EFFECT OF CAUSE RELATED MARKETING ON CONSUMER S PURCHASE INTENTION

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1 EFFECT OF CAUSE RELATED MARKETING ON CONSUMER S PURCHASE INTENTION Sanjeev Kumar Sharma 1, Era Nagpal 2 1 Professor, 2 SRF University Business School, Panjab University, India ABSTRACT The practice of using corporate social responsibility as a tool of marketing and promotion is commonly known as cause related marketing (CRM). As one form of marketing communications, it can be assumed that CRM affects consumers brand purchase intention. It is an interesting topic to explore and can bring an additional perspective in this field of research. This paper aims to address this gap by investigating the relationship and impact of cause related marketing on the consumer s purchase intention. Data was collected using survey method and usable questionnaires from around 125 respondents. The hypotheses were tested using statistical tools like correlation and regression in SPSS 16. Results revealed that cause- related marketing has a positive impact on the consumer s purchase intention. Keywords: Marketing, Cause Related Marketing, Consumer Behavior, Purchase Intention. I. INTRODUCTION It is difficult for companies to differentiate their brands from competitors by traditional attributes, such as price and quality, because of the increased competition in markets nowadays [1]. To become meaningful entities for consumers to identify with, brands need to be associated with some symbolic values, such as altruism and civic mindedness. Some scholars also suggest that building stable committed relationships is beneficial for both parties [2]. In this context, many corporations have discovered the importance of strategic social alliances, and developed corporate social responsibility (CSR) programs [3]. As a type of CSR, cause-related marketing (CRM) has received the interest of specific corporations. CRM has gain ever-growing popularity among brand marketers, who believe this approach helps to enhance both-brand attitude and purchase intention [4]. CRM has became one of the fastest growing forms of marketing communication, which is reflected in increased expenditures on this form of communication with customers. Cause related marketing is the process of formulating and implementing marketing activities that are characterized by an offer from the corporation to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives [5]. When establishing partnership with a cause, there are a number of causes to choose from, it could be everything from health, animal protection, human services, and environmental causes, and so on. It was also suggested that how a corporation chooses a cause depends on different variables that are deemed or perceived important by the consumers of this corporation and that corporation should choose causes which fit with their own corporations and 9 P a g e

2 consumers [6]. After examining the relationship between the corporation, cause and customer and how the fit level between these three groups influence consumer response by generating a positive attitude toward the corporationcause alliance and purchase intention for the sponsored product, it was found that the higher fit level, the better the result the corporations obtain [7]. There are many different motives for companies to participate in CRM activities. Besides performing social responsibility, some companies are likely to have commercial motives for doing so, which include increasing sales, recruiting new employees, improving brand, and so on. A study conducted states that more than half of the companies participating in CRM were seeking to improve brand purchase intention. To capitalize all possible advantages, it is critical for a company to communicate with its customer about the CRM work. On the other side, consumers also wish to be informed about the company s CRM activity [8]. Hence, it is important to put more effort on studying the CRM issue from a consumer perspective. Several researchers have examined the consumers response to CRM strategy. CRM helps in selling products, improving the brand s image and encourages employees. However, if CRM is not carried out properly, it can affect the company s working and image adversely. Cause-related marketing has been seen as a good way to solve different social problems as it makes it important for marketers to look for new ways to become good corporate citizens. Although, it plays a vital role in enhancing the image of the company in the minds of the consumers, yet there is a lot of cynicism towards such schemes remains very high. Therefore, it is important to not only understand how cause related marketing can affect a consumer s perception about a brand, but we also must be aware of its impact on the purchase intention of the consumer. My purpose in this study is to examine whether CRM has any significant impact on a consumer s behavior and consequently his purchase intention. Its positive impact will be reflected in increased sales and profitability. The relationship among these constructs is being examined due to their potential relevance to the consumer-brand relationship domain. II. REVIEW OF LITERATURE Cause Related Marketing (CRM): The phrase, cause-related marketing, was coined in 1983 to describe a highly successful American Express program, which supported the restoration of the Statue of Liberty. As a result, throughout the early 1980s many companies considered cause-related marketing as a strategy to increase sales and market share, advance corporate social responsibility policies, and enhance corporate and brand image. Cause related marketing is the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenueproviding exchanges that satisfy organizational and individual objectives [7]. Since its development cause-related marketing strategy has had a major impact on businesses, organizations and consumers. In the face of disappearing diversity in the product price and promotion possibilities, saturated markets and shorter product lifecycle, companies strive to revitalize their brands by attaching it to ethical causes. It helps them to differentiate among the competitors and to strengthen their brand positioning [9]. Cause related marketing strategies appear in six broad headings. These are advertising (where a business aligns itself with a particular cause and uses its advertising to communicate the cause's message), public relations (attracting 10 P a g e

