Think Local : Think Ethical

Posted by A.C. Ping
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Since the early 1980s the dominance of free market thinking in the industry policies of Western nations, has delivered a plethora of choice to the average consumer. Where once the consumer was faced with the choice between the cheaper, often lower quality, local product and, the far more expensive, but higher quality, foreign product, a much more even choice is now available. In many Industries, the lowering of tariffs and the freeing up of global trade has led to an increased range of products to choose from and a much higher quality standard in locally made products. This is not to say that all Industries have reached this position but suffice to say that the future intentions of both Government and Industry bodies is clear.

Paradoxically, as the consumers range of choice and the producers access to new markets has increased, the marketer’s challenge has often become one of how to keep existing clients. In the face of an ever increasing array of sales promotions by competitors, companies have sought new and innovative ways to ensure their clients loyalty. Most popular amongst these measures have been the so called, ‘frequent user’ programs which ‘reward’ customers in proportion to their patronage. Major companies that have adopted this approach include, Ansett Airlines with their ‘Global Rewards’ program and the women’s fashion retailer ‘Liz Davenport’ but many smaller companies such as local bookstores have also implemented similar schemes.

More recently, groups of companies have combined to entice consumers with a wider range of incentives. ‘Fly Buys’ links together Myer stores and Shell service stations, whilst the ‘Qantas Telstra VISA card’ links Qantas, Telstra and Mobil through a credit card provided by the ANZ bank.

What is common to all of these schemes is their ultimate aim of tying a customer to their product and building a long term relationship with them. However, whilst companies in Australia have concentrated on ‘frequent user’ programs, overseas corporations, and American ones in particular, have been adding a new dimension to the act of ‘relationship building’. ‘Cause related marketing’ occurs when a company forms a relationship with a charity or cause for mutual benefit. The idea is that the charity gets increased income and awareness whilst the company can get increased sales and profile. In this sense, it’s a win win situation and in the United States this form of marketing has grown to be a half a billion dollar a year industry.

But whilst the growth of Cause Related Marketing in the United States has been phenomenal, the interest of Australian companies in the concept has been limited. McDonalds, as an American company, has been the leader in the field with ‘McHappy Day’, the Australian Rice Growers Co-operative supports the ‘Australian Koala’ Foundation with its ‘Koala Brand’ rice and the ‘Pal means money to the Guide Dogs’ is now into its second year, but we are yet to see the growth in this type of marketing that the US has experienced. Perhaps the reason has been that Australian companies have been sceptical as to whether or not Australian consumers would react to this type of overt community involvement in the way that US consumers have.

New research however, indicates that this situation is due to change. In April this year, Marketing Consultants, Cavill and Co. and the Research Firm, Worthington Di Marzio, combined to conduct a study called ‘The New Bottom Line - Consumers, Business and the Community - Directions for Cause Related Marketing in Australia’. One thousand consumers nationwide were interviewed by telephone to determine their attitudes towards Cause Related Marketing, the companies involved in such activities and their overall expectations for Australian companies being involved in community issues.

What will surprise Australian companies most is that the results of the survey almost mirror the results of a similar survey undertaken in the United States. That is, the assumption that Australian consumers would react differently to US consumers when considering corporate community involvement, would seem to be wrong. Of the survey group, 83% believed that it is good for companies to be involved with Cause Related Marketing with 88% saying that companies should promote their involvement with causes to the mainstream community. Within this group, 39% wanted to see companies promote their involvement through TV advertising, 25% through general advertising, 24% through print and 14% through packaging. In other words, there is no reason to be shy about promoting what you stand for as a company, consumers want to know.

With regard to the cause itself, 80% of survey respondents preferred to see a company support a specific cause over a year or more rather than many different causes over short time periods. There was also a preference for a local cause (53%) rather than a national (31%) or international (3%) cause. A majority (59%) also wanted to see Cause Related Marketing as part of a company’s philosophy with, tangible results, making the commitment public and commitment over time, being seen as proof that the company was legitimate about its concern for the cause.

What is also interesting is how Cause Related Marketing activities affect the behaviour of the consumer. As mentioned above, the question of consumer behaviour particularly in regard to loyalty, is a key issue in a deregulated world. In answering the question of "What influences you to buy a product or service ?", the most important influence was, not surprisingly, ‘value for money’, followed by, in order, ‘good customer service’, ‘whether the company is Australian’, ‘recommendation from a trusted friend’, ‘ready availability’, and then ‘values and ethics of the company’ and ‘the fact that the company contributes to charitable or community causes’. These two issues of ‘values and ethics’ and ‘contributions to charitable or community causes’ both rate higher than ‘customer loyalty or reward programs like Fly Buys or Frequent Flyers’.

In addition to this result, when faced with a situation where two brands were of the same quality and price but one was from a company associated with Cause Related Marketing and the other wasn’t, 73% said that they would prefer to buy the product or service from the company associated with the cause and 49% said they would be prepared to switch from their normal brand.

These results should be ringing alarm bells for any marketers out there, the implications are clear, consumers in Australia do care and they want to be associated with companies that care about something other than just the bottom line. This is not to say that companies should be abandoning other measures to encourage consumer loyalty, far from it, but Cause Related Marketing is another tool which should be considered for achieving the same ends.

The other conclusion that can be drawn from the survey is that the impact of CRM activities will depend heavily on the state of the industry within which the business operates. The closer the industry is to being in a state of perfect competition, that is many available brands at the same price and the same quality, the higher the impact of any CRM strategy will be. Or, to put it more succinctly, when price is not an issue because all available brands are price competitive, and service and quality are of equal standards across the board, what will matter most to the consumer is what the company stands for and how it behaves within the community. In a perfect world, what consumers will want are companies that care.

 

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