Cause-related Marketing Strategy in Supply Chain Considering Quality Differentiation

Abstract

Cause-related marketing (CRM), as an organic combination of marketing and corporate social responsibility (CSR), has been widely used in the supply chain. However, the existing literature rarely studies the CRM strategy the in the supply chain. This paper explores the pricing decisions and CRM strategy of supply chain members by examining a supply chain system consisting of a manufacturer and a retailer, where the manufacturer produces two quality differentiated products. By developing a Stackelberg model for three scenarios, including the No CRM strategy, CRM strategy for the high-quality product, and CRM strategy for the low-quality product, this paper finds that the CRM strategy will result in higher wholesale and sales prices for the cause-related product. In addition, consumers’ pro-sociality and the degree of product quality differentiation are critical to the manufacturer’s choice of CRM strategy. When the quality difference differs significantly, the manufacturer should implement CRM for the high-quality product in a market with low consumer pro-sociality and for the low-quality product in a market with high consumer pro-sociality; when the product quality difference is slight, the manufacturer should choose to implement CRM for the low-quality product regardless of consumer’s pro-sociality. Furthermore, the model is extended to that the retailer implements the CRM strategy and a retailer-led supply chain. The results indicate that CRM strategy in the supply chain is not influenced by the implementing entity or the supply chain leader.

Keywords

Cause-related marketing / supply chain / quality differentiation / pricing decisions / corporate social responsibility

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