The Cause Related Marketing Bandwagon in FMCG

FMCG GrowthThere has been strong growth in the Indian FMCG market over the years. The sector’s revenue reported a CAGR of 17.3% over 2006-2011. Consequently, today’s marketplace is flooded with brands in all product categories of the FMCG sector. With ever-increasing competition, a company is expected to do business in such a way that it stands for not just the financial returns, but for comprehensive social and economic returns to the society at large. Gillete’ Soldier for Women, Dove’s Real beauty sketches, Proctor & Gamble’s Thank you mom and Tata Tea’s Jaago re are a few examples of attempts made by leading corporations to do well financially by doing good socially. These campaigns are launched under a marketing strategy called ‘Cause-related Marketing’.

What is cause related marketing?

Cause related marketing is a marketing strategy wherein a product/brand/company is marketed in association with a ‘cause’. This identified cause is generally an issue that is prevailing in customers’ mindset. It can be social like child welfare, environmental like wildlife conservation or even abstract like uniqueness etc. Cause marketing campaign is used by companies strategically to create brand differentiation by enhancing brand equity and credibility. It can be employed by a company to achieve a number of marketing objectives, mainly, visibility, increased sales, repeat purchases, increased brand recognition, broadened customer base etc.

Now, more than ever, the companies are realizing the potential of aligning themselves with a cause. Earlier it was used mostly to increase sales and profits, but now it is used as a great brand positioning contrivance as it works on vitalizing brand equity and enhancing corporate image with sound economic and community impacts.

Cause-related marketing: differentiated from CSR

Cause Related Marketing and Corporate Social Responsibility (CSR) are often used interchangeably but there exists a vast difference between the two. CSR is primarily the philanthropic activities carried out by the company, generally in domains of social welfare or environment. The essential objective is to project the company as a responsible corporation resulting in positive brand image in eyes of consumer. Cause Related Marketing on the other hand is a marketing strategy done with a sole objective of building profit through goodwill. It is done by associating with a designated cause and is characterized as a profit-motivated giving. Unlike CSR, it is more targeted approach and a less selfless philanthropy.

Cause marketing practices

Cause related marketing is a flexible tool and can be employed in varied ways. Some of the common forms adopted by FMCG firms, of providing assistance to cause organisations are:

Transactional programs: This is the classic form of assistance to cause wherein a company donates a part of every sale of the affiliated product to the cause organisation. Many examples can be cited for this practice, a popular one being ITC’s INR 4 donation for the education of economically underprivileged students for every 4 Classmate notebooks sold.

Propaganda programs: Under these programs, the cause is promoted and contribution, in forms other than monetary, is made by the company. An example is Tata Tea’s Jaago Re campaign where the company promoted anti-corruption and encouraged the youth to vote. 

Time frame of the program

Cause marketing campaigns can be either strategic (long-term) or tactical (short-term). Long-term campaigns are generally found to help with enhancing brand loyalty, improving brand image and lowering apprehensions regarding company’s motivation. Proctor & Gamble’s Shiksha campaign has been contributing to the cause of child education since 2004. However, short-term associations are preferred by the companies at times, as they call for limited costs and bigger impact advantages. Lifebuoy’s ‘Roti Reminder’ at the Kumbh Mela 2013, which promoted the cause of hygiene, falls in this category.

Choice of cause

The fit between the selected cause and the profile of the company is an important variable in determining its impact.  For instance, Maggi’ Atta noodles promoting Taste bhi health bhi has high cause-company coherence, with the cause being health. In contrast Coca-Cola’s Arctic Home has rather low coherence. Generally, high coherence impedes the apprehensions arising in customer’s cognition and hence mobilizing the purchase intent due to higher urge to benefit the cause.

Epilogue

Cause related marketing fills a crucial void in society by giving the individuals an opportunity to contribute to the causes they feel for. If executed creatively, by carefully pairing cause and company, it can emerge as a rare and strong marketing contrivance which would converge social and corporate interests, favouring both equally.

Arushie Mangla is a PGP1 student at IIM Ahmedabad and a member of the Consult Club. She is a graduate from IIT Delhi in Civil Engineering with a minor area specialization in Business Management.

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Winds of Change?

