INTERNATIONAL JOURNAL OF MARKETING AND HUMAN RESOURCE MANAGEMENT (IJMHRM)

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1 INTERNATIONAL JOURNAL OF MARKETING AND HUMAN RESOURCE MANAGEMENT (IJMHRM) International Journal of Marketing and Human Resource Management (IJMHRM), ISSN (Print) ISSN X (Online) Volume 4, Issue 1, January- April (2013), pp IAEME: Journal Impact Factor (2013): (Calculated by GISI) IJMHRM I A E M E A STUDY ON EFFECTIVENESS OF CAUSE RELATED MARKETING [CRM] AS A STRATEGIC PHILANTHROPY IN TERMS OF BRAND POPULARITY & SALES Mr. Sandip Dhakecha Asst. Professor, School of Management, RK.University ABSTRACT Cause-related marketing is an emerging area within the marketing discipline, originating in the United States in the 1980s. There has been a growing concern for cause related marketing over the last two decades. A growing number of firms are entering into commercial partnerships with nonprofit organizations to achieve specific business objectives. Cause-related marketing is one example of such a partnership. Cause-related marketing is a marketing strategy whereby the firm makes a contribution, financial or otherwise, to a nonprofit organization(s) contingent upon the customer engaging in a revenue-providing exchange that satisfies business and individual objectives. The main objective of this research paper is to gather more understanding of CRM in terms of brand popularity & sales as compare to sales promotion and sponsorship. This paper explored the following questions: 1. Do consumers respond more positively toward Cause-related marketing than towards other marketing strategy? 2. What is the impact of Cause-related marketing on the consumer s response in terms of attitude towards the brand, attitude to the strategy and purchase intention? Key Words: Cause Related Marketing [CRM], Strategic Philanthropy, Sales Promotion, Sponsorship 28

2 1.0.0 OBJECTIVE The main objective of this paper is to understand the impact of CRM on brand popularity and sales in comparison of other marketing strategies like Sales promotions and Sponsorships INTRODUCTION A growing number of firms are entering into commercial partnerships with nonprofit organizations to achieve specific business objectives. Cause-related marketing is one example of such a partnership. Cause-related marketing is a marketing strategy whereby the firm makes a contribution, financial or otherwise, to a nonprofit organization(s) contingent upon the customer engaging in a revenue-providing exchange that satisfies business and individual objectives (Varadarajan and Menon 1988). It has emerged relatively recently and its origins have been attributed to a promotion undertaken by American Express in the early 1980s (Cunningham 1997). In an environment of increasing competition, the objective of every organization on the globe includes two common elements, first to keep improving consumer attitude towards brand and second to keep stimulating consumer purchase intension of that brand. In this regard a strategy known as Cause Related Marketing (CRM) is emerging on a fast pace and attracting increasing consumer interest. Considering the importance of this trend in our country efforts have been made not only to provide an understanding about this concept but also to compare its effectiveness with other marketing strategies. As CRM is an independent variable, variables which are dependent in this report are: Consumer attitude towards CRM strategy. Change in consumer attitude towards brand after CRM. Consumer purchase intention after CRM. I believe that this paper will provide a considerable justification for organization to undertake the CRM as an innovative yet effective strategy for changing customer attitude and shaping their purchase intention towards their brands LITERATURE SURVEY Marketing communication is one of the four Ps of marketing mix and its role is to create brand awareness, generate favorable brand attitudes and stimulate purchase intention (Belch and Belch 1998; Rossiter and Percy 1998). These objectives are pursued using a range of communications strategies including advertising, sales promotion, direct marketing, public relations, sponsorship and personal selling. Sales promotion is an important form of marketing communications. Price promotion, coupons, feature advertising and end-of-aisle displays have been identified as the most commonly used consumer promotions (Chandon, Wansink and Laurant 2000; Lemon and Nowlis 2002). Promotional tools in general are designed to stimulate short-term sales but frequent promotions can alter the customer s reference price and negatively impact on brand equity (Mela, Gupta and Lehmann 1997). Sponsorship s importance as a form of marketing communications is also not negligible. It has increased in comparison to traditional advertising (Erdogan and Kitchen 1998; Harvey 2001). The popularity of sponsorship has also been attributed to its ability to avoid the clutter; as it attempts to enhance consumers perceptions of the brand by creating a link between the brand and a sponsored event or organization that is valued by the consumer. However, the ultimate objective is to influence consumer preference and purchase. Despite the availability of several marketing tools, marketing communication is changing the communication practices and has provided the bases for the development of new forms of communication and marketing strategies, such as cause-related marketing. 29

