers prefer more tangible information regarding the donation amount, but, as mentioned above in the Web search, 70% of the CRM formats were completely abstract in nature. Companies have different kind of reasons to present their donation amount vaguely. Brown, Olsen, and Pracejus (2003) found that expressing the donation amount as a percentage of profit leads to widespread confusion, and near universal overestimation of the amount being donated. Even consumers who have had formal accounting training are susceptible to this bias. In other words, expressing the donation amount vaguely often results in overestimation of the amount being donated. Overestimation of the donation amount happens when a subset of the population skips the steps of estimating profit levels entirely. This may be caused by two different effects: the PEP or the PO effect. The profit-equals-price (PEP) effect leads to an overestimation of the amount being donated. For example, when 10% of the profit will be donated and the profit level is 10%, 1% of the price will be donated. Given the PEP effect, the consumer would calculate 10% of the price, since the consumer equals profit 15

16 to price. This results in a calculated donation amount ten times too high. Another way to overestimate the amount being donated is the profitoverestimation (PO) effect. Consumers do not typically know the actual profit level for an item. Bolton, Warlop, and Alba (2003) and Brown, Olsen, and Pracejus (2003) demonstrated that consumers inclined to overestimate profits, often to an extreme extent. It appears that stating donation amount as a percentage of profit (estimable quantifier), rather than a percentage of price (calculable quantifier), can result in enhanced consumer response Consumer skepticism There is also some skepticism about CRM. In general, consumers are less skeptical to new and innovative marketing tactics because they do not readily identify the persuasive intent. When the new tactic becomes well known, and its marketing goal becomes obvious, consumers are likely to become skeptical, and CRM is no exception (Morh and Webb 1998). Forehand and Grier (2003) found two different types of consumer skepticism. Predispositional skepticism is a general tendency to see marketer s motives as suspicious, this tendency is difficult to change. Consumers with high predispositional skepticism tend to pay less attention to advertising and discounts. The other type of skepticism is situational skepticism; this is a temporary state to doubt a certain marketer s motive. From a marketer s perspective, the difference between the two types of skepticism is very interesting, since predispositional skepticism is generally beyond marketers reach while situational skepticism is not. Situational variables influence consumer skepticism by inducing a state of skepticism. An example of a situational variable is the way a donation amount is presented in a CRM campaign. This example is a typical variable that a marketer can decide. Situational skepticism is the main type of skepticism in this research; predispositional skepticism will be excluded, since it is beyond marketers reach. Kim and Lee (2009) found that when the donation amount was stated in a verifiable manner, subjects were more likely to believe the ad claim than it was stated vaguely. In other words, when marketers present their donation amount in a verifiable 16

17 way (like an exact quantifier) it will lead to lower (situational) skepticism than when the amount is presented vague (like estimable and abstract quantifiers) Product price Previous discount promotion literature has found an interaction between product price and the way of presenting a discount (Chen, Monroe, and Lou 1998; Heath, Chatterjee, and France 1995). It has been examined that, for a given discount, the absolute value of the price reduction is higher for high-priced products, whereas, for a given absolute price discount, the relative percentage reduction is higher for lower-priced products. For example, a 1000,- discount on a ,- automobile appears significant in terms of Euros saving, but the equivalent 5% discount seems less attractive. The opposite is true for low-priced items, for example, a 50% price reduction on a 0,50 can of energy drink appears attractive in terms of percentage amount, but the real monetary savings of 0,25 does not appear significant. Chang (2008) has examined whether the same relationship, as described above, also exists in CRM campaigns. Chang (2008) found that when the donation amount is constant, a donation amount framed in absolute dollar value is more effective than that in percentage terms for low-priced products, and the opposite is true for high-priced items. In other words, Chang (2008) suggest that CRM is more effective with a concrete quantifier by low-priced products, and calculable quantifiers are better by high-priced items. The results of Chang (2008) are the opposite of the findings in previous discount promotion literature (Chen et al. 1998; Heath et al. 1995). A reason for the opposite results in CRM is that consumers might have a tendency to think that CRM will bring extra costs, and consumers prefer cash discount, instead of donation, when the amount becomes higher (Myers and Strahilevitz 1998). In other words, when the product price is high, with an exact quantifier the consumer perceives the amount being donated as large, and this will lead to extra costs, which leads to preferring a product with an discount instead of a product with an donation to a cause. 17

18 3.3 Conclusion In the conclusion of this chapter the second research question will be answered. The research question is: What are donation quantifiers and how do donation quantifiers influence the effectiveness of a CRM campaign? Marketers have to make a lot of decisions in creating a successful CRM campaign, and choosing a donation quantifier is one of them. In this chapter, four donation quantifiers were distinguished, namely exact, calculable, estimable, and abstract quantifiers. A concrete quantifier leads to the most positive evaluation of the firm and the least consumer skepticism. On the other side, a more abstract quantifier leads to overestimation of the donation amount, which is positive for the firm since Dahl and Lavack (1995) found that consumers are more skeptical of small donation sizes. Two effects, namely the Profit-Overestimation effect and the Profit-Equals-Price effect, can cause overestimation of the donation amount. At last, product price can influence the choice of a donation quantifier. Chang (2008) suggest that CRM is more effective with a exact quantifier in case of low-priced products, and calculable quantifiers are more effective with high-priced items. 18