Corporate Social Responsibility and the way forward

Today every major company has a CSR policy and not having one is near blasphemy. Corporate activism and popular issues like climate change have pushed CSR to be a standard cost of carrying out business. Although major companies have adopted the CSR policy, many still see it as superficial spending towards “compliance”. As a result, the recent downturn is being seen as a threat to the CSR industry, which is perceived as an avoidable luxury.

In light of this development, companies are rethinking their CSR strategy and are now partnering with NGOs, the government, other companies and even competitors. But one of the most promising developments has been the advent of social entrepreneurship into the gambit of CSR. This promises to create disruptive change, one which pushes CSR from merely being satisficing in nature to something which is ingrained in a company’s strategy.

The Piramal Foundation, the CSR arm of the Piramal group is a shining example. Their mission statement lucidly puts the point across – “Our method is based on a belief that talented young people, challenged to address some of our country’s most common development issues, will find innovative solutions that are relevant, cost-effective, and applicable to the nation at large.” Accordingly, Piramal has built a repertoire of for-profit social enterprises tackling issues from rural health to the supply of drinking water. Among them, Piramal e-Swasthya (erstwhile Mobile Medics) stands out.

Kavikrut, an HBS alumnus, founded Mobile Medics right out of college. As he puts it – “Lack of existing solutions, a grave challenge, a good business plan, and a seed fund led me to take the plunge. I spent about 2 years at Mobile Medics where we treated 2,000 patients across 12 villages.” This zeal and attachment is typically seen in a social entrepreneur which, as per the Ashoka Foundation, is a loose term for “ambitious and persistent people tackling major social issues and offering new ideas for wide-scale change.”

When Mobile Medics wanted to scale up it saw Piramal’s umbrella a perfect place to be under. It saw synergies which led to the absorption of the Mobile Medics team to start eSwasthya. Such synergies helped Piramal not only in effective CSR but also in extending Piramal Health’s competence to the large rural Indian health market.

Unlike traditional CSR, which often lies on the fringes in large companies, involvement with social entrepreneurs brings greater focus. By involving people who in many cases have used their own money and time on projects brings measurable results and financial rigor in social investments. Therefore, we now see huge money being poured by companies into social enterprises through their CSR arms.

It is inevitable that this entrepreneurial approach of tacking social issues will shake the existing “philanthropic” CSR model. However, till now social enterprises have generated more hype than meaningful change. It may pave the way for hybrid business models in the future, but for the time being the corporate behemoths are the ones who can make a significant difference. As in the case of Piramal and Mobile Medics, established companies will collaborate or absorb successful social ventures to further their goals. If we extrapolate this trend, we reach an important academic theory – Corporate Social Entrepreneurship (CSE).

CSE is a process aimed at enabling business to develop more advance and powerful forms of CSR. It makes CSR an integral part of a company’s strategy. A former CEO of Starbucks puts it elegantly, “Aligning self-interest to social responsibility is the most powerful way to sustaining a company’s success.”

CSE requires corporations to have an entrepreneurial culture where cross functional teams harness synergies across various stakeholders. ITC’s e-choupal is a powerful example of how a social initiative has become core to a corporate strategy which links business and society. e-choupal empowers small farmers by removing middlemen in the Indian agricultural markets by leveraging the internet.

Such examples where entrepreneurial activity is supported in a corporate setting are increasing. Further, we can see that the demand for entrepreneurial talent has increased, who are being empowered and given clear goals consistent with the firm’s values which are crucial in advancing CSR.

The transformation of CSR to CSE, if realized, would mean that social values would no longer be viewed as an accessory, but as an important structural component of an organization. As CSE furthers the core objectives of corporations, it amounts to a paradigm shift in how business is done. Such a transformation will definitely be met with massive resistance. Furthermore, social betterment is an area where corporations’ competencies are doubtful. Changing values to look for such disruptive social innovations would enlarge the phase of transition.

However, Piramal and ITC have shown us that the challenges are surmountable. Also, it is increasingly becoming evident that socioeconomic value creation and synergistic partnerships are vital ingredients to a sustainable business today. Till the CSE dream is achieved, many more Kavikruts will partner with leading corporations to enrich the cusp of business and society.

Sachin Bhardwaj is a PGP 1 student at IIM Ahmedabad and a member of the Consult Club. He is passionate about the social sector and public policy. He holds a B.E. in Electrical and Electronics Engineering from BITS Pilani  and has led rural development projects with the help of UNICEF in the past.