Successful Cause-Related Marketing Partnering as a Means to Aligning Corporate and Philanthropic Goals: An Empirical Study

INTRODUCTION As companies look towards a more strategic approach of incorporating philanthropic activities, firms are examining various avenues to align these activities with brand and corporate goals (Varadarajan and Menon, 1988; Fellman, 1999). Cause-Related Marketing (CRM) has emerged as a framework to strategically align both business and charitable goals. CRM refers to corporate social responsibility activities, including offers to contribute a portion of the price of a product or service to a charitable organization. The key feature of CRM is that the charitable contribution is contingent upon the consumer engaging in a revenue producing transaction with the firm (Varadarajan and Menon, 1988). While, several components of CRM have been analyzed, (see Lafferty, Goldsmith and Hult, 2004; Lafferty and Goldsmith, 2003) few CRM studies (i.e. Pracejus and Olsen, 2002; Lafferty and Goldsmith, 2003) have been all-encompassing, and included both antecedents of successful partnerships and outcomes of CRM for the firm and brand. The purpose of this study is multi-faceted. First, this study advances the literature on the factors necessary for successful CRM partnerships from the for-profit firm's perspective. Second, associative learning theory will be applied to build the framework of the antecedents and consequences of successful CRM partnerships. Third, word-of-mouth promotion will be included as a new consequence of a successful CRM partnership as posited in a paper by Thomas, Fraedrich, and Mullen (Forthcoming). CRM PARTNERSHIPS While the vast majority of CRM research has focused on corporate involvement and consumer behavior, a few studies have investigated the effects of the "quality of the CRM partnership" (e.g. Till and Nowak, 2000; Pracejus and Olsen, 2002; Kalligeros, 2005; Lafferty, Goldsmith and Hult, 2004; Lafferty and Goldsmith, 2003). Studies suggest that firms with high levels of compatibility between the core business and social activities are viewed more favorably than firms who have lower levels of compatibility with the social activities (Brown and Dacin, 1997; Sen and Bhattacharya, 2001). Building on the work of Strahilevitz and Meyers (1998), which hints at the possibility that compatibility between firm and charitable cause may impact the success of CRM activities, Pracejus and Olsen (2002) directly investigated this phenomena. The authors found that compatibility does impact CRM success. Additionally, they extend other research into elements of compatibility, such as those between brand extensions and core brands (Aaker and Keller, 1990, 1993), and composite brand alliances (Park, Jun and Shocker, 1996). When core brand and extension compatibility is strong, the extensions have been found to enhance evaluation of the core brand (Aaker, and Keller, 1990, 1993). Similarly, studies of composite branding alliances found that greater compatibility leads to greater success (Park, Jun, and Shocker, 1996). These studies and others (e.g. Kamins, and Gupta, 1994) suggest that consumer attitudes towards brands are increased when compatibility is high. Pracejus, and Olsen (2002) note that CRM is similar to brand alliances because CRM links a brand to another object, the charitable cause. Therefore, CRM partnerships with strong compatibility should have improved performance, such as, increased consumer attitudes toward the brand and firm, and thus a higher likelihood of purchase by the consumer. Using choice-based conjoint analysis, Pracejus, and Olsen (2002) examined the compatibility between firm/brand and charitable cause, how this relationship impacts CRM success, and the magnitude of the effects. Results indicated that CRM impacts consumer choice, and that firm/brand and charitable cause compatibility increases this effect. Specifically, in the first study, Pracejus and Olsen (2002), found that CRM campaigns with a high degree of compatibility between brand and charity have nearly five times more impact on choice, in terms of price trade-off than do campaigns with a low degree of compatibility. …