Mitigating effect of providing specific information on consumers’ negative reactions to cause-related marketing

Abstract

Cause-related marketing (CRM) has received attention from companies around the world in recent years. Companies in Japan use CRM, but they are struggling with it because Japanese consumers have little interest in social contribution and have negative attitudes toward CRM. This study addresses the reason why Japanese consumers display negative attitudes toward products related to CRM from the viewpoint of company motives toward CRM.

An online survey was completed by 290 university students in Japan. We estimated the data using the Discrete Choice Experiment (DCE) method.

We found that Japanese consumers displayed negative willingness to pay (WTP) toward a well-known brand’s product with CRM information (β = −2.485, WTP = −106.7, p < .001). Providing information on the company’s motive for long-term commitment to CRM (the company’s positive motive for CRM) mitigates the negative effect of CRM (β = −1.721, WTP = −46.3, p < .001). Given this information, the overall assessment (WTP) of CRM (whether a CRM campaign has positive effects on product choice or not) is 2.6, which value is larger than the −45.2 WTP value where a consumer is not given this information.

Our results contribute to the theoretical and practical aspects of CRM. Theoretically, we investigate the negative aspects of CRM, whereas many studies focus only on the positive aspects. We concluded that, in Japan, a company is required to demonstrate the motive behind their CRM campaign for it to have an impact on product choice.

Main article text

Introduction

Fair Trade products are not very familiar to Japanese people. In a survey of 1229 Japanese respondents, 10.6 per cent of the respondents responded ‘I completely understand about Fair Trade’, and only 10.1 per cent of the respondents made at least one Fair Trade purchase per year (Watanabe, 2021). Cause-related marketing (CRM) is used to promote sales of Fair Trade products. Kotler & Lee (2005, p. 23) explained CRM as one of six corporate social initiatives. CRM is defined as ‘A corporation commits to making a contribution or donating a percentage of revenues to a specific cause based on product sales’ (Kotler & Lee, 2005, p. 23). The choice and the amount of the donation ‘will depend on consumer behavior’ (Galan-Ladero, Galera-Casquet & Alves, 2021, chapter 1; Varadarajan & Menon, 1988, p. 60).

An example of a CRM campaign to promote a Fair Trade product is the ‘1 Choco for 1 Smile’ campaign run by Morinaga, one of Japan’s leading confectionery companies. This campaign has been running since 2008, with 1 yen from the sale of each eligible product donated to NGOs supporting children in developing countries (Yoshioka, 2015). People Tree, a Fair Trade apparel company based in London and Tokyo, has run a CRM campaign called ‘Share the Love’ since 2011, through which money from the sale of every eligible item is donated to NGOs supporting children and producers in developing countries (People Tree, 2023).

These cases demonstrate the use of CRM for Fair Trade products in Japan to meet Fair Trade objectives, such as donating a portion of sales to support child labor and producers in developing countries. Therefore, CRM for Fair Trade products has created what Fair Trade is meaning in Japan. ‘As evidence to support this, most Japanese people tend to have an image of fairtrade as supporting poverty’ (Watanabe, 2021).

This study will examine the effect of knowing the motives behind CRM on Japanese consumers’ willingness to choose Fair Trade products. Prior research has pointed out that the motive behind a company’s use of CRM influences the effectiveness of that CRM (Bae, 2018; Barone, Miyazaki & Taylor, 2000; Moosmayer & Fuljahn, 2013). The reason for targeting Japanese consumers is that a survey conducted by Charities Aid Foundation (2019) indicated that Japanese people have the lowest level of willingness to contribute to society (through donations, volunteer work, and so on). The results of this study can be compared with prior research conducted in other countries where the willingness to contribute to society is higher than in Japan.

The remainder of this paper is structured as follows. The second section formulates the hypotheses related to our study. The third section explains our methods for testing the research hypotheses. The fourth presents and discusses the results. The final section summarizes our conclusions and explores the scope for future research.

