In 1983, American Express coined the term “cause-related marketing” (CRM) when it embarked on a charitable endeavor to renovate the Statue of Liberty. The effort netted $1.7M (roughly $4M today when adjusted for inflation) for the preservation of the Statue of Liberty and Ellis Island. Needless to say, CRM is now an integral business strategy used by businesses worldwide to gain a competitive advantage, enhance financial performance and strengthen their corporate image as a socially responsible citizen.
Yet, time and again businesses embarking on cause-related marketing endeavors are subject to public skepticism. Begging the question, is cause-related marketing strategically responsible? What about from the viewpoint of non-profits? And what of consumers?
Feel free to voice your opinion. I have compiled a short list of pros and cons just to get the conversation rolling.
- For-profits: Demonstrates that it is socially responsible citizen (i.e. corporate social responsibility)
- For-profits: Informs the public of its values
- For-profits: Gain a competitive advantage
- For-profits: Enhance financial performance
- Nonprofits: Publicity and marketing related to CRM
- Nonprofits: Additional source of funding
- Consumers: Demonstrates that they are socially responsible citizens
- For-profits: Campaigns often have little to do with the company’s main business, thus businesses are susceptible to public skepticism and/or cynicism
- Nonprofits: Blurs the lines between business and philanthropy, i.e. being involved in for-profit activities
- Nonprofits: Relieves the government and corporations of solving large scale social problems and places them squarely on the shoulders on consumers and charities
- Nonprofits: Charities that are not female-centric do not draw much interest from corporate marketers because women are the primary purchasers of consumer products
- Nonprofits: Business objectives can supersede humanitarian objectives
- Nonprofits: Reduction in direct donations from the general public, as donations are now made through consumer transactions
- Nonprofits: If an involved party has a damaged reputation, the other party may be perceived negatively as well
- Consumers: In instances, businesses will cap charitable contributions but will continue campaign-related product sales (deceptive marketing)
- Consumers: Funds can be unrestricted so overhead costs can be covered by CRM funds (deceptive marketing)
Article adapted from: Charities shouldn’t let corporate marketers set the agenda