academic paper - cause-related marketing v2.3

Cause-Related Marketing versus Fixed Sum Donation !1

Corporate Philanthropy - The difference in perception among Dutch consumers

between Cause-Related Marketing and Fixed Sum donations.

Anton Floor

Academic Paper for the Pre-Master Marketing

Drs. Ingmar Leijen

Vrije Universiteit, Amsterdam

June 2016


Content

Summary 3Introduction 4Theoretical Framework 6

Motivations for Corporate Philanthropy 6

Efficacy of Cause-Related Marketing and Fixed-Sum Donations 7

Moderating variables to the relationship of Corporate Philanthropy and consumer intention 9

Research Design 11Measures 11

Scales 13

Data Collection 13Descriptive statistics 14

Participants 14

Scale Means 15

Correlation 15

Results 16Conclusion & Discussion 17Limitations & Future research 19Bibliography 21


SUMMARY

“There's no such thing as altruism” - Andrew Tobias

Taking the developments in the area or corporate philanthropy into consideration, one may almost

agree with Mr. Tobias. The philanthropic activities of corporations, with their high focus on brand-

exposure and return on investment, have little to do with sincere interest in giving back to the

community. Yet, even though pure altruism may not exist, the perception (or even illusion) of

altruistic motives does exists and influences attitudes and behavior.

This paper investigated a specific area within corporate philanthropy: the difference between Cause-

Related Marketing, where the donated amount depends on the sales quantity, and Fixed Sum

donations. Corporations use these methods to support a cause they believe in and benefit from that

donation by positive consumer-company identification.

This study found that, for being perceived as more altruistic, corporations should implement fixed

Sum donations as opposed to Cause-Related Marketing. The impact this choice has on consumer

attitude is almost fully mediated by perceived altruism. There is a difference between corporations

with varying reputations. A company with a bad reputation may benefit more from Fixed Sum

donations and would even be punished harder for using Cause-related Marketing than corporations

with a good reputation. Those corporations with a good reputation can ‘get away with’ Cause

Related marketing far more easily.

This study also revealed that the brand/cause fit influences this relationship. The negative impact of

the choice for Cause-Related Marketing on perceived altruism will be reduced when the consumer

sees the corporation and non-profit as fitting well together.

Organizations will have to pursue valid self-evaluation to gain insights in their reputation among the

public. Only then it will be possible to fully evaluate the choices organizations can make regarding

the type of donations and the cause with whom they want to identify.


Corporate Philanthropy: The difference in perception among Dutch consumers

between Cause-Related Marketing and Fixed Sum donations.

INTRODUCTION

Corporations nowadays work in a context of global competition and high public scrutiny (Cautier,

2015). Where in the old days it would have been sufficient to deliver proper quality products and

services in exchange for a fair price, companies are challenged to change their ways in response to

changing demands. Since a few decades, firms are under increasing pressure to work ethically,

behave in socially responsible ways and give something back to society (Mohr, 2001). This context

has set the stage for an increase of corporate philanthropic activity. Corporate Philanthropy is a

fascinating subject, due to its position on the crossroads of business and society (Cautier, 2015).

However, managers struggle to find tangible guidelines on how to optimize the use of Corporate

Philanthropy as a business strategy, regardless of their motives to do so. A corporation can have

motivations balancing between altruistic and commercial. Two well known forms of corporate

philanthropy are Cause-Related marketing and Fixed Sum donations. Contrary to Cause-Related

Marketing, Fixed-Sum Donations are not connected to customer engagement/activities. The

organization donates a fixed sum of money or effort (e.g., employee time) to a charitable cause. It is

expected that Cause-related marketing, due to its connection to customer engagement/activities, is

perceived as less altruistic and thus has a negative effect on consumer attitude towards the

corporation when compared to strategies of Fixed Sum donations. This paper aims to add specific

knowledge towards that relation and attempts to give managers tangible solutions for decision-

making on this topic.

