CONSUMER BEHAVIOR STUDY CONFIRMS CAUSE-RELATED MARKETING CAN EXPONENTIALLY INCREASE SALES
Cone/Duke University Study Also Reveals Consumers Spend Twice as Long Viewing Cause-Related Advertisements
BOSTON (October 1, 2008) – As the term “cause-related marketing” reaches its 25th anniversary and a sea of pink ribbons washes over the U.S. this month, a new consumer behavior study confirms that cause-related marketing can exponentially increase sales, in one case as much as 74 percent, resulting in millions of dollars in potential revenue for brands.
The 2008 Cone/Duke University Behavioral Cause Study, released today by Cone and Duke University’s Fuqua School of Business, validates for the first time that cause-related marketing can significantly drive actual consumer choice.
During the first phase of the study at Duke University, 182 participants evaluated a new regional magazine and were exposed to either a cause-related or generic corporate advertisement for one of four focus brands. Afterward, they entered a mock convenience store with nearly 150 SKUs and were given real money to purchase a product in each of the four categories. Results revealed:
Substantial cause-related sales lift for two of the four consumer packaged goods categories tested:
- 74% increase in actual purchase for a shampoo brand when associated with a cause(47% of participants who saw the cause-related message chose the brand while only 27% of those who saw the generic corporate advertisement chose the brand)
- 28% increase in actual purchase for a toothpaste brand when associated with a cause (64% of participants who saw the cause message chose the target brand vs. 50% who viewed the generic corporate advertisement)
- Modest increases in the other two product categories tested (chips and light bulbs) – Qualitative consumer responses showed that the issue, the nonprofit and the inherent nature of products were key factors in making cause-related purchasing decisions and helped explain why movement in these categories was not significant.
In the second phase of the research, Cone and Duke validated the sales increases for shampoo and toothpaste by replicating the study online among a nationally projectable sample of more than 1,000 adults. The results revealed that participants spent nearly twice as long reviewing cause-related ads versus the general corporate advertisements. This resulted in a sales increase (19 percent) similar to the lab study for the target toothpaste brand. And although the shampoo brand increased only by a modest 5 percent, sales among its target audience of women increased by nearly 14 percent.
“It’s much easier to make a purchase by clicking a button than it is to pick up and experience a brand in the richer store environment; the results of our study likely lie between the impulsive online shopper and the deliberate in-store shopper,” says Gavan Fitzsimons, Duke marketing professor and lead researcher on the study. “One thing we know for sure - consumers are paying more attention to cause messages, and as a result, are more likely to purchase. This is clearly great news for brand managers, as every percentage increase can translate to millions of dollars in revenue.”
2008 Cone Cause Evolution Study
Cone first began measuring the attitudes of Americans 15 years ago, and today, expectations of companies continue to grow. To complement the behavioral study, Cone conducted the 2008 Cause Evolution Study, to better identify what drove substantial product sales for only two of the four brands. The results found that consumers consider the following factors to be important when deciding to support a company’s cause efforts:
- 84% want to select their own cause
- 83% say personal relevance is key
- 80% believe the specific nonprofit associated with the campaign matters
- 77% say practical incentives for involvement, such as saving money or time, are important
- 65% find emotional incentives for involvement, such as it making them feel good or alleviating shopping guilt, important
“The findings of the 2008 Cone Cause Evolution Survey help reinforce why two of the categories in our behavioral research did not show significant increases in sales. Consumers want to feel a connection to the issue and the nonprofit while fulfilling their personal needs,” says Alison DaSilva, executive vice president, Knowledge Leadership and Insights, Cone. “While this is a tall order for companies, it provides great opportunity for continued innovation and business growth.”
Consumers Set Bar High for Companies, Even During Poor Economic Climate
The 2008 Cone Cause Evolution Study also revealed that consumers continue to have high philanthropic expectations for companies struggling amid the current economic crisis. More than half (52 percent) of Americans feel companies should maintain their level of financial support of causes and nonprofit organizations. Another quarter (26 percent) expects companies to give even more.
Fortunately for marketers, consumers are also more receptive to cause messages than ever before. They will reward companies that give back both with their goodwill and their wallets:
- 85% of Americans say they have a more positive image of a product or company when it supports a cause they care about (remains unchanged from 1993)
- 85% feel it is acceptable for companies to involve a cause in their marketing (compared to 66% in 1993)
- 79% say they would be likely to switch from one brand to another, when price and quality are about equal, if the other brand is associated with a good cause (compared to 66% in 1993)
- 38% percent have bought a product associated with a cause in the last 12 months (compared to 20% in 1993)
Priority Issues for Business and Society
The leading issues that Americans want companies to address in their cause programs are consistent with growing domestic and global needs. These are also issues in which companies can use their business scale and resources to have the greatest impact. The issues include:
- Education – 80%
- Economic development (i.e.: job creation, income generation, wealth accumulation) – 80%
- Health and disease – 79%
- Access to clean water – 79%
- Environment – 77%
- Disaster relief – 77%
- Hunger – 77%
Americans also acknowledge that to truly drive change, there needs to be widespread collaboration among sectors. Nearly nine in 10 Americans (89 percent) say it is important that business, government and nonprofits collaborate to solve pressing social and environmental issues.
Almost uniformly (91 percent), Americans believe companies should tell them how they are supporting causes, but many do not feel they are getting sufficient information. Only 58 percent of Americans believe companies are providing enough details about their cause efforts. Half also think the government or other third parties should regulate cause marketing by companies.
“Progressive organizations are moving away from ‘assembly-line cause’ – simply picking an issue and a partner off the shelf – as they evaluate how societal needs and business growth are intrinsically linked,” says DaSilva. “In today’s highly transparent society, consumers are seeking more information about the details of the program, the issue and the impact that they and the company are having. Companies must not only answer, ‘What do you stand for?’ but also ‘What do you do?’”
For a copy of the complete report, “Past. Present. Future. The 25th Anniversary of Cause Marketing,” please visit our Research & Insights section.
About the Surveys:
The 2008 Cone Cause Evolution Study presents the findings of an online survey conducted August 14-15, 2008 by Opinion Research Corporation among a demographically representative U.S. sample of 1,071 adults, comprising 500 men and 571 women 18 years of age and older. The margin of error associated with a sample of this size is ± 3%.
The 2008 Cone/Duke University Behavioral Cause Study consists of a two-phase research methodology. The first phase was conducted throughout October and December 2007 in a behavioral lab study at Duke University among a random sample of 182 participants, ranging in age from 18- to 62-years-old. The second phase, conducted online in July 2008, consisted of a demographically representative U.S. sample of 1,051 adults, including 625 women and 426 men.
About Cone: Cone LLC (www.coneinc.com) is a strategy and communications agency committed to building brand trust. Cone creates stakeholder loyalty and long-term relationships through the development and execution of Cause Branding SM, Corporate Responsibility, Brand Marketing and Crisis Prevention and Management initiatives. Cone is a part of the Omnicom Group (NYSE: OMC) (www.omnicomgroup.com). Omnicom is a leading global advertising, marketing and corporate communications company.
About Duke: The Fuqua School of Business at Duke University is dedicated to advancing the understanding of management through research, putting research knowledge at the service of business and society and providing the highest quality education for business and not-for-profit leaders worldwide. Fuqua offers a wide range of MBA study options, including daytime and executive programs and seeks across all its programs to help create leaders of consequence.