Literature Review

Effect of CRM information on product choice

Previous studies revealed that CRM campaigns increase favourable attitudes (Barone et al., 2000; Ferraris, Del Giudice, Grandhi & Cillo, 2019; Lafferty & Goldsmith, 2005; Webb & Mohr, 1998). For example, Lafferty & Goldsmith (2005) explore how CRM information that links a brand with a cause affects attitudes toward a brand by comparing the attitudes of consumers both before and after exposure to CRM information. They found that post-exposure positive attitudes toward the brand are higher than pre-exposure attitudes. Ferraie et al. (2019) examined the impact of CRM on purchase intention and found that it positively influenced purchase intention for both Italian and Brazilian consumers.

However, there are some indications that CRM has its negative aspects. Webb and Mohr (1998) point out that some people may interpret a company’s use of CRM as self-centered reasons, and may therefore exhibit a negative attitude toward that company’s CRM campaign. Sheikh and Beise-Zee (2011) also point out that a disadvantage of CRM is that ‘the public is more likely to suspect the company’s impetus to be merely an attempt to woo customers, rather than genuine support of the cause’ (p. 28).

This scepticism toward CRM tends to be particularly strong in Japan. Ota, Sakata & Iijima (2019) state that CRM information in combination with a well-known university brand has a negative effect on Japanese consumers, but the main effect of that well-known university brand is positive. Furthermore, Ota, Iijima & Sakata (2020) confirm that CRM information in combination with a well-known company brand has a negative effect on consumer product choice in Japan. ¹ Therefore, we formulate the following hypothesis:

H1: CRM information in combination with a well-known brand has a negative effect on product choice in Japan.

Company’s perceived motive for CRM mitigates its negative effect

Forehand & Grier (2003) argue that ‘consumer skepticism toward a company is driven not simply by beliefs that the company’s motives are self-serving but rather by the perception that the company is being deceptive about its true motives’ (p. 350). To mitigate scepticism toward the company using CRM, marketers may provide information on the altruistic motive for CRM such as a long-term commitment to a non-profit organization (Webb & Mohr, 1998). Barone et al. (2000) pointed out that a company’s perceived motive for supporting a social cause may influence the degree to which CRM strategies affect product choice, and they found that both positive attitudes toward the company and purchase intention increase if the company’s motive for CRM campaigns is recognized as unselfish. Moosmayer & Fuljahn (2013) pointed out that when selecting CRM products price is the most important factor, contributing by 45 per cent to product choice; followed by the company’s motives for CRM, contributing by 27 per cent; followed by the amount donated (18 per cent), which is related to the company’s positive motives (Webb & Mohr, 1998). Furthermore, they found that the effects of perceived altruistic motives on product choice exceed those of perceived profit-oriented motives. Bae (2018) explored the mediating effect of attributional thinking on how CRM advertisements influence corporate credibility. Bae (2018) found that scepticism toward CRM decreases when people have positive attributional thinking (e.g., the company is trying to give something back to the community) and increases when people have negative attributional thinking (e.g., the company will take advantage of the non-profit organization to help its own business).

Previous studies on CSR also showed that a company’s perceived motive for CSR influences consumer attitudes (Ellen, Webb & Mohr, 2006; Fatma & Rahman, 2017; Groza, Pronschinske & Walker, 2011; Jeon & An, 2019; Singh, Iglesias & Batista-Foguet, 2012; Wongpitch, Minakan, Powpaka & Laohavichien, 2016). For example, Groza et al. (2011) showed that values-driven motives (e.g., the company believes that CSR is the right thing to do) have a positive effect on attitudes toward the company and purchase intention, compared to the effect of strategy-driven motives (e.g., the company wants to increase sales or mitigate harm). Wongpitch et al. (2016) demonstrated that altruistic motives (the same as values-driven motives) for CSR activities have a positive effect on attitudes toward the company, increasing purchase intention by promoting a positive attitude toward the brand. Jeon & An (2019) showed that perceived CSR authenticity (integrity in CSR activities) evokes favourable attitudes toward the company, whilst egoistic motives (e.g., the company believes that CSR will be of benefit to the business) influence CSR authenticity negatively.

Hence, Japanese consumers’ scepticism about CRM decreases when people receive information on the altruistic motive for CRM, and the negative effect of CRM is mitigated. We propose the following hypothesis:

H2: A company’s perceived positive motive for CRM mitigates the negative effect of CRM in Japan.