At the basis of the choice between Cause-Related marketing and Fixed Sum donations lies the

motivation of the firm. In the past few decades some research has been conducted to why firms do

this in the first place. Cautier and Pache acknowledge the fact that Corporate Philanthropy seems to

be an oxymoron, since giving away money contradicts the commercial, profit-making purpose of a

company (Cautier, 2015). This paper further examines this balance between business and social

responsibility motives using the definition for Corporate Social Responsibility that was initially

proposed by Petkus and Woodruff (1992) and used in the paper about the impact of Corporate

Social Responsibility on buying behavior by Mohr, Webb and Harris (2001): Corporate Social

Responsibility is a company’s commitment to minimizing or eliminating any harmful effects and


maximizing its long-run beneficial impact on society. Mohr et al. specified important areas of

responsibility, such as obeying the law and ethical norms, treating employees fairly, protecting the

environment and donating to charity. Cartier et al. speak of “the pyramid of corporate social

responsibility”. At the basis of the pyramid there is the economic responsibility (i.e., being

profitable), then come legal responsibilities (i.e., obeying the law), ethical responsibility (i.e., doing

what is right) and finally a voluntary element of giving something back to society (Cautier, 2015).

The latter has most connection with the term Corporate Philanthropy. In their article on corporate

sponsorship and Cause-Related Marketing, Polonsky and Speed (2000) define Corporate

Philanthropy as “ [the act of] returning or investing a share of the company’s profits into the

community”. This is still a rather broad definition, but does however imply an active process of

donating funds and/or employee time to social causes. To answer the research question the paper

will first study firms’ motivations to pursue corporate philanthropic activities.

This paper will then turn towards the two mentioned constructs of Corporate Philanthropy: Cause-

Related Marketing and Fixed Sum Donations. This paper follows Varadarajan’s et al. definition of

Cause-Related Marketing: “the process of formulating and implementing marketing activities that

are characterized by an offer from the firm to contribute a specified amount to a designated cause

when customers engage in revenue-providing exchanges that satisfy organizational and individual

objectives” Varadarajan, Rajan & Menon (1988).

This paper aims to answer the following question: “What is the difference in perception among

Dutch consumers between Cause-Related Marketing and Fixed Sum donations?” The answer to this

research question will be retrieved by researching as to what Corporate philanthropy is, what the

benefits of either Cause-Related Marketing and Fixed Sum donations are, and what influences the

effect of either donation mechanism on consumer behavior.

This paper will seek answers in existing literature to the question of efficacy of Cause-related

Marketing and Fixed Sum donations respectively. Finally, the paper will conclude with own field

research into the relations in the mentioned constructs and potential moderating or mediating

variables that may be of influence.


THEORETICAL FRAMEWORK

Motivations for Corporate Philanthropy According to Varadarajan, Rajan & Menon (1988) corporate involvement in social well-being

initially started as a voluntary response to social issues and problems in the United States. Despite

the loss of profit corporations decided to invest in the community for altruistic reasons. Until a

supreme courts in New Jersey determined otherwise, corporations were limited in the amount they

could donate to social causes because it would not be in the best interest of the corporations’

stockholders.

Polonsky and Speed (2000) noted that the traditional concept of Corporate Philanthropy was

founded on altruism and involved the firm making contributions of cash or kind without an

expected tied benefit. Corporations recognized they acted in an environment that allowed them to

operate and Corporate Philanthropy was considered to be returning or investing a share of the profit

into the community. A next phase in the development of Corporate Philanthropy was defined by

increasing pressure of stockholders to engage in social responsible actions that did not necessarily

attribute to the companies’ profits.

Since the late 80’s the trend seems to have bent to a nuance between voluntary and mandatory

corporate philanthropy. Varadarajan et al. (1988) quote Stroup & Neubert when stating that

Corporate Philanthropy seems to be driven by the concept of “enlightened” self-interest. It is not

pure altruism anymore that pushes corporations to socially responsible behavior, it is the realization

that it is necessary for their survival. Increasing homogeneity of products and services and the

increasing competition that is a result of this phenomenon make that corporations have to look

further for the competitive advantage. In addition there is the increasing demand from the market to

perform in a socially responsible manner. Corporate Philanthropy is increasingly being treated as an

investment in the long-term sustainability of the organization. The aim is to help valuable causes by

putting funds and means to their disposal and on the other hand creating value for the company by

working towards the company’s objectives.

Corporate Philanthropy and Corporate Social Responsibility activities increase levels of customer-

company identification (Lichtenstein, 2004). This, in turn, influences (indirectly) revenue, brand

recognition and brand equity. Positive association is the key element in this cooperation.

After these changes in history we can hardly speak of altruistic motives for sponsorship. Corporate

Philanthropy has basically become a marketing tool. This is well amplified in the Cautier and


Pache’s (2015) review and assessment article about Corporate Philanthropy. They place the motives

for companies to engage in philanthropic activities on a scale between altruism and for profit. They

position the mentioned motives like commitment to do good, investing to keep a competitive edge

and Corporate Philanthropy as a marketing tool on the spectrum.

