From the red Dell laptops for AIDS awareness to pink Nike high-tops for breast cancer research, more companies are embracing social causes as ways of helping themselves and others. Such cause-related marketing generally produces win-win outcomes: The for-profit companies generate goodwill and earnings, while the nonprofit causes share in income they may not otherwise have seen.
Granted, some cause-related marketing slips below the floor of decency. For instance, when a for-profit company donates to a worthy cause but then spends even more money on advertising to tell others the good it’s done, or when a nonprofit organization misappropriates the gifts it receives.
These unusual cases aside, the notion that cause-related marketing tends to produce mutual benefit does not mean that all of such benevolence is equally good. From the for-profit partner’s perspective, some cause-related marketing practices are better than others. The difference tends to be a function of how strategically a firm approaches its philanthropy, which can be separated into three distinct categories of cause-related marketing: Good, Better and Best.
Notwithstanding the misguided variety described above, virtually any donation is a good donation. If a firm is willing and able to share its profits with a worthy cause, that’s great.
A corporation that makes insecticides might donate to a cause aimed at eradicating hunger, or a restaurant chain might give a portion of its profits to malaria research. Both of these needs are very important, and it’s good to have organizations of all kinds support them.
If you read the previous examples and thought it was ironic that a pesticide company adopted hunger as its cause, while a restaurant chain embraced malaria research, your thinking is on the right track. Although noble and helpful, the preceding cause-related marketing was not strategic.
A better approach to cause-related marketing is to identify and support issues that are more directly related to the business. A more closely aligned social issue can capture momentum from the company’s mission and reinforce its branding.
Likewise, there may be opportunities to donate more than just money to the cause -- the company might be able to provide some of its own internal expertise, for instance in the form of employees offering their time and talents. Such volunteerism tends to be more meaningful to the participants than simply the knowledge that their employer cut a check to a cause.
As good as the preceding, strategically-minded social responsibility is, it’s still significantly limited by its irregularity. In most cases, a particular firm’s donation or volunteerism happens just a few times a year, and often it occurs less frequently. Of course, it’s unreasonable for a company to offer its time and money continually to a cause, or is it?
Some exceptional companies do so by carefully aligning their social and financial goals so that their everyday operations directly support a cause. For instance, Chipotle champions “Food with Integrity.” Among the firm’s social goals is its desire to help people eat more healthily, while employing business practices that respect animals and the environment.
Sure, Chipotle could write checks occasionally to a few nonprofit organizations that promote sustainable agriculture and good nutrition, but with revenues over $3 billion, this company makes much more of a positive impact by implementing business practices that directly address these needs. At the same time, Chipotle also helps its own cause: its socially-minded operations have proven to be quite profitable -- over $300 million in net income annually, which can serve as a source for other traditional giving too.
Giving is almost always a good thing. From a for-profit company’s perspective, strategic giving is even better.
The best cause-related marketing, however, occurs when a firm integrates its social goals with its financial goals so that its daily operations support societal needs while also fueling the firm’s operations and enabling it to profit. This integrated approach tends to be both more impactful and more sustainable. In short, it’s cause-related marketing at its best.
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