Oceanic Pharmachem Private Limited (OPPL) believes that to properly manage stakeholder relationships and its reputation, a company not only needs to adopt CSR as an integral part of its mission but must also communicate its contribution and efforts.
In today’s competitive marketplace, corporations regard their contributions today not as outright donations but as investments that are intended to benefit the company as well as the recipient. In their ever–increasing need to differentiate themselves, many companies are turning to the use of cause–related marketing (CRM) as a communications tool. Basically, the concept entails communicating through advertising, packaging and promotions, the corporate social responsibility, namely, the affiliation or work with non–profit organisations or support for causes. The point is to attract consumers wanting to make a difference in society through their purchasing.
However, altruistic intentions alone can no longer justify charitable giving and expenditures related to philanthropic activities. Sophisticated customers and stakeholders are looking at the behaviour of the firm: are the donations just for goodwill gain or is the concern about particular issues genuine. Consumers are also looking closely at companies who make claims regarding their involvement in social issues. There is a level of scepticism that often makes consumers doubt what a firm is saying or reject claims made in CRM campaigns, affecting their purchasing behaviour. It has even been suggested that because so many firms are now using CRM, scepticism is on the rise. Therefore not only is it important for companies pursuing CRM to be genuine in their behaviour but they must also have a full understanding of consumers’ knowledge of CRM and their level of scepticism before attempting this marketing technique.
Cause–Related Marketing: A Review
The practice of advocating corporate social responsibility in marketing communications activities is commonly known as Cause Marketing or Cause-related Marketing (CRM). It is defined as the process of formulating and implementing marketing activities that are characterised by contributing a specific amount to a designated non-profit effort that, in turn, causes customers to engage in revenue-providing exchanges.
CRM is the latest buzz–word for marketers who have come to realise that alliances of companies with charities can potentially result in growing market shares and customer loyalty. Cause–related marketing has a great potential in helping marketers to stay in tune with the mood of the public, as it is more sensitive, trustworthy and relevant to society. Surveys have shown that most consumers, if price and quality are equal, are more likely to switch to a brand that has a cause–related marketing benefit.
When properly executed, CRM sells products, enhances image and motivates employees. However, CRM can be a very dangerous area for companies to venture into if not done properly. Tying the cause
to the organisation’s mission, making it long term, not using it as a short–term tactic to increase sales, and understanding that the effects are not always easy to measure and whatever effects there are, normally through enhanced reputation, are very long term. Most consumers think of CRM as a believable and effective way to improve the country’s social problems and that it can influence what and where they buy.
The following statement underlines the paradoxes a firm encounters when considering cause–related marketing:
‘If they don’t say enough about their charity links, consumers believe that companies are hiding something and if they say too much they believe that charities are being exploited by the big corporations. It makes the promotion of such schemes one of the most delicate jobs in marketing. Go too far one way and consumers believe you are using the charity, go the other way and they will not even know of your involvement.’ – O’Sullivan, 1997
Several studies indicate that it is important for marketers to seek out ways to become good corporate citizens, that cause–related marketing is ‘a good way to solve social problems’, and that consumers have a more positive image of a company if it is doing something to make the world a better place. Yet the level of scepticism towards such schemes that unite the interests of charity and business remains very high. Scepticism towards CRM derives mainly from customers’ distrust and cynicism towards advertising, which is a component of the marketing mix used in CRM campaigns. The negative attitudes towards CRM is mostly to scepticism towards implementation and/or cynicism towards a firm’s motives. This scepticism is perhaps further fuelled by recent research which show that total corporate philanthropy increases in small but significant ways following negative media exposure. This could be interpreted by stakeholders as an attempt on the part of these organisations to ‘buy’ their way out of a negative situation.
Even though, a firm’s support of social causes can influence consumer choice, but simple support is not enough. Marketers must consider how consumers perceive the company’s motivation. This distinction has many times led to varying purchasing decisions based on CRM.
Perceptions that the company is making ‘much ado about nothing’ or that its promotion does not correspond to the reality of the help being given to the cause can lead to scepticism. Since scepticism can affect consumers’ purchase decisions, it can be a great help when developing campaign strategies to have a more thorough understanding of the level of scepticism in target audiences. Consumers with a high level of scepticism will be less likely to respond positively to CRM campaigns than consumers with a low level of scepticism towards CRM.
Though, It is nearly impossible to influence the opinion of cynics, due to their enduring beliefs, this scepticism can be decreased by increasing knowledge. Actually, most consumers are not as aware of company activities in the area of social responsibility. Hence, increased coverage by the media of
corporate activities and the rise of business activity in this area, can help to get the effect through to the average consumer.
Having a pro–social agenda means having a powerful marketing tool that can build and shape a company’s reputational status, make a differentiation in the market and give a company a competitive edge. In today’s business environment, firms that last are those which manage their key relationships well and focus on their reputations. Differentiating the company/ brand through the image of care and compassion to society is a strategy that can be highly rewarded. However, only a consistent, believable contribution to a cause or non–profit organisation can build brand image and brand equity. For that, corporate philanthropy needs to be strategic.
For companies, knowing how public perceive them and what they expect in return for their support, is fundamental in designing communication objectives and strategies aiming to strengthen relationships with stakeholders. Stakeholders’ support for a business is based on their relationship and interaction with the brand as well as the way they perceive the brand and its company. Honesty, long–term commitment to a cause and involvement of non–profit organisations are factors that help to overcome customers’ scepticism towards CRM.
Research suggests that knowledge has a negative effect on a person’s scepticism level. This would indicate to marketers that one of the first things they can do is to emphasise the awareness of corporate social responsibility and its benefits among consumers. By increasing knowledge, they can then decrease the level of scepticism and thus achieve even higher favourable behavioural responses. Marketing and corporate communications initiatives should then concentrate on using tools that are designed to inform and to make consumers more aware.