Cause-related marketing on the rise

The season of goodwill is upon us. Anxious marketers are looking for new ways to help consumers feel good about spending again in these times of war and economic decline. Contrary to fears that the weakening economy would deal a blow to charities dependent on donations this Christmas, a growing consumer desire to give something back to the community has led to a recent splurge of cause-related marketing campaigns.

The season of goodwill is upon us. Anxious marketers are looking for new ways to help consumers feel good about spending again in these times of war and economic decline. Contrary to fears that the weakening economy would deal a blow to charities dependent on donations this Christmas, a growing consumer desire to give something back to the community has led to a recent splurge of cause-related marketing campaigns. Businesses are hoping to boost sales and build brand loyalty by raising their corporate profile through mutually beneficial charitable partnerships.

Cause-related marketing programs, driven by the assumption that, if product cost and quality are equal, a customer will choose to buy the product associated with a charity, have always been popular, and are even more so post Sept. 11.

More than 80% of companies in Canada are actively pursuing goodwill-inspired marketing initiatives, according to Toronto-based marketing communications consulting agency Harbinger, which says this figure has increased significantly in the last 10 years.

As many as 88% of Canadians believe that businesses should do more than simply make a profit, create jobs and obey laws, according to the 1999 millennium poll on corporate social responsibility, conducted by Toronto-based Environics International. The same poll found that more than half of North American consumers had punished companies not perceived as socially responsible in the last year.

‘People want and expect companies to go beyond their traditional role,’ says Chris Coulter, VP at Environics. ‘We have also found that companies’ sense of ethical consumerism tends to be further ahead than the general public’s, which indicates that a further rise (in cause-related marketing) is expected.’

A 1999 study by Boston-based communications company Cone and international market research group Roper Starch Worldwide found that 78% of U.S. consumers were likely to switch brands due to a cause-related incentive, so it’s no wonder that more and more corporations are making the foray into cause-related activity.

‘After Sept. 11, people are wanting to connect with their community more than ever before,’ says Michael Smith, president of Oakville, Ont.-based Integram Marketing Group. ‘Marketers are seeing the commercial value of cause-marketing.’

In one cause-related promotion organized by Integram Marketing, The Beer Store teamed up with hockey ambassador Don Cherry for Reduce, Reuse, Replay, a program encouraging people to recycle used hockey equipment. This fall, visitors to the 433 branches of The Beer Store across Ontario were invited to drop off hockey equipment, to be distributed to needy children in the province. The promotion, which resulted in 170 bins full of equipment, each weighing 400-500 lb, was created as an extension to The Beer Store’s longstanding commitment to environmental protection.

‘We wanted to extend our commitment to recycling to take it beyond the reuse of bottles,’ says Jeff Newton, executive director of Brewers of Ontario. ‘This is a way of helping underprivileged children and driving traffic to the stores at the same time.’

Although this promotion was organized prior to Sept. 11, Smith says it came at an appropriate time, when consumers were crying out for some way to give back to society. ‘Because of Sept. 11, people are looking for a feel-good story and this fits the bill.’

Print and radio advertising supplemented the promotion.

John Torella, a retail analyst with Toronto-based J.C. Williams Group, agrees that cause-related marketing is on the rise among retailers. While the terrorist attacks may have a positive effect on giving in the short-term, Torella believes that the increased interest in this type of marketing is largely due to changing consumer attitudes, and is therefore likely to have continuing relevance in years to come.

‘In our research, one of the consumer attitudes that has emerged over the last four to five years is that this kind of activity certainly adds credence to the image of a store,’ he says. ‘Without doubt, it is on the rise.’

However, he adds that this kind of marketing presents a number of challenges to retailers. ‘They have to make sure that the causes they choose are relevant to their consumers. Consumers today are pretty astute and they want to know where their money is going. Some of the causes today have very high-reaching, lofty goals that people don’t really understand.’

According to Fran McDougall, national account director for Make-A-Wish Foundation of Canada, the increased interest in cause-related marketing of late is primarily due to a developing awareness of the sector and a change of cultural attitudes. ‘Schools today place a lot more emphasis on community volunteer work and the need to support charities than ever before,’ she says. ‘People entering the workforce now are the first generation to have been through that system. It’s a whole different tone and emphasis in the education system.’

In recent years, the Vancouver-based foundation, which grants wishes to children with life-threatening illnesses, has witnessed a ‘huge increase’ in the number of companies expressing an interest in forming partnerships, although no specific figures are available. Such alignments are individually tailored to suit each company. In one recent example, a Toyota dealership in B.C. donated $50 to the foundation for each Toyota purchased during October.

Despite the recent slump in the economy, McDougall has found that donations have not taken a dive as one might expect. ‘In times of depression we actually find that more people want to give to charity,’ she says.