The scale is illustrated below.

In their article about consumer reactions to Corporate Social Responsibility, Sankar Sen and

Bhattacharya (2001) show that there is a positive influence of Corporate Social Responsibility

behavior on the corporation’s image with consumers. It increases consumer-company congruence

and influences their intentions for action. However, a very important take-away from their research

is that the negative Corporate Social Responsibility (a company acts in a socially irresponsible way)

has a far greater negative influence than positive influence in the opposite direction. Without going

into further detail on the differences in approach (Cause-Related Marketing vs. Fixed-Sum

Donations) it concludes that managers need to be vigilant when implementing Corporate Social

Responsibility strategies.

This paper will further examine the relationship between Corporate Philanthropy - which is one

expression of corporate social responsibility - and consumer attitude through the mediating variable

of perceived altruism.

Efficacy of Cause-Related Marketing and Fixed-Sum Donations

What the first execution of a Cause-Related Marketing campaign has been, remains debated. Yet,

many authors refer to the 1983 campaign by American Express as the first widely successful one. In

order to gather funds for the renovation of the Statue of Liberty, American Express promised to

donate one cent for every transaction with one of their credit cards and 25 US Dollars for every

new card that was issued during a specific time. American Express saw its revenue rise by 28%

compared to the same period in the prior year and saw a sizable increase in the number of new cards

issued. Since the late 80’s Cause-Related Marketing has become more accepted and by the turn of

the millennium the annual spending on Cause-Related Marketing campaigns in the United states

topped 300 Million (Dean, 2004). It is estimated that corporations currently spend over one-and-

half billion dollars on Cause-Related Marketing campaigns annually.

Altruistic For-ProfitCommitment to the common good

Charitable

Investment to keep a competitive edge Community Investment

Marketing Tool

Commercial


The closest examination of the differences between Cause-Related Marketing and Fixed-Sum

Donations has been done by Dwane Hal Dean. He investigated the difference in perception towards

the two different approaches of Corporate Philanthropy among under-graduate students. The

moderating variable in his hypotheses were the firm’s reputation. He identified three levels of social

responsibility among firms: irresponsible, average and scrupulous. He concludes that: - Scrupulous firms have little to gain from a single donation. - Irresponsible firms increase their favor among consumers, regardless of the type of donation

mechanism.- From average firms Fixed-Sum Donations are better perceived by consumers than Cause-Related

Marketing campaigns. - A single donation or campaign does not make an irresponsible firm scrupulous in the perception

of consumers (Dean, 2004).

Besides that he added that, “Disproportion between the promotion budget allocated for the

campaign (which stimulates demand for the firm’s products) and the final donation may suggest a

lack of sincere interest on the part of the corporation in the cause”.

Mohr, Webb & Harris (2001) claim that in a direct comparison Fixed-Sum Donations shows better

results than Cause-Related Marketing in terms of evaluation by consumers. They recognize five

variables that affect the efficacy of Fixed-Sum Donations and Cause-Related Marketing: - Attitude towards business in general- Level of Corporate Social Responsibility desired- Attitude towards SR firms- Perception of firms’ motives- Impact of Corporate Social Responsibility on Consumer Behavior (dependent)

The qualitative research gives no substantial evidence for the impact of these variables on the

dependent variable. More evidence towards the claim that these variables influence perception is

brought in by Barbara E. Kahn (2001) in her paper on Corporate Sponsorship and Philanthropic

activities. With her two-part study among undergraduate students she showed that when someone

has an ulterior motive for a particular behavior the resulting suspicion can result in less favorable

perceptions.

In their article Barone, Miyazaki & Taylor (2000) come to the conclusion that Cause-Related

Marketing does indeed positively influence Consumer choice. They too acknowledge the

moderating variable of perceived motivation of corporations to donate money to a specific cause.


Compared to other research the most differentiating approach may have been the examination of the

influence of a potential trade-off. In their surveys they found that people may be willing, under

specific circumstances, to trade off price and quality for a contribution to a cause. The trade-off

functions as a boundary condition for Cause-Related Marketing, according to the authors. It limits

the extent in which corporations can use the donation mechanism.

Even though there is no full consensus about the details, most researchers agree that Corporate

Philanthropy can attribute to better consumer perceptions, brand image and brand equity. The

practice of Cause-Related Marketing has been evaluated a number of times and the overall take-

away is that it can be an effective strategy, under the right circumstances. One of those

circumstances, as discussed above without quantification, is the perceived altruism. Another

variable is the perceived brand/cause fit. Both have not been quantified in the mentioned studies.