3 1.2.1 Brand Attitude Attitudes are not innate; they are learned and plays a critical role in influencing behavior therefore can be created or changed through marketing communications strategies. Attitudes act as a key link in the causal chain between attribute perceptions on the one hand and intentions and behaviors on the other. Thus marketers who understand that causal sequence, and who use it in decision making, can have a powerful ally in their battle for superiority in the marketplace (Lutz 1991) To generate a positive attitude toward the brand, the consumer must believe that the brand has the attributes and benefits that will satisfy his or her wants or needs (Keller 1993). These attributes or benefits can be product-related or non-product related, but must be important to the consumer to have an impact. Attitudes toward a brand can also be altered by pointing out their relationships to particular social groups, events or causes (Rossiter and Percy 1998). In this context, marketing communications must be designed to create these favorable attitudes, reinforce existing favorable attitudes and/or change negative attitudes Purchase Intension In terms of measuring the impact of marketing communications, it has been found that, although the attitudes of customers are important, they are less relevant than what the consumer actually does in the marketplace (Schultz 1998, p.410). The ability to influence purchase intention is therefore a critical objective for marketing communication. In this context, In addition to the existence of a favorable brand attitude, a number of other factors such as habit, corporate credibility, endorsement of a product by an association and/or sport sponsorship can have a positive effect on purchase intention (Daneshvary and Schwer 2000). Similarly, high involvement with the sponsored activity will impact on a consumer s preference for a sponsor s product due to the level of goodwill generated (Meenaghan 2001). The origin of the phrase cause-related marketing has been attributed to American Express in relation to a marketing campaign undertaken in 1983 (Cunningham 1997). With the objectives of increasing new cardholders as well as usage of the card, American Express developed a marketing strategy that linked those objectives with a commitment to contribute funds for the restoration of the Statue of Liberty. AMEX achieved a 28 percent increase in card usage as well as a substantial increase in new cardholders. According to Varadarajan and Menon (1988): 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. Cause-related marketing has also been referred to as strategic philanthropy and a way for business to do well while doing well. It is also suggested that the strategic use of philanthropy is an important component in building long-term competitiveness (Simon 1995). Sponsorship has been described as the underwriting of a special event to support corporate objectives by enhancing corporate image, increasing awareness of brands, or directly stimulating sales of products and services (Javalgi et al. 1994, p.48). In the case of sponsorship, the contribution to the nonprofit organization precedes the generation of sales revenue and is made in anticipation of an outcome. In contrast, with a cause-related marketing strategy, the contribution is a direct consequence of revenue generation. Therefore, cause-related marketing and sponsorship are perceived as different strategies (Cornwell and Maignan 1998). Sales promotion has been defined as short term incentives to encourage purchase or sales of a product or service (Kotler et al. 2001). Incentives used in sales promotions generally relate to 30

4 discounts, cash-back offers, additional product for the same cost or free gifts; that is, a tangible utilitarian benefit for the consumer. Cause-related marketing, conversely, does not necessarily offer a personal benefit to the consumer, but instead provides a benefit to a third party via the cause or charity. Sales promotion however can be used in conjunction with cause-related marketing. To summarize, the literature suggests that cause-related marketing can create positive implication as this strategy actively engages the customer. This engagement is an advantage over other marketing activities such as sponsorship and sales promotions as these activities are generally short-term in nature and can be useful for encouraging product trail, rewarding existing customer or increase usage RESEARCH QUESTION In the context of literature survey and the objective of report as well as taking into consideration, the specific research question comes out as follows. 1. Dose CRM as a strategy effect on consumer s response in terms of attitude to the strategy, change consumer attitude towards brand and stimulate purchase intensions? 2. Do sales promotions and sponsorships generate more positive consumer response than CRM? METHODOLOGY In this paper efforts have been made to investigate the effectiveness of cause-related marketing, in terms of consumer attitude to the strategy, brand attitude and purchase intention. It also explores consumer response to cause-related marketing as compared to sponsorship and sales promotion. The findings I believe shall provide knowledge and assistance to marketing managers in the development of more effective cause-related marketing strategies. The convenience sample based on 275 respondents has been drawn from both undergraduate and postgraduate Teachers of RK University representing all disciplines. It was believed that these respondents would provide more rational opinion as they know and understand more deeply the subject matter as compare to common men. Data was collected using self-administered survey in which questionnaire was the key instrument. Survey was administered during the third week of January 2013 i.e. between 17 th, 18 th, and 19 th as before these dates respondents were not easily available because of University exams. The data was then analyzed using statistical techniques given in MS Excel which includes analysis of variance (ANOVA). Z-TEST, T-TEST and measure of Central Tendencies and Dispersion HYPOTHESIS Keeping in mind the objective along with the research question, number of hypothesis have been developed which are as follows: H1. A Consumer will have more positive attitude towards CRM as an image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships. H2. A Consumer opinion will be significantly different in terms of their change of attitude towards brands which undertake CRM as compare to Sales promotions and Sponsorships. H3. A Consumer purchase intention will not be more positive as a result of exposure to CRM strategy than the exposure to Sales promotions and Sponsorships. H4. A Respondents opinion will not be significantly different in terms of all determinants (Overall) taken to measure the impact of cause related marketing as compare to sales promotion & promotion towards brand popularity and sales. 31

