Corporations up cause-related activity

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.