08 Sep2009

Cause Marketing vs. Corporate Social Responsibility

Posted in Business and Development, Cause Marketing, CSR by with 11 Comments

I recently published a post on B-Corporations and the role they play in separating the socially responsible businesses from those that simply market themselves a such. “Cause Marketing” is a proven effective technique at creating a more loyal consumer base and earning a competitive advantage. Look at the (RED) Campaign and TOMS Shoes. With a (RED) Starbucks Card, you can help fight AIDS with every Mocca-Frappa-Latte you purchase! But to what degree is “Doing Good” setting a standard for Corporate Social Responsibility?

Here’s what Starbucks gives to the Global Fund through the (RED) program:

  • 5 cents, every purchase on a (RED) Starbucks Card (through 12/31/09)
  • $1, per $12 1lb bag of (RED) Coffee (8%)
  • $1, per $16 (RED) Coffee Tumbler (6%)
  • $1, per $20 (RED) Water Bottle (5%)

Of course with any philanthropic initiative there will be somebody saying, “but they could do more”. There’s always more to do. The question is, is there a point where cause-related marketing is “disingenuous”? Are firms, like Starbucks, using cause-related marketing to maximize their ROI while “giving” the bare minimum? If Starbucks were to register as a “B-Corporation”, would they meet the criteria?

A consumer looking to maximize their coffee-to-philanthropy ratio should probably look at Organic Coffee Cartel — a small social enterprise selling efficiently grown coffee purchased from small farmers in the developing world and giving 51% of profits to charity.

So here are some questions for discussions:

1.) How discretionary are consumers when it comes to cause/cause-related marketing?

2.) If consumers are utility maximizers, does social impact enter into their “utility function”; and if so, to what degree? Is it simply self-serving (eg. I feel good) or is it practical (eg. I maximized my investment)

3.) If the answer to the above two questions is YES, how can we generate broad-based consumer education on how to maximize their social impact?

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11 Responses to “Cause Marketing vs. Corporate Social Responsibility”

  • Kevin Asuncion September 8, 2009 Reply to

    Hi Marco,

    Thought provoking post, this is something I've been thinking about for awhile now. In terms of how discretionary consumers are with cause and cause marketing, I think they find cause and cause marketing one in the same. We are barely scratching the surface where cause is part of business dna(social enterprises, and B-Corps). I think consumer taste is shifting towards more socially and environmentally as more and more responsible players enter industries, the demand for those products and services should increase and consumers will begin to notice the difference between a cause company, and a company that markets cause as a means to increase ROI. I think consumers when given enough time to observe the market will catch on. In terms of broad based education for consumers I think B-corp distinction is a step in the right direction, consumers tend to do the least amount of work to understand the market and if a legal distinction can help a consumer distinguish and become more discretionary in their choices then I think it could go a long way in conditioning consumers to make responsible choices. Again awesome post Marco, look forward to more thought provoking posts.
  • Marco Puccia September 8, 2009 Reply to

    I think one of the coolest things in the cause marketing space has been the fact that cause-driven consumerism has become fashionable, and it is the consumers that end up educating one another on why their brand (and their identity with that brand) is MORE socially responsible than the other. It sparks a good discussion that raises awareness and holds companies accountable.

    Thanks for your comment Kevin!
  • susan01 September 9, 2009 Reply to

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Margaret

    http://businesseshome.net
  • Cause Marketing, Continued… - Marco Puccia : Business and Development September 9, 2009 Reply to

    [...] My post yesterday about the authenticity behind cause marketing and consumer education sparked a comment from Kevin Asuncion, who wrote, “I think consumer taste is shifting towards more socially and environmentally [...]
  • Investment Metrics vs. Storytelling - Marco Puccia : Business and Development September 14, 2009 Reply to

    [...] actually goes to the root of the discussions I’ve had on my blog about B-Corporations and Cause Marketing (Part 2). Authenticity [...]
  • Investment Metrics vs. Storytelling « Due Diligence 2.0 October 26, 2009 Reply to

    [...] actually goes to the root of the discussions I’ve had on my blog about B-Corporations and Cause Marketing (Part 2). Authenticity [...]
  • JeffMowatt November 3, 2009 Reply to

    Clearly, any organisation which markets products on the basis of them doing good has to ensure that what the organisation as a whole does is not creating more harm than the social component does good

    Roll back from B Corps, to 1996 and in the P-CED model, which can be considered a progentor, the starting point, which is a critique of orthodox capitalism which leads to the ethical conclusion that no human can be considered disposable.

    http://www.p-ced.com/1/about/background/
  • Marco Puccia November 3, 2009 Reply to

    Very interesting — thanks Jeff!
  • JeffMowatt November 3, 2009 Reply to

    Clearly, any organisation which markets products on the basis of them doing good has to ensure that what the organisation as a whole does is not creating more harm than the social component does good

    Roll back from B Corps, to 1996 and in the P-CED model, which can be considered a progentor, the starting point, which is a critique of orthodox capitalism which leads to the ethical conclusion that no human can be considered disposable.

    http://www.p-ced.com/1/about/background/

    This leads on to making the case for a model with a primary social objective with “at least 50%” of surplus invested in the same..

    http://www.p-ced.com/1/about/history/

    It was proven in concept in 1999 when used to source a development initiative in Russia for USAID and since 2004 as a UK based social enterprise leveraging social reform in Ukraine. These impacts achieved without a marketing campaign, but visible for those who care to look, are to be found in the links on our website's about page.

    http://people-centered.net/About.aspx

    Jeff
  • Marco Puccia November 3, 2009 Reply to

    Very interesting — thanks Jeff!
  • Coffee Club April 28, 2010 Reply to

    Since this event is already finished. Hope that Starbucks will think a good promotional strategy like Green Card to protect our planet which is much worst than HIV.

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