3 press and public attention to a strategic partnership between a business and a non-for profit group), sponsorship (corporate sponsorship of a particular program or event), licensing (the corporation pays for the license to use a charity logo on its products or service), and direct marketing (both business and non-profit raise funds and promote brand awareness) which count to the standard corporate practices. The last two forms are facilitated giving and purchased triggered donations. In a facilitated giving company supports customer donations to the charity. The most widely used practice is purchase-triggered donations; in this practice the company spends a percentage of sales to a charitable cause or organization [10]. It was found that consumer perceptions of corporate social responsibility and CRM can positively influence their beliefs about and attitudes toward new products and companies, these findings were especially significant for academics but not for mangers and practitioners [11]. Firms walk a fine line between reaping increased sales, goodwill, and positive publicity and incurring negative publicity and charges of exploitation of causes [5]. Purchase Intention of the Consumers: Consumers may intend to purchase a particular brand because they perceive the brand offers the right features, quality, or emotional benefits. The perception of high quality may lead consumers to recognize the differentiation and superiority of a particular brand and thus encourage them to choose that brand over competing brands [12]. Simply put, other aspects of any two brands being equal, consumers may purchase the brand with higher quality. It is stated that a company established CRM strategy with the aim of fulfilling several objectives related to corporate strategy, marketing strategy or individual product strategy [8]. These objectives vary but tend to have the similar final objective brand purchase intention. Brand purchase intention can be defined as the tendency to purchase the brand routinely in the future and resist switching to other brand [12]. This tendency is the consumer s selfinstruction to purchase the brand (or take other relevant purchase-related action). It is an anticipated, conscious planning of the action step, which is the final buyer response step [13]. There are two factors contributing to the brand purchase intention to be a critical objective of CRM. The first factor is that purchase intention is the best predictor of a consumer s purchase behavior [8]. This relationship is empirically tested in hospitality and tourism businesses [14]. The second factor is that now more and more consumers are brands conscious all over the world [15]. With the diversity of the product, consumers cannot compare the entire products with other products carefully. To reduce the perceived risk of purchase, they attempt to buy well known brand. What s more, they seek additional information and repeat the purchase of the brand which has provided satisfaction [16]. III. RESEARCH GAP From the literature reviewed, it was observed that although many researchers have studied the effect of cause related marketing on the consumer behavior and purchase intention, but still there is scope to explore this relationship in context of the cities selected for this research in North India. So, I have decided to take up this study to fill the research gap. The study is aimed at not only studying the impact of CRM on consumer s purchase intention but also to review the perception and behavior of consumer towards a product which is marketed with a social cause. 11 P a g e

4 IV. OBJECTIVE OF THE STUDY The main objective of this study is to address the gap by investigating if there is any significant relationship between cause- related marketing and a consumer s purchase intention. It also aims at studying the level of the impact CRM can have on the perception, attitude and behavior of the consumers, which formulates their purchase intention. Research Methodology: The research conducted was descriptive in nature. It aimed at finding out whether cause related marketing influenced a consumer s purchase intention and to investigate the level of impact it has. 1. Hypotheses: H1: There is a significant relationship between cause related marketing and consumer s purchase intention. H2: Cause related marketing has a significant impact on the consumer s purchase intention. 2. Sample Design and Sample Size: A total of 140 respondents were contacted for carrying out the research out of which those that were completely filled and usable were 125. Convenience sampling was used for collecting primary data in order to arrive at the findings of the research. The duration of data collection spanned over about 40 days during November February To collect data, prospective respondents were approached in and around the tricity: Chandigarh, Panchkula, Mohali. 3. Research Instrument: A self administered questionnaire was developed for the purpose of collecting primary data to arrive at empirically tested results. The questionnaire contained 2 sections apart from the general demographics, which have been mentioned below: i. Cause Related Marketing ii. Consumer s Purchase Intention The purpose of the research was to study whether cause-related marketing had any significant relationship with consumer s purchase intention and to study its impact as well. The questionnaire contained 12 items to record responses in order to study the relationship between the above mentioned variables. Therefore, cause related marketing acted as the independent variable, whereas, consumer s purchase intention was treated as the dependent variable in this research. 4. Research Tools: SPSS Software was used to conduct analysis on the data collected. Statistical tools like, Correlation and Regression were used to analyze data and derive useful findings so as to arrive at conclusions which had practical managerial implications. Results: H1: To test that there is a significant relationship between cause related marketing and consumer s purchase intention, correlation analysis was run between both the variables which yielded the following results. 12 P a g e