19 Chapter 4: Influence of Donation Size in the choice of Donation Quantifiers In Chapter four the relationship between donation size and donation quantifiers will be explored. The chapter will be closed with a conclusion in paragraph The relationship between donation size and donation quantifiers In chapter two it became clear that donation size influences the effectiveness of a CRM campaign, and it is a difficult process for a manager to determine the donation size. In chapter three the influence of donation quantifiers was explored. Concerns the donation size, there are two options: a high or low donation. The best way to avoid consumer skepticism is to choose a high donation amount, since Dahl and Lavack (1995) found that consumers are more skeptical to small donation sizes. The choice becomes more difficult when firms have to choose a donation quantifier. When the firm has a high donation size, an exact quantifier seems an effective option, because exact quantifiers rated far more positively than abstract ones (Garretson et al. 2007; Brown et al. 2004). Brown, Olsen, and Pracejus (2004) found that exact quantifiers rated most positively by consumers (75% of the consumers favor this quantifier). The positive rating leads to stronger purchase intentions, positive consumer evaluation, and less skeptical consumers in comparison with the other donation quantifiers. The calculable quantifiers rated much worse than exact quantifiers (only 4% favor this quantifier). The main reason for this worse score is that a calculable quantifier is less readily and accurately interpretable by consumers, this results in a negative consumer evaluation. Estimable quantifiers are the favor by 17% of the consumers. The advantage for a company with an estimable quantifier is the overestimation of the donation amount, which results in less skeptical consumers. At last, the abstract quantifiers weren t favor by any of the consumers. The main reason is that consumers like to know details about the amount being donated, which is not the case by an abstract quantifier. An abstract quantifier leads to negative consumer evaluation and skeptical consumers. The choice of the most effective donation quantifier becomes maybe more difficult in a campaign with a low donation size. The most important issue for a company 19

20 is to decide whether the communication will be in a transparent, or a vague way. The benefits of a more exact quantifier are, at first, that consumers express stronger purchase intentions and more favorable attitudes when the donation amount is presented in a more concrete way than in a calculable or estimable way (Brown et al. 2003; 2004). Second, when marketers present their donation amount in a verifiable way (like an exact quantifier) it will lead to lower skepticism than when the amount is presented vague (like estimable and abstract quantifiers). On the other hand, a more vague quantifier leads to overestimation of the amount being donated, which can result in enhanced consumer response, which is more interesting with a low donation size compared with a high donation size. But, there is something else to be reckoned with, namely the product price. Chang (2008) found when the donation amount is constant, a donation amount framed in absolute dollar value is more effective than that in percentage terms for low-priced products, and the opposite is true for high-priced items. In other words, an exact quantifier would be preferred when the product price is low, and on the other hand, calculable and estimable quantifiers would be preferred when the product price is high. In figure 4.1 an overview will be given of the relationship between the donation size and donation quantifiers, with in the third column an overview of the consequences of the choice. 20

21 Figure 4.1 overview of relationship between donation size and donation quantifiers High Donation Size Exact Quantifier Calculable Quantifier Estimable Quantifier Abstract Quantifier Stronger purchase intentions Positive consumer evaluation Effective for low-priced items Negative consumer evaluation Effective for high-priced items Overestimation of donation amount Effective for high-priced items Negative consumer evalutation Low Donation Size Exact Quantifier Calculable Quantifier Estimable Quantifier Abstract Quantifier Skeptical consumers High consumer trust Effective for low-priced items Negative consumer evaluation Skeptical consumers Effective for high-priced items Overestimation of donation amount Skeptical consumers Effective for high-priced items Negative consumer evaluation Skeptical consumers 4.2 Conclusion In the conclusion of chapter four the last research question will be answered. The research question is: What is the influence of donation size in the choice of donation quantifiers? When a firm wants to start a CRM campaign there are a lot of tough decisions to make: determining donation size and the choice of a good donation quantifier are two of them. Determining the donation size has an influence in the marketers choice of a donation quantifier. When the donation size is relatively high, the company will be proud of the donation amount. In this case, an exact quantifier seems to be interesting, since consumers rate this quantifier far more positively than the other ones. In case of a high 21

22 priced item, an estimable quantifier is also interesting, because a percentage of price quantifier is more effective with high priced items, than with low priced items (Chang 2008). In the case of a relatively low donation size, the choice of a donation quantifier becomes more difficult. A vague quantifier leads to more skepticism, but also to overestimation of the donation amount, which is positive for the firm. In other words, companies that are donating large percentages may be more likely to make their donation amounts explicit in their advertising, and companies donating smaller percentages are more likely to choose abstract formats, since overestimating profits means overestimating the amount being donated to the cause. On the other hand, a company has to reckon with their product price, since high priced items favor calculable, or estimable quantifiers. 22

