Cause Marketing Strategy with Consumer Prosocial Behavior

Abstract

With the market’s growing concern for corporate social responsibility, consumers’ purchasing decisions are gradually influenced by their prosocial behaviors, which leads more and more consumers to prefer brands and products associated with charity events. Based on this, cause-related marketing (CRM), as an innovative marketing model that combines product sales with public welfare, is gradually being favoured by various enterprises. Considering the market proportion of prosocial consumers, 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 donation behaviors. By developing a Stackelberg model for two scenarios, including the donations for each unit sold (UCM strategy) and donations for one-off (OCM strategy), this paper finds that the proportion of the market with prosocial consumers and their sensitivity to CRM, as well as the additional utility generated by this group of consumers under the OCM strategy, are key to the manufacturer’s choice of CRM strategy. The larger the additional utility generated under the UCM strategy, the more likely the manufacturer is to choose the OCM strategy. When the additional utility generated under the UCM strategy is small, the manufacturer’s CRM strategy is determined by the proportion of the market with prosocial consumers and their sensitivity to CRM: if the proportion of the market with prosocial consumers and their sensitivity to CRM are both moderate or large, the manufacturer should choose the OCM strategy; conversely, it is more favourable to choose the UCM strategy. Furthermore, the model is extended to that the retailer implements the CRM strategy which also have the same donation strategy options. The results indicate that CRM strategy in the supply chain and total donations areh less affected by the implementing entity.

Keywords

Cause-related marketing / corporate social responsibility / supply chain management / consumer prosocial behaviour

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Systems Engineering Society of China and Springer-Verlag GmbH Germany