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Cause-Related Marketing of Products with a Negative Externality

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  • Gilles Grolleau
  • Lisette Ibanez
  • Nathalie Lavoie

Abstract

Firms increasingly develop partnerships with non-profit organizations (NPO) to support a cause and improve their corporate image. This type of Corporate Social Responsibility, called Cause-Related Marketing, commits firms to fund associations that encourage environmental protection, international development, and other causes by donating part of their profits. In this article, we argue that when cause-related marketing is applied to products with a negative externality, these a priori win-win arrangements can generate adverse and unexpected effects. We consider a vertical differentiation model integrating two assumptions. First, consumers may perceive the firm's contribution to be higher than the actual donation. Second, consumers who value highly socially responsible behavior may prefer not to consume rather than consuming products that aren’t socially responsible. In this set-up we identify several possible counter-productive effects such as the likelihood of increase of the externality and the crowding out of direct contributions. We also draw policy and managerial implications.

Suggested Citation

  • Gilles Grolleau & Lisette Ibanez & Nathalie Lavoie, 2016. "Cause-Related Marketing of Products with a Negative Externality," Working Papers 02-16, LAMETA, Universtiy of Montpellier.
  • Handle: RePEc:lam:wpaper:02-16
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    3. Susana Costa e Silva & Paulo Duarte & Joana César Machado & Carla Martins, 2020. "Cause-related marketing in online environment: the role of brand-cause fit, perceived value, and trust," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 17(2), pages 135-157, June.
    4. Kulow, Katina & Kwon, Mina & Barone, Michael J., 2021. "Does seeing bad make you do good? How witnessing retail transgressions influence responses to cause marketing offers," Journal of Business Research, Elsevier, vol. 132(C), pages 680-692.
    5. He, Hongwei & Chao, Melody M. & Zhu, Weichun, 2019. "Cause-related marketing and employee engagement: The roles of admiration, implicit morality beliefs, and moral identity," Journal of Business Research, Elsevier, vol. 95(C), pages 83-92.
    6. Jeff Wiebe & Debra Z. Basil & Mary Runté, 2017. "Psychological distance and perceived consumer effectiveness in a cause-related marketing context," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 14(2), pages 197-215, June.
    7. Arslanagic-Kalajdzic, Maja & Kadic-Maglajlic, Selma & Dlacic, Jasmina & Zabkar, Vesna, 2022. "“We Go Together”: Understanding social cause-related purchase intentions of young adults," Journal of Business Research, Elsevier, vol. 140(C), pages 130-142.
    8. Khojastehpour, Morteza & Shams, S.M. Riad, 2020. "Addressing the complexity of stakeholder management in international ecological setting: A CSR approach," Journal of Business Research, Elsevier, vol. 119(C), pages 302-309.

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    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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