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.

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