This article was co-written with Alex Malouf, Corporate Communications Manager for the Arabian Peninsula, Procter & Gamble
In their ever-increasing need to differentiate both corporate and product brands, many companies are turning to the use of cause-related marketing. Decades ago, if you dropped the phrase “cause-related marketing” in the meeting room, your colleagues would most likely return an empty stare. However, the concept, which is also named cause marketing, of partnering a product or company campaign’s profitability with a charitable cause has become commonplace in Western Europe over the last decade. Thanks to initiatives such as the UAE’s Year of Giving, cause-related marketing is now catching on in the Gulf as well.
The idea was best explained by Philip Kotler. In his seminal work Marketing 3.0, Kotler wrote that marketing must engage people in ways that provide "solutions to their anxieties to make the globalized world a better place.” Research has shown that that consumers believe companies should do more than return profits to their shareholders. Today, consumers want companies and brands to demonstrate a purpose that benefits both local communities and the world at large.
The concept of cause-related marketing was first introduced to the mass market in 1983 by American Express to describe its campaign to raise money for the Statue of Liberty’s restoration. American Express donated one cent to the restoration every time someone used its charge card. As a result, the number of new cardholders grew by 45%, and card usage increased by 28%. Nowadays, there is an increasing number of companies introducing marketing activities involving corporate efforts of business and non-profit organizations for mutual benefit. The market is seeing a flooding number of new collaborations between corporates and NGOs in which their respective assets are combined to create shareholder and social value.
Today’s Consumers Prefer Causes
The 2013 Cone Global Cause Evaluation Survey shows that 55% of surveyed customers have boycotted a company because of irresponsible business practices. 53% would not invest in a company that does not actively support a good cause.
When choosing between two companies with similar products that engaged in cause marketing, 70% of those surveyed cited "personal relevance of cause" as the reason they chose one company over another. On another note, 76% think it is ok for brands to support good causes and make money at the same time.
According to research presented at the World Federation of Advertisers' annual conference in Brussels in 2012, global marketers surveyed overwhelmingly said that CSR will be increasingly important in building brands in the future, with 88% agreeing with that statement. However, only 46% of those marketers thought that consumers share and approve their support for good causes, when, in fact, 60% of consumers surveyed claimed to be looking for brands with a sense of purpose.
Companies are asking the following questions every day: Should we stand for a purpose or continue doing traditional marketing? How do we optimize our purpose-driven marketing investments? Can being socially responsible be used as a messaging strategy in our marketing campaigns to help increase revenue?
If you have ever purchased a product or service and felt good about it because it had a little pink ribbon or a sustainability label on it, you have likely been a consumer of a cause marketing campaign. We have totally changed the way we live our commercial lives; we now invest more of our minds, hearts and spirits. We keep searching for solutions that bring value to us and let us feel that we have a purpose in life. “[Marketing] will be won by those who become purpose-driven social brands,” explains Philip Kotler. To do so, businesses and non-profits must align to bring a cohesive brand story to life.
Cause Marketing: The Right Direction?
Companies are increasingly turning to purpose-driven marketing with the hope of cultivating loyalty among their key customers. Sure, consumers are happy to help save the world and be more responsible. But they must first see the benefit to their own households. When going through the process of developing purpose-driven social brands, companies have to make sure that there is a win-win situation between customers and the charity. This is achieved when customers feel their lives are enhanced by the charity efforts and that good feeling is transferred to how they feel about the market.
Despite compelling data however, lots of businesses are still indecisive on whether it is the right direction to take and whether is it the right time to start investing. “As marketers, we spend billions of dollars each year trying to understand consumers all over the world. Unfortunately, it is harder and harder,” said Edward Martin, Director, Marketing Excellence and CSR Insights at The Hershey Company. Therefore, it is time to understand that only a minority of customers take time to answer marketing surveys and ads. However, customers are more willing to engage with companies on social causes and environmental issues. It is not a good way to get into the customers’ minds? Try it once and you will see the immediate result.
Peter Ducker has said, “Profit is not the purpose of a business but rather the test of its validity.” I will take that a step further: the real indicator of measuring the success of a sales force is not making profit. It is the test of its added value and effectiveness to the customer. We need to step back from our conventional practices and take a larger view of what connects us to build deeper bases for purpose-driven engagement.
However, in order for these efforts to be effective, customers must feel that your efforts are authentic and truly supporting a cause. Businesses have to be transparent about how they are distributing funds to the cause and clearly outline the win-win solution the product or the campaign is preaching for. If you plan to develop a purpose-driven social brand and do a lot of cause-marketing, then develop a policy which deals with many of the above issues.