Large, well-established charities with familiar names are often more likely to benefit from corporate donations than the smaller charities, as companies generally expect high name-recognition to lead to a more successful promotion. The Canadian Cancer Society (CCS), for example, has a long-running history of partnerships with numerous companies.

‘It’s a very good business move from a corporate perspective, and many more companies are starting to realize that,’ says Arlene Adamson, director of the society. ‘The number of partnerships is definitely on the rise.’ Many of the programs are ongoing.

Vancouver-based grocery delivery company Quick Home Delivery has benefited from cost-effective community partnerships since its launch. Quick has donated 2.3% of its top-line sales to non-profit organizations that refer new buyers to the company. It currently has 22 partners including the United Way of the Lower Mainland. When consumers make an online purchase from Quick using a referral number available on United Way’s Web site, the charity will benefit.

‘This is the day and age where companies have to make it a philosophical part of the business design to give something back to the community,’ says Jill McRae, director of community marketing at Quick. ‘Tis the season for more focus on giving
As we enter peak fundraising season, almost every major retailer is advertising some kind of charitable event or donation incentive to lure the good-spirited consumer. This year, retailers are trying harder than ever to fight the tight economy and do well by doing good.
Canadian Tire is enticing consumers to buy its artificial Christmas trees with the knowledge that for each tree sold, $5 will be donated to the Canadian Tire Foundation for Families, which supports needy families. Although the foundation has been operating for many years, this is the first year that the fund-raising promotion has been the focus of a national TV spot.
‘In previous years we have mentioned the foundation during a spot for Christmas decorations, but never before has it been the heart of the spot as it is this year,’ says Eymbert Vaandering, VP of marketing at Canadian Tire. ‘This year, part of our strategy was to focus on community giving and we wanted to make that clearer in our advertising.’
Tim Hortons, which is well known for its support of good causes, is holding a food drive in Toronto, whereby customers are invited to donate non-perishable food items to the stores, to be distributed to those in need.
‘I don’t think there’s any question that giving positive contributions to the communities where we operate reaps very high returns for the company from a customer loyalty standpoint,’ says Patti Jameson, VP, corporate communications at the TDL Group, (operator of Tim Hortons).
Corus Entertainment has also increased its focus on giving this festive season with the launch of a promotion through two of its Toronto-based radio stations. Mojo Radio and Classic Rock Q107 are asking listeners to call toll-free hotline numbers to pledge donations to buy Mattel toys for terminally ill or underprivileged children. The promotions, Toys for Boys (which is a partnership with Big Brothers of Toronto) and Cares for Kids (organized in conjunction with the United Way of Greater Toronto), run from Nov. 19 to Dec. 16.
While Corus has a history of organizing cause-related promotions, this is the first year that a partnership with Mattel has been forged. Sherry Bent, promotions coordinator for the stations, says that callers are always very generous at Christmas time, but this year, on the back of Sept. 11, there has been a particular demand for an outlet to give something to the community. ‘This year has been over the top, for sure,’ she says.
‘We feel that our listeners appreciate the fact that we are not just entertaining and informing but we are also doing things for the community this Christmas as well.’
Shoppers Drug Mart and the Toronto Maple Leafs have also jumped on the charity bandwagon by continuing their annual calendar campaign. The 2001/2002 calendars are now being sold in Shoppers Drug Mart stores in Ontario, to raise money for various charities. The retailer has pledged to raise at least $50,000 through this year’s initiative.
And CP Rail’s annual Holiday Train will make its third journey from Montreal to Vancouver, collecting food for the Canadian Food Bank. The train decorated with 8,000 lights will make the 6,000-km journey from Dec. 7 – 21, stopping at more than 50 towns and cities. This year, two trains will also operate in the U.S, making a special stop at New York City to honor the victims and heroes of Sept. 11.
For the first time, CPR is promoting the train with radio and PSA spots in some of the markets to be visited by the train. Print ads will also run in local newspapers, as in previous years.
Yet, even in this time of heightened marketing focus on goodwill initiatives, the number of sponsors has declined this year, with Hudson’s Bay Company now being the only major Canadian sponsor. General Electric is sponsoring both the Canadian and U.S. trains. Canadian Tire, which has been a major sponsor in previous years, is involved this year only in providing the lights for the train, as the retailer is focusing its fundraising efforts on its own Foundation for Families.
‘This year, all the companies are trying to save their dollars for things that are most important for them,’ says Lori Crawford, marketing communications manager at CP Rail. ‘They are all concentrating on their own fundraising initiatives.’ She adds that many companies will be making one-off donations, however. Despite the decline in sponsorship, CPR will be putting on a bigger show with more lights than ever and has high hopes of toppings last year’s record of 11 tons of food collected.