Data and Method

Data

To examine these hypotheses, we collected data through a survey entitled ‘A Survey on Chocolates’. Our department students participated in the survey, which was conducted online using Questant. ² The survey was carried out between 8 June and 29 June 2020. There were 290 respondents, which consisted of 221 men (76.2 per cent), 53 women (18.3 per cent), and 16 N/A (5.5 per cent). After we screened the sample and eliminated inappropriate responses, the number of valid samples was 278.

We divided respondents into three groups according to their birth months and provided each group with a different amount of information (Figure 1) about AEON’s motive for CRM before asking them to complete questionnaires. ³ Morinaga demonstrated its commitment to CRM by receiving Fairtrade certification for its ‘1 chocolate for 1 smile’ CRM campaign. We decided to use Fairtrade certification to demonstrate the motivation for AEON’s CRM campaign. The respondents in Groups 1, 2 and 3 were provided with varying levels of information on AEON’s Fairtrade certification. The information provided to respondents in Group 1 emphasizes that AEON has been Fairtrade certified for a long time; Group 2 is told only that AEON is Fairtrade certified; and Group 3 are not told that AEON is Fairtrade certified. Our survey sheet has six parts. In the first part, the respondents were asked whether they had a positive image of AEON, and the answers were measured using a 7-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree). In the second part, they were provided with different information according to their groups. The third part contained choice experiments, in which we provided different choice sets with eight choices. In the fourth part, we asked about participants’ image of AEON again. The fifth part recorded attitudes toward poverty and environmental problems. The last part identified the demographic characteristics.

Figure 1

Steps for our Research and Analysis

Research methodology: discrete choice experiments and the determination of attributes and levels

We estimated the respondents’ WTP for each attribute to test our hypotheses. To obtain the WTP, we collected data using discrete choice experiments (DCE) and estimated DCE responses using the mixed logit model.

DCE is a special case for conjoint analysis, and it was originally developed for marketing research (Louviere &Woodworth, 1983; Louviere, Flynn & Carson, 2010). This method can be used for estimating WTP for goods with multiple properties. The attributes can be non-market values, such as the characteristics of goods, social values and environmental values (Aizaki, Nakatani & Sato, 2014). DCE is also used in the study area of CRM (Lee & Ferreira, 2011; Chang & Liu, 2012; Ota et al., 2019; Ota et al., 2020; Pracejus & Olsen, 2004).

To test this study’s hypotheses, we modified the attributes of chocolate in previous studies (Ota et al., 2019; Ota et al., 2020). Based on our hypotheses, the following attributes were evaluated using the DCE method: the price of the products (hereafter PRICE); the producer’s standard of living (hereafter PSOL); and the company brand (hereafter BRAND).

The levels for each attribute were set as shown in Table 1. We assigned levels according to previous studies (Ota et al., 2019; Ota et al., 2020). PSOL was divided into two levels: ‘adequate standard of living (no poverty support component)’ and ‘child labour owing to poverty (the purchase of chocolate can contribute to the prevention of poverty and child labour situations)’. BRAND was divided into two levels: AEON and ‘an unknown manufacturer’ (‘Unknown’ in Table 2). The product package did not feature labels for ‘adequate standard of living’ but featured a label for ‘unknown’.

Table 1

Profile design of the experiments

Table 2

Estimation results (Group 1–3)

Notes *** p < .01, ** p < .05, and *p < .10

From the total of twelve combinations of the above attribute levels, eight profiles were extracted by orthogonal planning using the AlgDesign package for the R Statistical Software implementation (R Core Team, 2018; Wheeler, 2006). We randomly extracted two of these profiles and set eight questions for three choice formulas, which included ‘Neither’, indicating choosing a chocolate product that was sold by an unfamiliar manufacturer to the public for 100 yen.

We conducted the survey without a pilot test because the validation was confirmed by previous studies (Ota et al., 2019; Ota et al., 2020).

Correspondence between analysis model and hypotheses

Full details of the methods used can be found in our previous research paper (Ota et al., 2020). In brief, we set a model which included three attributes: PRICE, PSOL and BRAND, with the cross-term ⁴ of PSOL and BRAND (hereafter PSOLBRA). Here, β_i denotes the coefficient estimates of each attribute i(i = PRICE,PSOL,BRAND,PSOLBRA).

