Cause Related Marketing (CRM) Under Fire

Cause Related Marketing (CRM) is one of the strongest tactics for corporations seeking to build their brand connection with their customers. It is also a very effective (albeit low-key) method to sell product. A typical cause related marketing campaign promises a donation for a selected charity for each sale of its product during a promotional period. Consumers buy the product with the added bonus of knowing a good cause will receive money because of their purchase. However, in spite of this success, challenging times are ahead for this type of marketing as public calls for reform and transparency attempt to reshape its future.

Cause Related Marketing has become so ubiquitous in the marketing mix that it is sometimes difficult to realize that it is a fairly new idea. The American Express company first used the term "cause related marketing" in 1983 during the company's campaign in support of the renovation of the Statue of Liberty. This first attempt at CRM was surprisingly successful. The credit card company donated a penny for the renovation of the statue every time someone used his or her card. Patriotic Americans responded in droves to the offer. The number of new AMEX cardholders grew by a whopping 45% and card usage increased by 28%.

Since that time, CRM has grown to become part of the marketing mix of virtually every large corporation. In an era in which quality products and low prices have become the required cost of doing business, the consumer's emotional connection to the brand has become a stronger factor in a consumer's purchasing decision. A brand's connection to good works is a winning strategy in creating a sense of "shared values" that form important bonds with customers.

Runaway success, however, has consequences. High profile campaigns have created critics of CRM as a business practice. Although some critics object to businesses using charitable causes to sell products, the sharpest criticism comes from opponents who compare the large amount of money that corporations spend in advertising the promotion against the smaller amount given to the charity. In some reported cases, companies have spent a significantly larger amount of money promoting their marketing campaign than their final contribution to the charity at the end of the campaign.

The most severe critics call for the elimination or curtailing of cause related marketing. That most certainly won't happen, but the push for transparency in spending and donations will continue until significant reforms are undertaken.

Bono's "Red" campaign has been a high profile Cause Related Marketing effort, with corporations rushing to join this promotion targeting African charities among others. To see the "blowback" from this charitable juggernaut, check out this web site, www.buylesscrap.org