Negative economic consequences of ethical campaigns?: Market data evidence

This study demonstrates how ethical attributes of goods affect market outcomes on the basis of market data and actual ethical campaigns. Among the various types of such attributes, such as eco-label and fair trade label, I focus on cause-related marketing (CRM), which economists study less frequently than other ethical attributes. Researchers who analyzed this topic focused largely on experimental data, which has less noise and enables researchers to obtain the pure effect of ethical attributes on market outcomes. However, ethical attributes in practice sometimes en-counter ignorance and even criticism by consumers who deem it as a mere marketing strategy, rather than a truly ethical campaign. These issues play weak role in experimental data estimates because brands and cam-paigns are typically artificial, but the important question is how ethical attributes work in the real marketplace. Therefore, I analyze this issue by estimating the demand for CRM on the basis of scanner data of the US bottled water market and actual campaigns. Surprisingly, the results indicate that CRM decrease sales and suggest that negative consequences of ethical campaigns may occur in the real marketplace.