This paper aims to fill that gap.

From this previous research the following hypotheses comes forth:

H1: The choice in Donation mechanism negatively relates to consumers’ attitudes when

implementing cause-related marketing over fixed sum donations.

H2: Perceived altruism mediates the relationship between corporate donation mechanisms

and consumers’ attitudes.

Moderating variables to the relationship of Corporate Philanthropy and consumer intention In his article about sponsorship and Cause-Related Marketing, Polonsky (2000) concluded that a fit

in Cause-Related Marketing campaign is vital, since it is taken as a signal of sincerity. Barbara

Kahn agreed when she stated that, “higher congruence between philanthropic activity and the

sponsor brand will result in more positive perceptions of [Corporate Philanthropy]” (Kahn, 2001).

Brønn added that Cause-Related Marketing works if consumers feel that there is a long term

commitment to a cause. Cause-Related Marketing needs to be strategic. Only a consistent,

believable contribution to a cause (or non-profit) can build brand image and brand equity (Brønn,

2001). The cause must resonate with the customer base. Best effects are seen with corporate brand

strategies or retailers that use their name as main brand (Lichtenstein, 2004).

Three studies, conducted by Strahlevitz & Meyer, provide strong evidence that charity incentives

are more effective with frivolous products than with practical products. Not so much the

combination between the cause and the product, but more the product itself determines the


motivation to donate. One of the presented explanation in the literature is the increased feeling of

guilt when comparing the donation to the luxury good one is purchasing (M. Strahlevitz, Myers,

J.G., 1998). This is confirmed in Strahlevitz’ 1999 research (M. Strahlevitz, 1999). However, here

he makes the distinction in size of the donation. Large donations do better with the frivolous

purchases while smaller donations work better with practical products.

Perhaps the most comprehensive work on the subject comes from John Pracejus in his article about

the role of Brand/Cause fit in the effectiveness of Cause-Related Marketing campaigns. He claims

that even though high-fit Cause-Related Marketing campaigns work much better than low-fit

campaigns (about five times as effective), the cost is still higher than can be justified in terms of

short-term sales. The real benefit for organizations, according to Pracejus, lies in long term results

in terms of brand image and brand equity (Pracejus, 2004).

Taking all information from prior literature into consideration it becomes clear that the impact of

Corporate Social Responsibility is substantial and needs to be used with a clear strategy in mind.

The literature is overall in agreement that both variables of corporate philanthropy can be effective,

taking specific circumstances into consideration. However, the exact difference in perception of

Fixed-Sum Donations and Cause-Related Marketing campaigns has been neglected. Especially the

moderating variables of brand/case fit and firm reputation lack quantitative data to support claims

about their impact.

The two moderating variables which come forth from previous research are the perceived fit

between de brand and the cause and the company’s reputation. To further examine these two

moderating variables more research is needed. The hypotheses for this following research are

therefore:

H3: A good reputation of the firm will positively moderate the relationship between donation mechanism and perceived altruism. H4: Brand-Cause fit positively moderates the relationship between donation mechanism and perceived altruism.

Illustration 1: Hypotheses


RESEARCH DESIGN

To test the hypotheses relating the impact of corporate philanthropy (h1), the difference in

perception between Cause-Related marketing and Fixed Sum donations (h2) , and the impact of the

two moderating variables (h3 and h4) this study used a 2 (Cause-Related marketing or Fixed Sum

donations) x2 (good firm reputation or bad firm reputation) x2 (good brand/cause fit or bad brand/

cause fit) in between subject design. Samples were drawn by convenience. The subjects were

presented with a survey through the online platform Qualtrics. Firm reputation, type of donation

and, the brand/cause combination were presented to respondents as separate, written scenarios, each

followed by a questionnaire on the same page.

Measures The reputation of a firm was manipulated in two ways: scrupulous firms and irresponsible firms.

This factor was operationalized with two written scenarios of an athletic-shoe company (Brand X),

describing the company as either scrupulous or irresponsible.

