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October 15, 2008

Cause Marketing Can Result In Sales Lift

Cause-related marketing can exponentially increase sales, in one case as much as 74 percent, resulting in millions of dollars in potential revenue for brands, according to the 2008 Cone/Duke University Behavioral Cause Study. Cone and Duke University’s Fuqua School of Business say that the report validates for the first time that cause-related marketing can significantly drive actual consumer choice.

During the first phase of the study at Duke University, 182 participants evaluated a new regional magazine and were exposed to either a cause-related or generic corporate advertisement for one of four focus brands. Afterward, they entered a mock convenience store with nearly 150 SKUs and were given real money to purchase a product in each of the four categories. Results revealed:

Substantial cause-related sales lift for two of the four consumer packaged goods categories tested:

• 74% increase in actual purchase for a shampoo brand when associated with a cause
• (47% of participants who saw the cause-related message chose the brand while only 27% of those who saw the generic corporate advertisement chose the brand)
• 28% increase in actual purchase for a toothpaste brand when associated with a cause
• (64% of participants who saw the cause message chose the target brand vs. 50% who viewed the generic corporate advertisement)
• Modest increases in the other two product categories tested (chips and light bulbs) – Qualitative consumer responses showed that the issue, the nonprofit and the inherent nature of products were key factors in making cause-related purchasing decisions and helped explain why movement in these categories was not significant.

In the second phase of the research, Cone and Duke validated the sales increases for shampoo and toothpaste by replicating the study online among a nationally projectable sample of more than 1,000 adults. The results revealed that participants spent nearly twice as long reviewing cause-related ads versus the general corporate advertisements. This resulted in a sales increase (19 percent) similar to the lab study for the target toothpaste brand. And although the shampoo brand increased only by a modest 5 percent, sales among its target audience of women increased by nearly 14 percent.

To complement the behavioral study, Cone conducted the 2008 Cause Evolution Study, to better identify what drove substantial product sales for only two of the four brands. The results found that consumers consider the following factors to be important when deciding to support a company’s cause efforts:

• 84% want to select their own cause
• 83% say personal relevance is key
• 80% believe the specific nonprofit associated with the campaign matters
• 77% say practical incentives for involvement, such as saving money or time, are important
• 65% find emotional incentives for involvement, such as it making them feel good or alleviating shopping guilt, important

Consumers Set Bar High for Companies, Even During Poor Economic Climate

The 2008 Cone Cause Evolution Study also revealed that consumers continue to have high philanthropic expectations for companies struggling amid the current economic crisis. More than half (52 percent) of Americans feel companies should maintain their level of financial support of causes and nonprofit organizations. Another quarter (26 percent) expects companies to give even more.

Fortunately for marketers, consumers are also more receptive to cause messages than ever before. They will reward companies that give back both with their goodwill and their wallets:

• 85% of Americans say they have a more positive image of a product or company when it supports a cause they care about (remains unchanged from 1993)
• 85% feel it is acceptable for companies to involve a cause in their marketing (compared to 66% in 1993)
• 79% say they would be likely to switch from one brand to another, when price and quality are about equal, if the other brand is associated with a good cause (compared to 66% in 1993)
• 38% percent have bought a product associated with a cause in the last 12 months (compared to 20% in 1993)

Priority Issues for Business and Society

The leading issues that Americans want companies to address in their cause programs are consistent with growing domestic and global needs. These are also issues in which companies can use their business scale and resources to have the greatest impact. The issues include:

• Education – 80%
• Economic development (i.e.: job creation, income generation, wealth accumulation) – 80%
• Health and disease – 79%
• Access to clean water – 79%
• Environment – 77%
• Disaster relief – 77%
• Hunger – 77%

Communication Disconnect

Almost uniformly (91 percent), Americans believe companies should tell them how they are supporting causes, but many do not feel they are getting sufficient information. Only 58 percent of Americans believe companies are providing enough details about their cause efforts. Half also think the government or other third parties should regulate cause marketing by companies.

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