Selling for a cause

February 12, 2009

I’ve been thinking a lot lately about what’s called cause-related marketing– businesses teaming up with charitable causes, as when a company donates a portion of an item’s price to a charity. I’ve been wanting to do this myself, because there are several causes that I care about and would like to find a way to support.  And if I’m going to do it, I want to do it right– in a way that really helps the charity and doesn’t hurt my business. There are a number of issues at play, and if done without careful reflection, the whole thing can backfire, which won’t do the business or the cause any good.

The factors are too numerous to address all in one blog post– so for starters, we’ll go with this study*, where the researcher has looked at the issue of how much to give per item, what type of items work best, and whether to frame the donation in terms of cents or percentage.

Now, in a way, a sale and an ’embedded premium’ like donation to a charity with purchase are very similar– the business is giving away a cut of the price to someone, either by letting the buyer keep it themselves (as in a sale) or by giving it to a charity. But psychologically, it seems to be very different. 

The researcher found that unlike in sale discount situations, it was more effective to frame a donation in terms of a flat dollar (or cents) amount rather than a percentage.  Presumably for the same reason– while in a sale you want to mask somewhat the actual price of the item to protect future expectations about price, in a donation context you want it to be crystal clear exactly how much will be given.  Having to calculate the amount will make the exact amount more ambiguous (especially with the remarkably inspecific “percentage of profit” framing– as if we the buyers have any way of knowing what the profit is).  If you’re donating, it’s good to be as clear as possible about the amount.

They also found that charity-donation promotions were more effective when the product was a ‘frivolous’ rather than practical item. If people are looking for an excuse to buy something they want but don’t really need, donating a portion of the price to charity will offset their guilt a bit and give them a little more incentive to buy. With practical items, that doesn’t come into play so much.  Plus, there’s an emotional element to giving that doesn’t get activated as much when people are buying practical items.

Now here’s the part that most surprised me– The donation campaign was more effective a) when the items in question were low-priced and b) when the amount of the donation was low. Donating a larger portion of higher-priced items (in the study, a printer or electronic dictionary) makes people more skeptical about the motivations of the company in offering the donation, and makes them wonder a bit about the quality of the item– is the price being inflated so they can give so much to charity? (If you really want to donate a percentage of a more expensive item, here’s where framing the donation as a percentage may be useful).  I guess that makes sense, but I would have thought that if giving a little was good, then giving more would be even more of a draw. Apparently not!

By far the most effective form of donation amount was when it was a small amount of an inexpensive (and frivolous) item.  That means more sales for the business and, more importantly, more money for the charity as a result of the campaign.

 

* Chang, C. 2008. To donate or not to donate? Product characteristics and framing effects of cause-related marketing on consumer purchase behavior. Psychology and Marketing 25:12, 1089-1110.

Advertisements

Ok, so you want to give a discount. After deciding how much you can afford to mark off, the next question may be whether to frame it in terms of a dollar amount off or a percentage off.  But which is better?  Is there any reason to think one is more effective than the other?

As it happens, yes, there are some differences. Some of the issues at play here include first of all, which is more effective at getting people to buy during the promotion; secondly, how does it affect whether people will buy after the promotion is over? Does the depth of the discount make any difference in all this? And how might the discount effect people’s expectations about the price once the promotion is over with? 

DelVecchio, Krishnan, and Smith (2007) ran a few studies to look at these questions, and found that, in a deep-discount situation, a percentage-off, being ever-so-slightly more demanding to calculate, leads people to expect higher prices when the discounted item isn’t on sale. This is good, because you don’t want people to find your regular prices too high, and you want to minimize any negative price-quality inferences they might make based on sale price.  And it seems that during the sale itself, people respond equally well to (meaning they’ll buy) both percentages off and cents-off.  So there are a couple reasons why percentages off are better, and no strikes against.

The same basically holds true for the period after the sale ends. There’s a bit of a difference between deep discounts (about 40% off in this study)and lower-depth discounts (15% off), in that the percentage-off deep discounts enjoyed greater sales than the cents-off deep discounts.  Not much difference was found between the two frames for lower-depth discounts.

Take-home message: if you’re going to offer deep discounts (and recall that that’s not necessarily a good long-term strategy), express them in terms of a percentage off, preferably not a super-easy-to-calculate percentage off. The reason behind the advantages of percentage-off sales seems to be the increased difficulty of making the calculation, so if you hand customers an easy problem like “50% off”, it kind of ruins the effect.

 

DelVecchio, D., H. Krishnan, and D. Smith. 2007.  Cents or Percent? The effects of promotion framing on price expectations and choice. Journal of Marketing 71: 158-170.