The scrupulous firm was presented as follows:

“ A well-known athletic shoe company (we will call it Brand X instead of its real name) is at a crossroads. A long-serving CEO is retiring and a new person will be stepping in to lead the company. The former CEO strived to balance the needs of investors against the social obligation of the company to benefit its employees and customers. As an example, this obligation was interpreted to extend to the employees of subcontractors doing outsourced production for Brand X in Indonesia and other Asian countries. Brand X inspectors rigorously enforced company policies to ensure that subcontracted employees were given adequate working conditions, subsidized healthcare, and education benefits. In addition. Brand X helped subcontracted employees organize the equivalent of a savings and loan association in Indonesia, so that the association could make loans to employees to buy a home or start a business. In recognition of its pro-social actions. Brand X has been selected for the "social choice" portfolio of publicly traded companies held by mutual funds.” (Dean, 2004)

The irresponsible firm was presented as follows:

“ A well-known athletic shoe company (we will call it Brand X instead of its real name) has a problem. The news media has disclosed that subcontractors for Brand X in Indonesia and other countries operate under "sweatshop" conditions. The Asian subcontractors are reported to employ children, some as young as 7, working 10 hours a day in dingy factories for low wages. Human rights advocates have criticized Brand X, saying that Brand X inspectors have been aware of the problem for years but the company chose to do nothing about it. They charge that Brand X deliberately allowed the exploitation of child labor to achieve low cost production of shoes. Brand X denies these allegations, noting


that child labor is a violation of company policy. The company has promised a review of its policies on outsourced production and stricter enforcement of its contracts with Asian producers.” (Dean, 2004)

The type of donation was manipulated in the second paragraph of the scenario. In the paragraph

the philanthropic activities of Brand X were presented as either being tied tot the sales volume

(Cause-related marketing) or as a fixed sum donation. The same paragraph stated the non-profit

the donation was given to. Unicef represented a good fit, since the aim of the non-profit is to

improve the lives of children, which fits the narrative of reducing child-labor. IFAW represented

a bad fit, since animal welfare has little common ground with the core business of Brand X.

The firm engaged in Cause-related marketing and a good brand/cause fit was presented as

follows:

“In response to the situation Brand X, or the new CEO of Brand X announces that Brand X will make a donation to UNICEF (the United Nations Children's Fund), a UN agency dedicated to improving the health and general welfare of children worldwide. Brand X will donate to UNICEF one Euro for each pair of Brand X shoes sold in Europe during the next three months. That is, the amount of the donation is conditional upon the number of Brand X shoes sold and the generation of revenue for Brand X. Advertising for Brand X during this period will emphasize the UNICEF donation.” (Dean, 2004)

The firm engaged in Fixed Sum Donation and having a poor brand/cause fit was presented as

follows:

“In response to the situation Brand X, or the new CEO of Brand X has announced that Brand X will make a donation to [IFAW, an international non-profit organization dedicated to improving the welfare of animals worldwide]. Brand X will donate 125.000 Euros to IFAW at the end of the next fiscal quarter. The donation is not conditional upon any other action or event. Advertising for Brand X during this period will emphasize the IFAW donation.” (Dean, 2004)

The other two studies combined the donation per sale with the non-profit IFAW (Cause-

related marketing with poor brand/cause fit) and the fixed sum donation with the non-profit

UNICEF (fixed sum donation with a good brand/cause fit) using the same narrative as the

scenarios above.


Scales The dependent variables were measured by presenting the respondents with a statement and

requesting them to express their agreement with the statement using a 7-point Likert-scale in

which 1 corresponded with full disagreement and 7 with full agreement.

Brand reputation was measured using a scale adapted from Shanahan and Hopkins

(2007). One example of a question to measure Brand reputation is: “Brand X is a good

Corporate Citizen”.

Endorser/Brand fit was measured using a scale adapted from Ellen, Webb and Mohr

(2006). One example of a question to measure Brand reputation is: “When I think of Brand

X as an endorser, ____ is one of the first non-profits I think about”.

Perceived altruism was measured using a scale adapted from Ellen, Webb and Mohr

(2006). One example of a question to measure Brand reputation is: “They feel morally

obliged to help”.

Satisfaction with the company was measured using a scale adapted from Chun, Rosa

and Davies (2006). One example of a question to measure Brand reputation is: “I would

recommend ____ to my colleagues and friends.”.

DATA COLLECTION

The respondents’ answers were collected through the online platform Qualtrics. Each respondent

was presented with two studies with a corresponding set of questions. After downloading the data

from Qualtrics and loading the data into SPSS the double studies per respondent separated and

placed as new cases into separate rows. The total number of respondents was 185 whom were

presented with a total of 370 studies.

