Cause related marketing program contains a partnership between a profit-based business and a non-profit organization. Here, the enterprise associates its marketing strategy with the fundraising requirements of a charitable or generous cause for the mutual benefit of both parties. Under cause-related marketing, businesses are actively involved; thus, its concept goes beyond the notion of one-time donations.
Effective cause related programs increase the brand image and goodwill of the organization, along with the trustworthiness of marketing endeavors. This is another major reason that strengthens the growth of cause-related marketing. Such programs also help customers by giving them a more sensible way to contribute to non-profit organizations through purchases.
According to Thompson, “Cause Related Marketing can be defined as a strategic positioning and marketing tool which links a company or brand to a relevant social cause or issue for mutual benefit.”
Major Benefits of Cause Related Marketing
The benefits of cause related marketing are as follows:
1. Attracting and Retaining Customers
It is a strong belief among the organization’s related marketing efforts that such efforts significantly help attract, retain, and develop long-term relationships with customers.
2. Market Differentiation
Cause-related marketing helps organizations differentiate themselves from their direct competitors by giving customers a chance to contribute more significantly rather than just buying products.
3. Connect with Niche Markets
Under cause marketing, organizations are partnered with non-profit organizations, which helps them to associate with a particular demographic/geographic niche market.
4. Motivated and Loyal Employees
One of the main advantages of cause-related marketing enterprises is that they can attract and retain quality and skilled personnel.
5. Reinforced Company Mission
Endeavours of cause-related marketing can help businesses to communicate with customers, suppliers, employees, and other stakeholders of the company. These endeavors also allow the company to align with its corporate social responsibility.
6. Creating a Positive Image of the Brand
Enterprises will gain greater visibility by linking themselves with the ‘supporting the cause’ tag. This will also help them to reinforce their brand image.
Limitations of Cause Related Marketing
The limitations of cause related marketing are as follows:
1. Risk of Being Perceived Negatively
Cause-related marketing efforts can only be fruitful if both organizations conduct their operations sincerely and effectively. If there is any misconduct or any wrong decision is made, then it can be harmful to both the involved parties. Further, the goodwill of an enterprise with a good market image is at risk if it links itself with an unethical or disreputable non-profit organisation.
2. Main Purpose is Profit, Not Charity
Enterprises consider socially responsible advertising a for-profit strategy and try to take advantage. Many organizations try to increase their profits through a social cause. Many organizations try to increase their earnings through a social cause. If the core objective of firms is to increase their revenues by donating or sponsoring a charitable cause. In that case, such efforts will not make them noble.
3. Charity as Marketing Tool
Many firms use charity as a marketing tool to advertise themselves in the media. Due to this, many noble enterprises need help convincing the public about the caring motives behind their charitable actions.
4. Negative Publicity Harmful for Non-Profit Organisations
Forming a non-profit organisation requires consistent hard work and a deep sense of charity and care. Since the existence of a non-profit organization depends upon the people’s belief in them, their goodwill and interests are at risk if there is any negative publicity.
5. Not Investment-Free
Cause-related marketing is not investment-free as it mandates monetary and time investments. Both these investments can cause a substantial expense depending upon the company supporting the type of cause.