Academic journal article International Journal of Business and Society

Consumers' Responses to Corporate Philanthropy: Are They Willing to Make Trade-Offs?

Academic journal article International Journal of Business and Society

Consumers' Responses to Corporate Philanthropy: Are They Willing to Make Trade-Offs?

Article excerpt

ABSTRACT

More and more companies are allocating part of their budgets to supporting good causes through corporate philanthropy. This approach implies a social concern for communities and, at the same time, a concern for their corporate economic performance (e.g. linking philanthropic efforts to economic performance through cause-related marketing). This paper attempts to find which variables related to the implementation of a philanthropic campaign are more important for consumers and which of them yield higher utilities. The main finding of this study is that price and quality are the most important attributes when making a purchase decision, followed by the philanthropic donations. Other social corporate dimensions are disregarded.

I. INTRODUCTION

Philanthropy, or the charity principle, is considered to be the embryo of corporate social responsibility (Lozano, 1994). Although philanthropy has traditionally been a way of showing firms' commitment with society, more recently it has been used by companies as a means of meeting their economic responsibility, by improving corporate reputation and, in general, by using it as a marketing tool, for instance through cause-related marketing (CRM). There is no agreed definition of CRM (Pringle and Thompson, 1999 versus Varadarajan and Menon, 1988 versus Ballesteros, 2001). Among practitioners, CRM is defined as a donation depending on corporate sales/profit (the typical appeal is: "if you buy the brand XYZ, 2 cents - or 10% of price - will be donated to ABC"). Whilst corporate contributions are normally regarded as a true philanthropic contribution, CRM is considered part of a commercial strategy (Polonsky and Speed, 2001). Most authors agree that nowadays community investments are considered a source of competitive advantage (Fombrun, 1999; Varadarajan and Menon, 1988, Adkins, 1999; Austin 2000; Sagawa and Segal, 2000).

Social pressure on companies is leading to a growing concern about their relationship with communities. In Spain, 8 out of 10 consumers believe that large companies should support beneficial projects for the community (F. Empresa y Sociedad, 1997), and similar results have been obtained in other countries (Adkins, 1999; Cone/Roper, 1997; Fundación Empresa y Sociedad, 1997 and 1999; Rachtman and Hong, 2000; Sagawa and Segal, 2001 ; Thiery-Seror, 2000). Spanish companies have been responsive to this pressure: half of Spanish companies regard their relationship with the community as an important part of their strategy (Minguella et al., 2000); in some cases, it is the key attribute of brand positioning[1].

When philanthropy was conceived as a way of giving back to society part of the returns obtained, forecasting the commercial success of these practices was no necessary. Yet, when companies introduce these practices as part of their marketing strategy, consumers attitudes are an important concern. And not only for companies: when corporate philanthropy replaces the government as Welfare provider (Valor, 2003a), it is vital to know whether consumers will support this type of practices. Otherwise, companies may stop investing in their communities, with the consequently welfare loss for them.

This paper is structured as follows. Firstly, previous literature will be reviewed. secondly, the objectives and methodology will be described. Thirdly, the results will be presented. Finally, some conclusions, limitations and managerial implications will be offered.

II. BACKGROUND

Surveys, in all of the countries where they have been conducted, show high percentages of people - more than 75% of sample - willing to buy brands supporting good causes (Adkins, 1999; Cone/Roper, 1997; Fundación Empresa y Sociedad, 1997 and 1999; Rachtman and Hong, 2000; Sagawa and Segal, 2001; Thiery-Seror, 2000). Other studies, through personal interviews, however, have found that CRM had little influence on the purchase decision, although the attitude towards CRM as a marketing tool was very positive (Mohr et al. …

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