After eliminating rows without values 282 rows remained in the data set. Analyzing these data with

Box-plots graphs showed 20 cases with outliers and extreme values that indicated tests in the data

collection process. These data were removed from the data set. The total data set that was ready for

analyzing consisted of 262 cases.

Four items in the Altruism scale were recoded to measure the responses in the same direction

(Altr_6 until Altr_9) Factor analysis was used to check for coherence among the items in the scales.

The exploratory factor analysis tested all measured variables and transformed these into linear

components. Since the sample size exceeded 250 Kaiser’s criterion was too strict for the data set


(Jolliffe, 1986). All factors with Eigenvalues over 0.7 were retained. This resulted in six retained

factors which represented 66.59% of the variation explained. Further analysis showed that two

items (Altr_4: “They try to make it easier for consumers to donate to the non-profit, Altr_8:

(Recoded) “They do it for the tax breaks”) fell outside the factors and were removed. The recoded

items of Perceived Altruism, which initially focussed on the firm taking advantage of the non-profit,

were represented in a factor separated from the first five Altruism items. Manual checks showed no

incoherence in the data set that could explain this difference. Combining the factors in a Cronbach

Alpha gave a value of .862, which indicates the seven remaining items were reliable together.

The main hypothesis was tested using an independent-samples t-test. Cause-related Marketing and

Fixed Sum donations were compared to their respective influence on the dependent variable

Consumer Attitude. The mediation of Perceived Altruism as well as the moderating relation of Firm

Reputation and Brand/Cause fit were tested using Hayes’ regression analysis, a macro add-on in

SPSS.

DESCRIPTIVE STATISTICS

Participants The online survey was filled out by a total of 185 respondents whom were all presented with two

studies. The total number of studies filled out was therefore 370. A total of 108 cases were deleted

for various reasons. 88 cases were deleted due to insufficient viable answers or a complete lack of

answers entirely. Of the 20 outliers six were cases with only 1 answers, indicating a test entry. The

remaining 14 outliers were taken out after Box-plot analysis.

Of the 262 cases in the analysis two did not list their gender (0.8%), 138 were male (52.7%) and

122 were female (46.9%). This closely resembles the distribution of gender division in the

population.

Of the 262 cases in the analysis two did not list their level of education (0.8%). Using the

Frequency function in SPSS the distribution of education levels were subtracted from the data. Six

responded, whom represent 2.3% of the sample, listed their high school diploma as their highest

educational level received. A total of 86 respondents have a bachelors degree through a university

of applied sciences. This group represents 32.8% of the sample. With 43.5% the best represented in

the sample are people with a bachelor of science or masters degree through university. The average

age of respondents is 31.44 years. All respondents listed their age. Age shows a normal distribution

around 31.44.


Scale Means The table below presents the scale means, along with the sample size, minimum and maximum

measured and standard deviation.

The gender distribution resembles the distribution in the population close enough to make it a valid

representation. The age and education distribution is skewed in comparison with the population.

This poses a limitation for generalization of the findings in this research, since the majority of the

sample were higher educated.

Correlation Results of the correlation analysis between perceived altruism and consumer attitude, as well as

the two moderating variables are shown in the figure below. The figure demonstrates valid, positive correlations between the dependent variable, the mediating variable and the two moderators.

Consumer Attitude correlates strongly to Firm Reputation and Perceived Altruism. Donation type negatively correlates to all other variable, be it with a small effect. The correlation between

donation type and Brand/Cause fit is not significant.

N Minimum Maximum Mean Standard Deveation

Firm Reputation 262 1.00 7.00 4.17 1.671

Brand/Cause Fit 262 1.00 7.00 3.48 1.578

Perceived Altruism 262 1.00 7.00 3.64 1.110

Consumer Attitude 262 1.00 7.00 3.71 1.578

Table 1: Means, Standard Deviation (DV), and correlation of the study variables, N=262

Mean SD 1 2 3 4

1. Firm Reputation 4.17 1.67 -

2. Brand/Cause Fit 3.48 1.57 .447** -

3. Perceived Altruism 3.64 1.11 .646** .403** -

4. Consumer Attitude 3.71 1.58 .728** .459** .750** -

5. Donation Type - - -.197** -.058* -.285** -.239**

*p < 0.05, **p < 0.01


RESULTS

To test the relationship with consumer attitude an independent-samples t-test was conducted to

compare Fixed Sum Donations and Cause-Related Marketing. There was a significant difference in

the scores for Fixed Sum donations (M=4.08, SD=1.55) and Cause-Related Marketing (M=3.33,

SD=1.52) conditions; t (260)=3.98, p = 0.000. These results suggest that the choice for Cause

Related Marketing does have an effect on consumer attitude. Specifically, the results suggest that

when corporations implement Cause-Related marketing the consumers’ attitude towards the

corporation will be lower in comparison to implementing executing Fixed Sum donations. These

results support hypothesis 1.