5 5.0.0 SURVEY FINDINGS The major survey findings were analyzed below in order to have a better understanding and comprehension of respondents opinion towards the impact of CRM viz-a-viz Sales promotion and Sponsorship Measures of Central tendencies & dispersions The measure of central tendencies and measure of dispersion for the dimensions related to the impact of cause related marketing on brand popularity and sales are presented below: Table 1 Positive Attitude towards SP & Sponsorship Positive Attitude towards (CRM) Change Attitude From + To - Mean Standard Error Median Mode Standard Dev Sample Var Kurtosis Skewness Range Minimum Maximum Sum Count Change Attitude From - To + Consumers Buy Products if linked with SP & Sponsorship 32 Consumers Buy Products if linked with CRM Mean Standard Error Median Mode Standard Dev Sample Var Kurtosis Skewness Range Minimum Maximum Sum Count

6 The above analysis shows that the respondents opinion towards impact of cause related marketing on brand popularity & sales as compare to sales promotion and sponsorship for all the surveyed determinants was as high as 3.02 for CRM change attitude from negative to positive and as low as 1.99 for Consumers will buy products if linked with sales promotion & sponsorship. The standard deviation of respondents opinions towards impact of cause related marketing on brand popularity and sales as compare to sales promotion and sponsorship was highest for dimension ---consumers will buy products if linked with CRM and least for dimension consumers will buy products if linked with sales promotion & sponsorship Dimension CRM change attitude from negative to positive is second in terms of high standard deviation These high standard deviations indicates that there is a high polarization of the respondent s on the dimension consumer will buy products if linked with CRM, and CRM CHANGE ATTITUDE FROM negative to positive whereas least on the CONSUMERS will buy products if linked with sales promotion & sponsorship. The skewness of dimension for consumers will buy products if linked with sales promotion & sponsorship, Consumers will buy products if linked with CRM, change in attitude from negative to positive through sales promotion & sponsorship was found positive, which were 0.02, 0.05, and 0.23 respectively. It indicates that the normal distribution curve is positively skewed and that the majority of the respondents opinions were above than the mean. The skewness was found negative for negative to positive change in attitude through CRM, positive attitude towards sales promotion & sponsorship and for positive attitude towards CRM respectively -0.03, and This indicates that the normal distribution curve is negatively skewed and that the majority of the respondents opinions were lower than the mean HYPOTHESIS TESTING Based on literature survey different hypotheses were developed and tested which are presented as follows: Hypothesis One H1O: Consumer will not have more positive attitude towards CRM as an image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships. H1A: Consumer will have more positive attitude towards CRM as an image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships. Statically Representation: H1 o: µ1 µ2 H1 A: µ1 = µ2 33

