The Press, April 2010

Next time you buy coffee beans from local roaster Underground, you might be getting more than a caffeine fix. You could also be donating to youth charity Project K.

It’s a grassroots example of a growing phenomenon in New Zealand – companies aligning with good causes for altruism and commercial gain.

Underground, a Canterbury coffee bean roaster and operator of several cafes, donates some of the proceeds from each bag of its “Above The Line” coffee to Project K, a charity that uses outdoor activities to help underachieving teenagers.

Cycle clothing makers Ground Effect is another example of a company giving to receive. “Since Adam rode a hard-tail, Ground Effect has provided foot soldiers and cold cash for the cycling revolution,” they say in describing their famous ‘slush fund’ which supports volunteers to build mountain bike tracks around the country.

Is this do-gooder marketing effective or an irresponsible waste of shareholder funds?

Philip Kotler, one of the world’s most respected marketing academics, was recently quoted in the UK’s Financial Times as saying the time was right for what is called “cause marketing”.

He points to the fact consumers have become increasingly cynical as marketers bombard them with more products, and more advertising messages. On the other side firms are facing more pressure as a result of the recession, and are looking at cheaper ways of marketing themselves.

Associating with a good cause can be a cost-effective way of braking through the cynicism of consumers and building trust.

A study recently released by the University of Michigan backs this up. It found that cause marketing can increase a company’s sales and help them raise their prices. This was down to “the additional benefit that consumers get from buying a cause-related product (besides what the product itself does for them). Consumers feel good about the firm selling the product, and also about themselves when they purchase such a product.”

You can’t underestimate the power of this emotional connection to your brand. If the only difference between your product and a competitor’s is the fact you are backing a charity, that can be enough to swing a customer’s choice in your favour.

As Kiwis we need to lift our game as givers. For too long we have left the support of community organisations to local and central government, and other funding bodies like the gaming trusts, and it shows in the statistics.

A 2006 study by UK-based Charitable Aid Foundation put New Zealand well down on a list of developed countries in our level of giving as a ratio of GDP. New Zealand’s generosity level of 0.29% of GDP, compared poorly to the Australian figure of 0.69% and USA figure of 1.67%.

It’s not that New Zealand businesses aren’t generous, more that it has been hard for us to give. That has got easier in recent times, with the government changing the way donations are treated in 2008. Previous to that only publicly listed firms and Maori organisations could claim tax deductions from charitable donations. Now they can claim a tax deduction for charitable gifts up to the amount of their taxable income.

Online giving methods have also emerged. and are two of the new bunch of organisations making it easier for charities to collect and companies and individuals to give.

What are some of the things you need to think about when evaluating some ‘do-gooder’ marketing? Most companies have no shortage of organisations asking for financial and other help, so having some sort of framework for assessing them is critical.

Market fit is an obvious consideration. Will those involved in the cause be logical buyers or influences of those buying your product? Aged care provider Ryman Healthcare backs various good causes, but is careful about selecting those related to the older demographic.

Direct revenue opportunities are not always possible, but a great way to measure the direct benefit of cause marketing. Like the Underground example, you might sacrifice some profit from a product line, but the overall benefit to your brand can be greater.

Brand exposure is usually the more obvious benefit to analyse. What are the opportunities for positive exposure through publicity the cause attracts? Are their ways you can reach their networks directly to promote your brand or sell product? Can you somehow associate the cause’s name with the marketing your typically do e.g. an endorsement in an advertisement. Charities like Cure Kids are great at getting media coverage, and that benefits all of their commercial supporters.

Staff opportunities are another important consideration. Involving your team in a charitable endeavour is a powerful unifying force. For example, Jade Software Corporation under Sir Gil Simpson had a longstanding commitment to the Christchurch City Mission. That didn’t give the company a lot of brand exposure, but it provided many staff opportunities to work together in the shelter, cooking meals and answering phones.

Of course there is another simple reason for getting behind a cause. Good old-fashioned social responsibility - backing those out in the community trying to make a difference for those that are less fortunate.

Adding cause marketing to your tactical mix is worth considering. Done carefully and managed well, it can deliver commercial benefit, and make a difference in an increasingly tough world.

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