Regression analysis (Hayes, 2013) was used to investigate the hypothesis of perceived altruism

positivity mediating the effect of the donation type on consumers’ attitude. Results indicated that the

type of donation was a significant predictor of perceived altruism, b = -.63, SE = .13, p < .01, and

that perceived altruism was a significant predictor of consumer attitude, b = 1.05, SE = .06 p <.01.

These results support the mediational hypothesis. The donation type was no longer a significant

predictor of consumer attitude after controlling for the mediator, perceived altruism, b = -.09, SE = .

14, ns, consistent with full mediation. Approximately 24% of the variance in consumer attitude was

accounted for by the predictors (R² = .239). The indirect effect was tested using a bootstrap

estimation approach with 1000 samples (Shrout & Bolger, 2002). These results indicated the

indirect coefficient was significant, b = -.67, SE = .14, 95% CI = -.9310, -4060. Choosing Cause-

Related Marketing was associated with approximately .67 points lower satisfaction scores as

mediated by perceived altruism. These results support hypothesis 2.

A multiple regression model was tested to investigate whether the relationship between donation

type and perceived altruism depends on the firm reputation, and brand/cause fit . The three

predictors and the interactions were entered into a regression model (Hayes, 2013). Results

indicated that firm reputation (b = .36, SE = .044, p < .01), brand/cause fit (b = .10, SE = .040, P < .

01) and donation type (b = -.37, SE = .114, p < .01) were all associated with perceived altruism. The

interactions between donation type, firm reputation, and brand/cause fit were also significant (b = -.

26, SE = .114, p < .01), suggesting that the effect of donation is type being moderated by the level

firm reputation and brand/cause fit. These results support hypothesis 3 and 4.


Indirect Effect: b = -.67, SE = .14, 95% CI = -.9310, -4060

CONCLUSION & DISCUSSION

This study was instigated by the question of how Corporate Philanthropy could be optimized as a

business strategy. Since the late 80’s there have been numerous attempts to fill the gaps in the

collective knowledge on the subject, with varying scope and focus. This paper specifically focussed

on the difference between two types of donation to a charity: a donation per sold unit (Cause-related

marketing) or a set quantity of money or effort (Fixed Sum donations). The research question that

set the scope of this study was formulated as: “What is the difference in perception among dutch

consumers between Cause-Related Marketing and Fixed Sum donations?”

When connecting their name to a charity a corporation is generally aiming to increase levels of

customer-company identification (Lichtenstein, 2004). By showing socially acceptable behavior

and donating to charities that may be of importance to a potential customer the organization may

positively influence that potential customer’s behavior. Previous research has already shown that

there are some ‘ground rules’ that need to be taken into consideration. Corporate social

responsibility has been presented as a pyramid, with economic responsibility at the basis, legal and

ethical responsibilities next in hierarchical order and finally a voluntary element of giving

something back (Cautier, 2015). This paper has focussed solely on the latter.

Results from the questionnaire, where people were asked to share their views on a firm’s reputation,

motivations and the fit of firm and the cause that was supported, show that there is a difference in

consumer attitude when comparing Cause-Related Marketing and Fixed Sum donations. Consumer

attitude was significantly decreased when the presented firm donated a Euro for each pair of shoes

Donation Type

Perceived Altruism

Consumer Attitude

Brand/Cause Fit

Firm Reputation

.10** .36**

-.63** 1.05**

-.08


sold in Europe in comparison to a single donation of 125.000 Euros. This conclusion at itself is not

new (Mohr, 2001), and does not give sufficient details about why this relation occurs.

Using a regression analysis (Hayes, 2013) the influence of perceived altruism has been examined. It

appears that the direct relation is relatively low but that the relation via perceived altruism is very

high. One could speak of full mediation in this instance; the relation between the type of donation

and consumer attitude is almost completely depending on the perception of altruistic motives of the

firm. Previous research would project perceived altruism or perceived motivations as a moderating

variable (Barone, 2000; Mohr, 2001), yet, as this current study shows the variable of perceived

altruism mediates the main relationship.

These findings have significant implications for the other variables that influence this relationship.