5 Variables N Sig. (2-tailed) Pearson Correlation (r) Cause Related Marketing Purchase Intention 125 As we can see from the table, the results show that there is a positive correlation between cause related marketing and consumer s purchase intention, with r =.587. Thus, H1 is accepted. H2: To test that cause- related marketing had a significant impact on consumer s purchase intention, after a positive correlation has already been established between them, a regression analysis was run between the two variables which showed the following results. Regression Variables R R Square Adjusted R F Sig. Model Square 1 Cause Related Marketing and Purchase Intention The results of regression analysis show that, brand image has a positive impact on word of mouth. The adjusted R^ has come out to be.338, thus we can say that 33.8 % change in consumer s purchase intention is explained by cause related marketing. Thus, H2 is accepted. V. CONCLUSION The objective of this research paper was to explore how a cause-related marketing strategy shapes consumer s purchase intention. The results of the study showed that there was a significant correlation between these two variables. On further analysis, it was found that cause- related marketing had a positive impact on the consumer s purchase intention as it affected the consumer s perception and behavior towards the brand favorably. This marketing tool has a pro-social agenda and it plays a significant role in shaping an image of the company in the market. It enhances the reputation of the company and gives it a competitive edge for its further growth. In today s business world, firms which manage their key relationships well and focus on their image are the ones that last longer. Differentiating your brand through the image of care and compassion to society is a strategy that can be highly rewarded. However, only a reliable and an authentic contribution to a cause (or nonprofit organization) can build brand image and brand equity. It can thus, be concluded that cause-related marketing has a potential to affect the consumer s purchase intentions as it adds to the value of the brand, increases the credibility of the brand and strengthens relationships with external and internal stakeholders. Managerial Implications: Marketing managers face a lot of challenges in today s business environment, out of these one of the biggest challenge is to differentiate their product to sustain the rising competition in the market, this study concludes that cause-related marketing can help in product and brand differentiation. The research suggests that marketers will be 13 P a g e

6 considering cause-related marketing as an element of their marketing strategy as it helps in improving the brand image and attitude of consumer s towards the brand. It is also recommended to the practitioners to conduct proper research to study the consumer s perception before selecting any potential nonprofit partner. Future Research: Further research can be done on the consumer s perception towards the fit between cause and brand, and also their attitude towards participation in these activities. Similar study could be replicated for groups of different consumer types, or by using a number of other brands and product categories. The effect of factors like price of product, age, personal values etc on cause related marketing can be studied. Also, the impact of cause related marketing on brand attitude, brand loyalty and consumer s behavior can be studied in detail. REFERENCES [1] Bigné-Alcañiz, E., Currás-Pérez, R. and Sánchez-García I. (2009). Brand credibility in cause-related marketing: the moderating role of consumer values. Journal of Product & Brand Management, 18(6), pp [2] Bhattacharya, C.B. and Sen, S. (2003). Consumer-Company Identification: A Framework for Understanding Consumers Relationships with Companies. Journal of marketing, 67(2), pp [3] Maignan, I. and Ralston, D.A., (2002). Corporate social responsibility in Europe and the US: insights from businesses' self-presentations, Journal of International Business Studies, Vol. 33(3). [4] Tsai, S., (2009). Modeling strategic management for cause-related marketing. Marketing Intelligence & Planning, Vol. 27, No. 5, pp [5] Varadarajan, P. R., & Menon, A. (1988, July). Cause-related marketing: A co-alignment of marketing strategy and corporate philanthropy. Journal of Marketing, 52, [6] Hou, J., Du, L. and Li, J. (2008). Cause attributes influencing consumer's purchasing intention: empirical evidence from China. Asia Pacific Journal of Marketing and Logistics, 20(4), pp [7] Gupta, S. and Pirsch, J. (2006). The company-cause-customer fit decision in cause-related marketing. Journal of Consumer Marketing, Vol. 23 (6), pp [8] Westberg, K. and Pope, N. (2005). An examination of cause-related marketing in the context of brand attitude, purchase intention, perceived fit and personal values. ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing, pp [9] Meffert, H. and Holzberg, M. (2009). Cause-related Marketing: Ein scheinheiliges Kooperationskonzept?. Marketing Review St. Gallen, Vol. 2, pp P a g e

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