Raised chocolate waffles

February 8, 2009

My New Year’s Resolution was to eat more waffles– specifically, on Sundays when I am home, I will make waffles. Preferably a different recipe every week, but we’ll see how sustainable that is. Last week I discovered yeasted waffles– these buckwheat waffles are my favorites so far– a crispy outside and soft inside that I had never imagined possible. For an early Valentine’s Day treat, I wanted to try chocolate waffles, but I wanted the crispy goodness of yeasted waffles and couldn’t find any recipes that fit the bill. So I adapted the buckwheat waffle recipe for my purposes. Had them this morning with a bit of maple syrup, but I bet they’d be good with cherry preserves, too…

1 pkg yeast (2 1/4 tsp.)

2 c. lukewarm milk

1/2 stick melted butter, cooled to warm

1 tsp salt

1/2 c. sugar

2 c. all-purpose flour

1/2 c. cocoa powder

1/4 – 1/2 tsp cinnamon

1/2 tsp vanilla

2 eggs, beaten

1/4 tsp baking soda

The night before you want to eat them, mix together in a large bowl the yeast, milk, butter, salt, sugar, flour, cinnamon, cocoa powder. Cover loosely with plastic wrap and let sit out on the counter overnight (if you live somewhere warm, maybe put it in the fridge).  In the morning, mix in eggs, vanilla, and baking soda.  Pour about 1/2 c. into your preheated waffle iron. Enjoy.

Ok, enough with the chicken feet already. Back to work.

I keep coming back to this product line variety question. It’s important to me because people’s opinion of how much variety I offer and of what sort can form very quickly, and whatever judgment they come to in that first crucial moment or two can color their perceptions from that moment on. If they decide I offer a good variety and am a master of my craft, they’re more likely to browse and then buy. If they decide my variety isn’t so good and that I don’t look focused enough, nothing will change their minds.  I make the art I make, sure, but if small details of presentation can make the difference in how people see my work, well, I want control over that. And as much as art is different than any other product, still, as an artist you can make what you make, but the moment you try to sell it, it’s a product and you’re working in an economic world. Best come prepared.

Anyway, yeah, variety. Earlier research I looked at indicated that a) being very focused in your product offerings leads people to believe that you are better at doing what you do, and therefore, your product is better, and therefore, they’ll be willing to pay more for it; and b) the variety has to be within-category, other wise you don’t look like an expert. This led me to wonder a bit about, in the arts, what counts as operating within one category.  And how much leeway do we have?

So now a little more on categorization.  Categories can be broad or very fine-grained, and a couple of things contribute to this.  One thing is expertise– if  a person is very familiar with the overall category, they’ll be able to chop the domain into smaller pieces.  So if you’re not into, say, fine tea, tea is tea is tea. But if you’re a tea expert, you break it down much more– you’ve got your black, green, yellow, white, oolong, pu-erh, pouchongs and souchongs…and then your growing regions, tea estates, and leaf size. 

Apparently* another way that finer-grained categorization can happen is just through preference– and not just because preference often leads eventually to expertise.  In this study, the researchers showed people unfamiliar symbols, and showed the symbols with either positive or negative photos.  Then they had them sort the symbols into categories (according to ‘meaning’). The symbols that had been shown with positive images ended up in more categories than symbols shown with negative images.  This suggests that just liking things allows you to find more distinctions among them.

I take this to mean that some things about presentation of art are going to be self-fulfilling– people who don’t know anything about your work, materials, or technique and who decide from the get-go that they don’t care for your style– you’re just not going to be able to win themover.  They won’t see the variety you actually have, and thus they’ll be less likely to see your craftsmanship, product quality, and be less impressed with your selection. Don’t worry about them.

On the other hand, those who take to your work immediately will stay and look, all the while thinking and seeing more and more detail and gettinghappier and happier.  For them, you don’t want to bee TOO focused–catch their eye with a nice variety of items with small differences so that the more they look, the more variety they’ll perceive, and that will cycle back into them liking the work more. 

And I’d guess that how widely you want to draw your categories to begin with depends on who your customer is. If they’re folks who already know a lot about art, you’ll want your offering to be more focused. But if they’re new to your work or only occasional consumers of your type of product, you can perhaps be a little freer to offer different types of things (within limits).  Think about a glass jewelry maker like Kevin O’Grady who sells mainly to collectors, and offers mainly bracelets, vs. a glassworker who sells to the public at art fairs and offers pendants, necklaces, bracelets, earrings, cufflinks, hair barettes, brooches, etc. etc. 

 

*Smallman, R. and N. Roese. 2008. Preference invites categorization. Psychological Science 19:12, 1228-1232.