Cause Marketing Lowers Charitable Donations: US Research
Thursday, 7th April 2011 at 3:24 pm
Cause marketing lowers charitable donations and can lead to decreased consumer happiness, according to research from an American University.
Research undertaken by Aradhna Krishna, Professor of Marketing at the University of Michigan's Ross School of Business, found that consumers who buy products linked to social causes end up giving less money to a social cause or charity.
The study found that Cause marketing – defined in the research as ‘when firms share proceeds from the sale of a product with a social cause’ – can not only result in fewer donations, it can decrease consumer happiness as well.
Aradhna Krishna says consumers appear to realise that participating in cause marketing is inherently more selfish than a direct charitable donation, reducing their subsequent happiness (versus a direct donation).
Krishna says unfortunately, this doesn't prevent them from substituting it for charitable giving, which reduces the overall charitable donation.
The findings are based on various studies carried out by Krishna involving 300 college students to see whether consumers who bought products linked to a social cause would reduce subsequent donations to that cause.
The study found that charitable giving is lower if consumers buy a cause-related product—even if the consumer planned to buy it, anyway, regardless of its link to a cause.
Krishna says consumers may think of the corporate donation as theirs since it is facilitated by their act— and in fact, this type of thinking is 'rational' since it allows consumers to spend less to meet their donation goals.
She says this suggests that even if cause-marketing purchases are costless, consumers think of their purchase as a charitable act and decrease subsequent acts. The higher the cause-marketing expenditure, the lower was the individual charitable giving.
Another important finding of the research is that cause marketing has the potential to decrease consumer happiness, compared to direct donations.
Krishna says research has shown that pro-social behavior, such as cause marketing or charitable giving, can have components of both empathetic (selfless) altruism and egoistic (selfish) altruism.
She says purchasing cause marketing products has larger connection to egoistic altruism, which has self-benefit as its ultimate goal, as the consumer acquires a product in the process.
She says charitable giving is linked more strongly to empathetic altruism, which has helping others as a main goal and self-benefit as an unintended consequence, as the consumer gets no tangible benefit in return.
Krishna says overall, the results raise concerns about the practice of cause marketing and suggest that consumers and policy-making bodies should be more vigilant about what cause marketing can do to individuals' direct donations, to total donations and to consumer happiness.
Australian cause marketing expert and Founder of Cavill + Co, Hayley Cavill has rejected the findings of the US study saying the sample is extremely unrepresentative and worryingly small.
Cavill says Australian research undertaken in 2008 by research firm Sweeney showed that 47% of consumers would consider donating to the charity that they see as part of a cause related marketing campaign.
She says the Australian research was undertaken amongst a representative sample of the population, rather than limited to University students.
She says surveying a captive audience of students may be an easy way to generate a journal article, but it is not proper research, and with such fundamental flaws in the methodology and basic analysis, the ultimate suggestion that cause-related marketing reduces direct donations has no valid research foundation.
The full study will be published in the July issue of the Journal of Consumer Psychology (US).