7 Z-test: Two Sample for Means Table 2 Positive Attitude towards SP & Sponsorship Positive Attitude towards (CRM) Mean Known Variance Observations Hypothesized Mean Diff Z P(Z<=z) one-tail 0.00 z Critical one-tail 1.64 P(Z<=z) two-tail 0.00 z Critical two-tail 1.96 Decision The hypotheses related with consumers will not have more positive attitude towards CRM as an image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships was rejected. At 95% confidence level the z-calculated value of is higher than the Z-critical value of 1.96, which apparently falls under critical zone Hypothesis Two H2O: Consumer opinion will not be significantly different in terms of their change of attitude towards brands which undertake CRM as compare to Sales promotions and Sponsorships. H2A: Consumer opinion will be significantly different in terms of their change of attitude towards brands which undertake CRM as compare to Sales promotions and Sponsorships. Statically Representation: H2 o: µ1 µ2 H2 A: µ1 = µ2 Z-test: Two Sample for Means Table 3 Use of CRM can change Attitude From + To - Use of SP & Sponsorship can Change Attitude From - To + Mean Known Variance Observations Hypothesized Mean Diff Z 0.15 P(Z<=z) one-tail 0.44 z Critical one-tail 1.64 P(Z<=z) two-tail 0.88 z Critical two-tail

8 Decision The hypotheses related to respondent s opinions of no significant difference on the two dimensions that is use of CRM can change of attitude towards brands from positive to negative as compare to Sales promotions and Sponsorships was accepted. At 95% confidence level, the z- critical value of 1.96 is higher than the calculated Z value of Hypothesis Three H3O: Consumer purchase intention will be more positive as a result of exposure to CRM strategy than the exposure to Sales promotions and Sponsorships. H3A: Consumer purchase intention will not be more positive as a result of exposure to CRM strategy than the exposure to Sales promotions and Sponsorships. Statically Representation: H3 o: µ1 µ2 H3 A: µ1 = µ2 F-test Two-Sample for Variances Table 4 Consumers prefer buying products linked with SP Consumers prefer buying products if linked with CRM Mean Variance Observations df F 0.29 P(F<=f) one-tail 0.00 F Critical one-tail 0.82 Decision The hypotheses related to respondents opinions of significant difference for determinant customer prefer buying products linked with CRM products linked with sales promotions & sponsorship was accepted; At 95% confidence level, and 274 degrees of freedom; the F-critical value was 0.82 and the F-calculated value was 0.29 that fall under non-critical region and shows that there is high significance Hypothesis Four H4O: There is no significant difference in respondents opinion in terms of measuring the impact of CRM viz-a-viz Sales promotion & sponsorship towards all determinants (overall). H4A: There is significant difference in respondents opinion in terms of measuring the impact of CRM viz-a-viz Sales promotion & sponsorship towards all determinants (overall). Statically Representation: H4 o: µ1 µ2 µ3 µ4 H4 A: µ1 = µ2 = µ3 = µ4 35

9 Anova: Single Factor Table 5 SUMMARY Groups Count Sum Average Variance Positive Attitude towards SP & Sponsorship Positive Attitude towards (CRM) Change Attitude From + To Change Attitude From - To Buy Products if linked with SP & Sponsorship Buy Products if linked with CRM ANOVA Source of Variation SS df MS F P- value F crit Between Groups Within Groups Total Decision: The hypothesis related to no significant difference in respondents opinion over the all six determinants was rejected. At 95% confidence level and (6, 1638) degree of freedom, the F- critical value is 1.79 and the F-calculated values is which apparently falls under the critical zone CONCLUSION Cause-related marketing activities, although emerged relatively recent, are useful for actively involving the customer with the brand. In an environment of increasing competition, product parity and demanding consumers, it has been suggested that cause-related marketing is a unique win-win-win strategy. That is to say, this marketing strategy benefits the community, generates goodwill and revenue for the company and creates positive feelings for the consumer as a result of their purchase decision. Furthermore, cause-related marketing is an attractive proposition to nonprofit organizations facing decreased government funding and increased competition for contributions from individual donors. Based on the literature survey a questionnaire was developed that was administered to a sample size of 275. The major findings are discussed below: Respondents opinion towards impact of cause related marketing on brand popularity & sales as compare to sales promotion and sponsorship for all the surveyed determinants was as high as 3.02 for CRM change attitude from negative to positive and as low as 1.99 for Consumers will buy products if linked with sales promotion & sponsorship. 36