Measurable utility, V, denote as follows:

$$V={\beta }_{PRICE}\times PRICE+{\beta }_{PSOL}\times PSOL+{\beta }_{BRAND}\times BRAND+{\beta }_{PSOLBRA}\times PSOLBRA$$

To estimate the model, we added error term ε and obtained the following observable utility, U:

$$(\text{Model})U={\beta }_{PRICE}\times PRICE+{\beta }_{PSOL}\times PSOL+{\beta }_{BRAND}\times BRAND+{\beta }_{PSOLBRA}\times PSOLBRA+\epsilon$$

As explained in the previous section, respondents were divided into three groups. We estimated the model with three groups, Group j(j = 1,2,3). Here, U ^j, V ^jand ε ^j denote observable utility, measurable utility and error term for Group j(j = 1,2,3) respectively. ${\beta }_{PRICE}^j$ denotes the coefficient estimates of PRICE, and ${\beta }_i^j$ denotes the coefficient estimates of each attribute for Group j(j = 1,2,3).

Then, we can obtain WTP as follows (Train, 2009, p. 43):

$$WT{P}_i^j=-\frac{{\beta }_i^j}{{\beta }_{PRICE}^j}$$

Using the model, we verify that H1 is supported if ${\beta }_{PSOLBRA}^3$ is significantly negative and WTP ³ is negative and that H2 is supported if ${\beta }_{PSOLBRA}^j$ (j = 1,2,3) are significant, ⁵ and the following inequalities hold:

$$WT{P}_{PSOLBRA}^1>WT{P}_{PSOLBRA}^2>WT{P}_{PSOLBRA}^3$$

In addition to testing WTP changes, we conducted several analyses of the changes in respondents’ images of AEON, namely, analysis of variances (ANOVA), analysis of covariance (ANCOVA), and Tukey’s honestly significant difference (HSD) test. They served to supplement the interpretation of H2.

Estimation

We estimated the model using the mixed logit model with the R statistical software (R Core Team, 2018) and the mlogit package (Croissant, 2020).

As is traditional, we used the conditional logit model to estimate DCE responses. It was assumed that all individuals had the same utility parameters, that is, homogeneity of preferences among individuals. The mixed logit model is a logit model where the parameters are assumed to vary from one individual to another. It is therefore a model that takes the heterogeneity of the population into account (Croissant, 2012). In this study, preferences for a brand and resolving a poverty problem would vary among respondents. Thus, we adopted a mixed logit model to estimate the model.

For the DCE analysis, the utility of an option is verified according to the sign and magnitude of the coefficient estimate of the variable. A positive sign of a coefficient estimate indicates a positive value and, consequently, a positive utility of the option. Conversely, when the sign of a coefficient estimate value is negative, this indicates that the smaller its value, the smaller the utility of that option (Aizaki & Nishimura, 2007).

Results and Discussion

Results

Our aim is to answer the following question: is information on the company’s motive for CRM effective in mitigating the negative effect of CRM for consumers in Japan? We proposed two hypotheses:

H1: CRM information in combination with a well-known brand has a negative effect on product choice in Japan.

H2: A company’s perceived positive motive for CRM mitigates its negative effect in Japan.

To test the hypotheses, we estimated the model using a mixed logit model. We then calculated the WTP for the attributes in the model for Group j (j = 1, 2, 3).

${\beta }_{PSOLBRA}^3$ was significantly negative (−2.485, p < .001), and $WT{P}_{PSOLBRA}^3$ was negative (−106.7) (Table 2). This result indicated that consumers in Japan negatively evaluated well-known brands’ CRM. Thus, H1 was supported.