23 Chapter 5 Conclusion In the last chapter of this thesis there will be a final conclusion in the first paragraph. In the conclusion the problem statement of chapter one will be answered. In the second paragraph there will be a discussion about this literature research, and some recommendations for further research will be provided. 5.1 Conclusion In the previous chapters the three different research questions were answered. With the help of these answers, the problem statement will be answered in the conclusion. The problem statement is: How does donation size influence the effectiveness of CRM campaigns, and how do Donation Quantifiers mediate this relationship? Donation size is a very difficult element in creating a successful CRM campaign. A company wants to create a good feeling by giving to a charity, but when the donation size grows, the company incomes decrease. When the donation size is too low, the company can be seen as cheap and skimpy, something a company just wants to avoid. Therefore, donation size influences the effectiveness of a CRM campaign by the height of the donation amount. In the choice of a donation quantifier, donation size plays an essential role. When a firm starts a CRM campaign with a high donation size it makes sense to choose for either an exact quantifier for a low-priced item, or an estimable quantifier for a highpriced item. These quantifiers lead to the most positive consumer evaluation, less consumer skepticism, and stronger purchase intentions. In case of a low donation size, the estimable quantifier is the most favorable with a high priced product, especially because a lot of consumers overestimate the amount being donated. In other words, it is desirable that companies donating smaller percentages are more likely to choose an estimable format, since overestimating profits means overestimating the amount being donated to the cause. And therefore, for companies that are donating large percentages it is more desirable to make their donation amounts explicit in their advertising, since it leads to 23

24 stronger purchase intentions. In case of a low priced product, the exact quantifier is also an interesting option, especially because an exact quantifier is more effective for low priced items, but it also leads to the most positive consumer evaluation. The variable donation quantifier is a partial mediator in the relationship between donation size and the effectiveness of a CRM campaign. Partial mediation is the case in which the path from X to Y is reduced in absolute size but is still different from zero when the mediator is controlled (Baron and Kenny 1986). The relationship between donation size and the effectiveness of a CRM campaign won t disappear because of the arrival of donation quantifiers, but a donation quantifier mediate partially the relationship between donation size and effectiveness of a CRM campaign. Product price is a moderator in the relationship between donation quantifiers and the effectiveness of a CRM campaign. Product price moderates this relationship, because a donation amount framed in absolute dollar value is more effective than that in percentage terms for low-priced products, and the opposite is true for high-priced items. The relationships in a virtual view: Donation Size Effectiveness of CRM Campaigns Donation Quantifier (Mediator) Product Price The conclusion above will now be applied in an actual case; the red laces campaign of Nike. Nike contributes hundred percent of their profits to programs that help fight AIDS 24

25 in Africa. To examine the donation size as low or high is difficult, because nothing is known about the profit of the laces. Probably, the donation size is high, since hundred percent is all of their profit. As mentioned earlier in chapter three, Nike uses an estimable donation quantifier. The red laces are sold for 4,-, so the product price is low. In this case, Nike may use better the exact quantifier, because it will lead to stronger purchase intentions and a positive consumer evaluation, and besides, because of the low product price, an exact quantifier will be more effective. A reason for Nike to choose for an estimable quantifier may be the fact that this kind of quantifier leads to overestimation of the amount being donated. Another reason may be a practical one; Nike doesn t know the profit yet, so they could not make their quantifier more concrete. 25

26 5.2 Discussion and recommendation for future research The conclusions that have been proposed in this thesis are based on previous research. The first limitation of this research is caused by the fact that there is not any empirical research conducted. To examine what the exact influence is of donation size in the effectiveness of a CRM campaign, and the mediating role of donation quantifiers, there have to be empirical research, where this study can be used as theoretical base. An experiment would be a good kind of research. Previous research of Chang (2008) called: To donate or not to donate? Product characteristics and framing effects of cause-related Marketing on consumer purchase behavior, is conducted at four universities in Taiwan. The population and behavior of Taiwan consumers may not be comparable with European or North American consumers. Conclusions of this research may not be generable for other populations, and other research may result in other conclusions. A recommendation for future research is to examine the role of product price in the relationship between donation quantifiers, and the effectiveness of a CRM campaign in Europe. A couple of studies reported in this literature research (Brown et al. 2003, 2004; Chen et al. 1998; Hajjat 2003) were conducted using a student sample. Students may not be generable for the complete population; for example, students are from younger age than the average population, which may influence the results and conclusions. Product price moderates the relationship between donation quantifiers, and the effectiveness of a CRM campaign. Chang (2008) found that a donation amount framed in absolute dollar value is more effective than that in percentage terms for low-priced products, and the opposite is true for high-priced items. In his study, the influence of product price is only examined with exact and calculable quantifiers. Estimable and abstract quantifiers are missing in his study. Recommendation for future research is to examine the influence of the product price in the relationship between all four donation quantifiers and the effectiveness of a CRM campaign, because it will lead to a better view of the moderating role of product price in this relationship. 26

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