Cause-related marketing of products with a negative externality

Abstract

Firms increasingly develop partnerships with non-profit organizations (NPO) to support a cause and improve their corporate image. This type of Corporate Social Responsibility, called Cause-Related Marketing, commits firms to fund associations that encourage environmental protection, international development, and other causes by donating part of their profits. In this article, we argue that when cause-related marketing is applied to products with a negative externality, these a priori win-win arrangements can generate adverse and unexpected effects. We consider a vertical differentiation model integrating two assumptions. First, consumers may perceive the firm's contribution to be higher than the actual donation. Second, consumers who value highly socially responsible behavior may prefer not to consume rather than consuming products that aren't socially responsible. In this set-up we identify several possible counter-productive effects such as the likelihood of increase of the externality and the crowding out of direct contributions. We also draw policy and managerial implications.

Increasing Consumers’ Hypermarket Visit Intention through Cause-Related Marketing: A Perspective from the Theory of Planned Behaviour

“…This study on CRM differs from others in two ways. First, others have focused on social cause or product factors, such as the influence of the social cause category on consumer perceptions (Lafferty & Edmondson, 2014) and products of CRM with negative externalities possibly leading to unexpected effects (Grolleau et al, 2016). The literature that has looked at consumer and firm factors such as consumers' CRM attitude and the firm's CSR image is limited.…”

Guest editorial

“…The practice particularly of international CRM has increased exponentially during the last decades, with more and more companies engaging in it (Koschate-Fischer et al , 2012; Roggeveen and Beitelspacher, 2019). CRM can be defined as a form of interorganizational collaboration (Hadjikhani et al , 2016) that supports health, environmental protection (Singh et al , 2011; Grolleau et al , 2016) or other relevant causes by donating part of business profits (Grolleau et al , 2016) or simply marketing with a worthy cause (Lafferty et al , 2016). Hence, when consumers purchase a “cause-related” product (Krishna, 2011; Robinson et al , 2012; Andrews et al , 2014; Grolleau et al , 2016), they are concurrently motivating a company donation to an environmental or socioeconomic cause (Koschate-Fischer et al , 2016).…”

The impact of the macro-environment on consumer scepticism towards cause-related marketing

“…(b) CRM and its related outcomes (Ballings et al, 2018;Chang et al, 2018;Christofi et al, 2013;2015b;La Ferle et al, 2013;Grolleau et al, 2016;Heidarzadeh Hanzaee et al, 2019;Hartmann et al, 2015;He et al, 2019;Howie et al, 2018;Mora and Vila, 2018;Srivastava, 2018;Parris and Peachey, 2013;Varadarajan and Menon, 1998;Yang and Yen, 2018); and (c) factors influencing consumers' evaluations and attitudes toward CRM (Howie et al, 2018;Bergkvist and Zhou, 2019;Chang et al, 2018;Cui et al, 2003;Hamby and Brinberg, 2018;Mora and Vila, 2018;Ladero et al, 2015).…”