Cause-related marketing is the mutually-beneficial partnering between a charitable initiative and a for-profit corporation with the purpose of increasing sales for the corporation by promoting the cause of the not-for- profit.
CRM can be an extremely effective marketing tool. According to results from a study, around 90% of consumers are likely to switch to a comparable brand if it associates with a good cause. People often feel good about buying products that align with a cause, with so-called “ego-utility” offering consumers a philanthropic boost to their self-image.
An example is McDonald’s McHappy Day, donating $1 from selected product sales to Ronald McDonald Houses and other local charities. This initiative has raised over $46 million for children in need, and saw significant sales boost for these key products.
It’s a nice way to sweeten the deal. Do a little good deed, get some good, warm and fuzzy brand awareness.
But is it possible to sweeten the deal too much?
A 2017 paper by Dubé, Luo, and Fang in Marketing Science found just that. They looked at the impact of combining their offering with a donation to charity and a price discount. The participants in their large-scale field experiment report lower levels of “feeling good about themselves” when discounts coincide with a generous donation.
When combining a cause-related promotion with a discount, they found the discount crowded out the feelings associated with charitable donations.
The discount removes the consumers chance to feel good about the donation by delivering direct, more selfish benefits to them. This shows that self-image motives drive consumers, not the consumption utility of a lower overall purchase price from the discount. I guess it is possible for the deal to be too sweet!
Marketers! This is your cue to keep it simple. Choose either discount or donation, but not both at the same time – otherwise you risk cancelling out your good deeds.