Organizations participating in either Cause-related marketing activities of donating fixed sums to

charities aim to increase consumer-company congruence and influence their intentions for actions

(Sen, 2001). Attitude is a good predictor of behavior when the attitude is stable of a longer period of

time and when it is connected to behavior-relevant information (Glasman, 2006). Not all positive

attitudes will lead to the expected positive behavior, but positive behavior is always preceded by a

positive attitude.

The previously described findings show that corporations, in order to influence attitudes and steer

behavior, need to influence perceived altruism. Two hypotheses in this study revolved around the

variables that may be of influence in the relationship between donation type and consumer attitude,

through perceived altruism: firm reputation and brand/cause fit.

According to previous research a good fit between the cause that receives a donation and the firm

(or its products) is vital for good results, since it is taken as a sign of sincerity (Polonsky, 2000). The

results from the current study are in agreement, yet the size of the relation is relatively low. A bigger

difference can be made when taking the firm reputation into consideration. A donation to a non-

profit helps an organization in a sense that it influences consumer attitude. An irresponsible firm,

doing a Cause-Related Marketing campaign with a cause that poses a poor fit with the organization

will not only just see little positive effect, the effect may be negative. A possible explanation for this

phenomenon may be that consumers may perceive the actions as less altruistic because it feels like

the organization is attempting to purchase a favorable cconsumer attitude.


Organizations with a bad reputation can obtain big results from a good brand/cause fit and with a

donation of a fixed sum. This aligns well with earlier notions of a consistent and believable

contribution to a fitting cause that is needed to build a brand image and brand equity (Brønn, 2001).

It does however contradict the findings of Dwayne Dean (2004) who claimed that “irresponsible

firms increase their favor among consumers, regardless of the type of donation mechanism”.

For organizations that already have built a good brand image may ‘get away’ with Cause-Related

Marketing activities more easily. The difference between the two donation types is far less than for

irresponsible firms. From a managerial perspective it would make sense to take the small difference

for granted and implement Cause-Related Marketing campaigns, since it shows immediate results in

sales.

With all the above, and the knowledge about the subject from previous studies, a few implications

for practical implementation can be given. The biggest take-away is that it is that consumers highly

focus on sincerity of the cooperation between a corporation and a non-profit. If the consumer feels

the message is not altruistic it impacts their attitude towards the corporation. This is especially the

case for companies with a poor reputation. Those organizations need to take time for (re)building

brand equity by doing long-lasting attributions to fitting non-profits without tying those donations

to generated sales.

The cost of Fixed sum donations is set, yet the return on investment is harder to predict. For

corporations it is therefore important to make the consideration between the two types of donation.

In day-to-day operations it may be harder to distinguish scrupulous firms from irresponsible firms,

not the least for corporations doing self-evaluation. Yet, it is vital to have this sense of self-

awareness to make a well-balanced choice between a Cause-Related Marketing of Fixed Sum

donation campaign. Both have their strengths and weaknesses, and both have severe impact on the

results for various corporations with different reputations.

LIMITATIONS & FUTURE RESEARCH

This study used an in between subject design where each respondent was presented with a scenario

and was asked to answer a few questions. No questions were asked about the same organization at a

later time and under varying circumstances. Clear answers about causality can therefore not be

given. Future research may focus on within-subject design research where this causality could be


further investigated. Such research may also shed light on why there is a different outcome in this

study as compared to Dwayne Dean (Dean, 2004). The findings contradict each other. Dean claimed

that irresponsible firms benefit from corporate philanthropic activities, regardless of the type of

donation, whereas the current study suggests that irresponsible firms benefit more from Fixed Sum

donations.

Due to practical limitations of the study (time and means), a few limitations had to be set to the

survey. To increase responses every respondent was presented with two scenarios and related

questionnaires. This made the survey rather long. The long survey increased the tiring-effect,

increasing the number of drop-outs. It also increased the learning-effect, where respondents were

biased during the second scenario by the information of the first scenario. This effect was

minimized by randomizing the studies between subjects and relative to each other.

The gender distribution of the sample well represents the actual population. The age and education

distribution was did not fully match the relative distribution in the population. Future research

should make sure the demographical variation is better.

The literature review proposed multiple moderating variables that may be of influence on the main

relationship that was investigated in this study. Due to the scope of the research only two have been

takin into consideration during the study. Future research may include moderating variables such as

attitude towards business in general, level of corporate social responsibility desires, length of the

campaign, etc.


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