For a good cause
Robyn Valentine and Robyn Hill at SIT ask whether cause-related marketing can help SMEs in volatile times.
Small and medium-sized enterprises (SMEs) make up 97 percent of Aotearoa New Zealand businesses. However, the combined pressures of COVID-19 and inflation have left many SMEs struggling financially. Businesses have been left with fewer resources to devote to corporate social responsibility and activities that contribute to local communities. At the same time, the pandemic has changed consumer behaviour. More people have turned towards supporting local businesses and brands. In such a market, cause-related marketing (CRM), where SMEs collaborate with charities and non-profit organisations, would seem to be a win-win strategy. Businesses could support charitable causes while increasing their sales. In the past, Aotearoa New Zealand consumers have been fairly positive towards CRM. After consistent messaging from government agencies during the pandemic to 'be kind', have consumer attitudes changed?
Robyn Valentine and Robyn Hill set out to answer this question in research recently published in the Southern Institute of Technology Journal of Applied Research (SITJAR). The first phase of their study gauged the level of support for CRM among nearly a hundred questionnaire respondents. The focused interviews which followed allowed for a deeper understanding of why people felt the way that they did. Did people feel it was okay for businesses to benefit from backing charitable causes? Were SMEs who linked their products to a cause perceived as taking advantage of charities? Or did respondents feel better about SMEs and trust them more if their marketing helped a good cause? The researchers also wanted to know if consumers would choose different products and pay more for them if the company was linked to a cause they supported.
The research findings suggest that most consumers view CRM positively. Perhaps surprisingly, this positive attitude does not necessarily lead to increased purchasing, patronage, or brand loyalty. While some consumers felt CRM provided a convenient way for them to help charities, and did not mind if organisations also benefited, other consumers were sceptical about the intent of organisations involved in CRM. How can SMEs overcome this scepticism? Based on their findings, Valentine and Hill recommend that small business owners capitalise on their ability to connect with local communities and align with a charity which has personal meaning to them. If this relationship is communicated through actions and a long-term commitment, then consumers are more likely to perceive cause-related marketing as authentic, rather than opportunistic.
Learn more about research at the Southern Institute of Technology