Cause-Marketing: Companies Look Beyond the Bottom Line
AMERICAN companies - from automakers to fashion designers - are using a unique kind of advertising to stand out from the crowd and increase customer loyalty.
New York-based menswear maker Members Only, for example, designates its entire marketing budget to national antidrug and pro-vote campaigns, says Ed Wachtel, the company's president and chief executive officer.
More and more, companies are linking their names to a social charity or cause - a strategy the marketing industry calls cause-related marketing (CRM). For the past nine years, Members Only has spent all of its marketing dollars on cause-related programs - totaling between $30 million and $35 million, Mr. Wachtel says. At the same time, sales have continued to increase.
``Could we have grown more if we'd shown strictly fashion?'' Wachtel asks. ``There's no way of ever knowing. But I truly believe the American consumer recognizes our name and thinks of us as a `good guy,' '' he says.
``[Cause marketing] doesn't preclude standard brand advertising,'' says Daniel Pearlman, president of The Pearlman Group, a Los Angeles-based marketing company. ``What it does is it adds value to the brand and ... improves consideration for that brand.''
In 1989, Mr. Pearlman helped Chrysler's Geo develop the ``Geo Tree Program,'' where the company plants a tree for every car it sells. The program is worth about $400 to $500 in consumers' minds, Pearlman says. In other words, if a consumer is looking at a similar model car at a comparable price, the Geo Tree Program counts as a credit, he says.
CRM is winning favor among consumers, according to a recent survey by Boston-based Cone Communications and Roper Starch Worldwide Inc., a marketing research firm in New York. Of the 2,000 adults surveyed, more than six out of 10 say - price and quality being equal - they would switch brands to buy a product supporting a cause they care about. ``The No. 1 thing that came out of our survey was that Americans are saying that business has a fundamental responsibility, alongside government and religious institutions and nonprofits, to help solve social problems,'' says Carl Cone, chief executive of Cone Communications.
Consumers gave high marks to McDonald's Corporation, Anheuser-Busch Companies Inc., Coca-Cola Company, DuPont, Proctor & Gamble Company, General Motors Corporation, and Eastman Kodak Company, while they gave a poor rating to Exxon Corporation, Dow Chemical Company, and General Electric Company for their environmental records.
Cause marketing surfaced in the early 1980s, Ms. Cone says, when American Express donated part of its profits to the Ellis Island/Statue of Liberty Restoration Fund. The campaign raised $1.7 million for the statue, and boosted card usage and card applications for American Express, she says.
Since then, other companies have jumped on the bandwagon. As part of New York-based Liz Claiborne Inc.'s ``Women's Work'' campaign, the company recently paid for ads aimed to help victims of domestic violence. The ads ran on billboards last fall in Boston and Miami.
For a cause-marketing program to be effective, a business has to have a quality product, find a compatible cause, and the program should be ``adopted from top to bottom by a company and then lived with for a number of years,'' Pearlman says. Many companies are hesitant to get involved in CRM, he says, because such efforts do not show up in a company's bottom line immediately.
Businesses are also concerned about sounding insincere, Pearlman says. ``When a company stands up and says: `We're doing this; we're doing that; isn't it great,' it is highly suspect,'' he says. ``If a company ... softly says ... `Here's what we've accomplished, we can accomplish even more if you chose to help us with it,' there is a little more sincerity to that tone.''
For some companies, supporting a cause is part of its ethos, a strategy Cone Communications calls ``passion branding.'' Passion-branding pioneers include McDonald's, Ben and Jerry's, and the Body Shop.
Stonyfield Farm Inc. in Londonderry, N.H., maker of all-natural yogurts, spends no money on advertising and is the fastest growing yogurt company in the United States, says President Gary Hirshberg. ``What we've learned ... is that the things we do to try to make the world a better place ... turn out to be very good for business,'' he says.