10 The standard deviation of respondents opinions towards impact of cause related marketing on brand popularity and sales as compare to sales promotion and sponsorship negative to positive is second in terms of high standard deviation These high standard deviations indicates that there is a high polarization of the respondent s on the dimension consumer will buy products if linked with CRM, and CRM CHANGE ATTITUDE FROM negative to positive whereas least on the CONSUMERS will buy products if linked with sales promotion & sponsorship. The skewness of dimension for consumers will buy products if linked with sales promotion & sponsorship, Consumers will buy products if linked with CRM, change in attitude from negative to positive through sales promotion & sponsorship was found positive, which were 0.02, 0.05, and 0.23 respectively. It indicates that the normal distribution curve is positively skewed and that the majority of the respondents opinions were above than the mean. The skewness was found negative for negative to positive change in attitude through CRM, positive attitude towards sales promotion & sponsorship and for positive attitude towards CRM respectively -0.03, and This indicates that the normal distribution curve is negatively skewed and that the majority of the respondents opinions were lower than the mean. The standard deviation of respondents opinions towards impact of cause related marketing on brand popularity and sales as compare to sales promotion and sponsorship was highest for dimension ---consumers will buy products if linked with CRM and least for dimension consumers will buy products if linked with sales promotion & sponsorship Dimension CRM change attitude from negative to positive is second in terms of high standard deviation These high standard deviations indicates that there is a high polarization of the respondent s on the dimension consumer will buy products if linked with CRM, and CRM CHANGE ATTITUDE FROM negative to positive whereas least on the CONSUMERS will buy products if linked with sales promotion & sponsorship. Based on literature survey four hypotheses were developed and tested; the summarized results are presented below: a) The hypotheses related with consumers will not have more positive attitude towards CRM as an image enhancing marketing strategy, than they will towards Sales promotions and Sponsorships was rejected. At 95% confidence level the z-calculated value of is higher than the Z-critical value of 1.96, which apparently falls under critical zone. b) The hypotheses related to respondent s opinions of no significant difference on the two dimensions that is use of CRM can change of attitude towards brands from positive to negative as compare to Sales promotions and Sponsorships was accepted. At 95% confidence level, the z- critical value of 1.96 is higher than the calculated Z value of This shows that there is no/low significant difference. c) The hypotheses related to respondents opinions of significant difference for determinant customer prefer buying products linked with CRM products linked with sales promotions & sponsorship was accepted; At 95% confidence level, and 274 degrees of freedom; the F-critical value was 0.82 and the F-calculated value was 0.29 that fall under non-critical region and shows that there is high significance. d) The hypothesis related to no significant difference in respondents opinion over the all six determinants was rejected. At 95% confidence level and (6, 1638) degree of freedom, the F- critical value is 1.79 and the F-calculated values is which apparently falls under the critical zone. 37

11 Appendix1 QUESTIONNAIRE (Demographical Data) Q-1. Age O O O 31 Above Q-2. Qualification O Undergraduate O Graduate O Postgraduate O Other Q-3. Gender O Male O Female Q-4. Area of Profession O Marketing O Finance O Computer Science O Engineering QUESTIONNAIRE (Subject Data) [Encircle the numbers where 5 is strongly agree and 1 is strongly disagree] Q-5. Your attitude will be more positive if an organization use cause related marketing strategy for their brand popularity and sales development? Q-6. Your attitude will be more positive if an organization use sales promotion and sponsorship for their brand popularity and sales development? Q-7. Use of CRM for brand popularity and sales development can change your attitude from negative to positive: Q-8. Use of sales promotion and sponsorship for brand popularity and sales development can change your attitude from negative to positive: Q-9. You would like to buy brands which are linked with the cause related marketing campaign and generating funds for some specific cause: Q-10. You would like to buy brands which are linked with sales promotion and sponsorship: Q-11. Overall you like organization expediting CRM strategy: REFERENCES 1. Andreason, AR 1996, Profits for Nonprofits: Find a Corporate Partner, Harvard Business Review, vol. 74, no. 6, pp Belch, GE and Belch, MA 1998, Advertising and Promotion, International Edition, Irwin/McGraw Hill, U.S.A. 3. Bendapudi, N, Surendra, S and Bendapudi, V 1996, Enhancing Helping Behavior: An Integrative Framework for Promotion Planning, Journal of Marketing, vol. 60, no. 3, pp Cavill and Company 1997, The New Bottom Line, Melbourne, Australia. 5. Chandon, P, Wansink, B and Laurant G 2000, A Benefit Congruency Framework of Sales Promotion Effectiveness, Journal of Marketing, vol. 64, October, pp

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