Being Good is Good for Business
CONSUMERS FACE a staggering array of choices in today’s marketplace. In an attempt to differentiate their goods and services from the competition’s, companies today are increasingly engaging in cause marketing, or the association of a company’s brand with a specific cause that can benefit society or the environment.
A recent study by faculty at the University of Tennessee, Knoxville, finds that corporations that successfully employ cause marketing, such as in campaigns where a donation is made with the purchase of a specially-marked item, see their profits rise.
Neeraj Bharadwaj, an associate professor in the Department of Marketing at the Haslam College of Business, says that companies which link their brands with causes that resonate with consumers can entice current customers and cultivate customers from rival brands. “Cause Marketing and Customer Profitability,” recently published in the Journal of the Academy of Marketing Science by Bharadwaj and his colleagues, draws a clear line between cause marketing and profitability.
“Research suggests that the vast majority of consumers want to do business with firms that are good corporate citizens,” Bharadwaj says, noting how this trend is now found in Super Bowl commercials, the upper echelon of the marketing arena. “In this year’s Super Bowl, 20 percent of all ads linked their brand to various causes,” which he says, is three times the number of such ads aired during the sporting event in 2017.
Bharadwaj and his co-authors, Michel Ballings, an assistant professor in the Department of Business Analytics and Statistics at Haslam, and Heath McCullough, a former doctoral student in Haslam’s marketing department, investigate both the positive outcomes for a brand implementing cause marketing and the impact of such campaigns on the main rival’s brand. Their study of Yoplait’s partnership with Susan G. Komen to raise funds for breast cancer research reveals notable results on both fronts.
General Mills, Yoplait’s parent company, pledged to make a 10 cent contribution to the Komen cause each time a customer submitted a code from the lid of a specially-marked package of their yogurt purchased during September and October. Pulling their results from a panel of more than 7,000 customers, Haslam researchers found that Yoplait saw a 2.7 percent increase in customer profitability during the time of the promotion, while key rival Dannon saw a loss of customer profitability of 13.3 percent during the same period.
By evaluating Yoplait’s partnership with Susan G. Komen, the authors demonstrate cause marketing’s benefit in promoting practical product categories, as opposed to more luxurious categories more commonly associated with charitable donations.
“Our research supports that brands—even those in lower price point categories like yogurt—that are aligned with a salient cause can deliver an additional benefit to consumers beyond the product itself, and in turn, yield desirable business outcomes,” Bharadwaj says.
Though the authors acknowledge other factors, including price reductions and featured status of a discounted product within store circulars, correlate to even greater increases in customer profitability, the additional benefit to a brand implementing a cause marketing campaign and the detriment to its competitor provide a strong argument toward its addition to current marketing practices.
The study provides specific behavioral evidence of profit impact from cause marketing. The findings also provide behavioral evidence supporting cause marketing’s potential to convert rivals’ customers while simultaneously strengthening brand equity, establishing it as an assertive strategy to draw customers and purchases away from competitors. —Emma Richards