${\beta }_{PSOLBRA}^1$ and ${\beta }_{PSOLBRA}^2$ were significantly negative, −1.721 (p < .001) and −1.799 (p < .001) respectively (Table 2). $WT{P}_{PSOLBRA}^1$ (−46.3) and $WT{P}_{PSOLBRA}^2$ (−63.8) were greater than $WT{P}_{PSOLBRA}^3$ (−106.7). These results showed that the evaluation of well-known brands’ CRM became less negative as consumers in Japan were provided with information on the company’s altruistic motive for CRM. Therefore, H2 was supported. Table 3 shows respondents’ impressions of AEON. The mean averages of the pre-experiment impressions of Groups 1, 2 and 3 were 5.51, 5.42 and 5.18 respectively. The result of the ANOVA for respondents’ pre-experiment impressions of AEON was insignificant, F (2, 275) = 1.816, p = 0.165 (Table 4). It indicated that there was no difference in the groups’ impressions of AEON before they were provided with information on the company’s Fairtrade certification.

Table 3

Respondents’ impressions of AEON

Table 4

Changes in impressions of AEON

On the other hand, the mean averages of the post-experiment impressions of Groups 1, 2 and 3 were 5.63, 5.44 and 4.99 respectively (Table 4). ANOVA for respondents’ post-experiment impressions of AEON was significant, F (2, 275) = 8.177, p < .001 (Table 4). It indicated that each group had a different impression of AEON after they were provided with different information on its Fairtrade certification. This result implied that information pertaining to AEON’s motive for CRM caused the respondents to have different impressions of the company. The mean averages of the differences between the pre- and post-experiment impressions of Groups 1, 2 and 3 were 0.12, 0.02 and −0.19 respectively (Table 3). The result of ANCOVA for the change in impressions of AEON indicated that the variable, Group, was significant, F (2, 272) = 6.986, p = .001 (Table 4). Tukey’s HSD showed that the difference between Groups 1 and 3 was significant (p < .01) and that the difference between Groups 2 and 3 was slightly significant (p < .05). However, the difference between Groups 1 and 2 was insignificant (Table 5). These results indicated that the difference was due to the information provided on AEON’s motive for CRM.

Table 5

The result of Tukey’s HSD for change in impressions of AEON

Discussion

The results in Table 3 show that PSOLBRA in Group 3 (which was not informed about the company’s motive for CRM) has a negative effect on product choice, even though the positive effect of BRAND is confirmed. These results indicate that products with CRM campaigns make consumers in Japan hesitant to choose, even if the company’s brand is well known. These results are in line with previous studies indicating that CRM has negative aspects (Sheikh & Beise-Zee, 2011; Webb & Mohr, 1998) and that CRM has a negative effect on product choice in Japan (Ota et al., 2019; Ota et al., 2020).

This might be explained in a cultural context. In Japan, there is an aphorism, ‘Intoku no bi’, which means the virtue of doing good by stealth. ⁶ For example, if someone brags about donating to a cause, people in Japan perceive it as being contrary to ‘Intoku no bi’. Consumers in Japan tend to value ‘Intoku no bi’ (Nomura & Yagi, 2016). In Japan, we assume that our results show that AEON’s CRM is perceived as being contrary to ‘Intoku no bi’. Consumers in Japan may be ashamed that AEON did not hide its cause activities, and instead used them to promote its business.

However, providing information on the company’s motive for a CRM campaign could mitigate consumers’ perception that CRM is contrary to ‘Intoku no bi’. The results in Table 4 show that the WTP for PSOLBRA is −46.3 in Group 1 (which was informed about the company’s motive for long-term commitment to CRM) and −63.8 in Group 2 (which was informed about the company’s motive for CRM without any information on the longevity of its commitment to it).

If the overall assessments of CRM (whether a CRM campaign has positive effects on product choice or not) are BRAND + PSOLBRA, they are 2.6 in Group 1, −1.3 in Group 2, and −45.2 in Group 3. These results indicate that the overall CRM effects could be positive depending on how the information is provided, even if the CRM campaign itself is perceived negatively.

Consistent with previous studies, perception of the motive behind a company’s use of CRM had a positive effect on purchasing behaviour. Previous studies by Barone et al. (2000) and Moosmayer & Fuljahn (2013) used American and German students respectively as their samples, and people in these countries have a greater motivation to contribute to society than people in Japan (Charities Aid Foundation, 2019). Nevertheless, similar results were obtained. Leading companies’ motives for CRM must be perceived as altruistic in order to increase purchasing behavior (Barone et al., 2000; Moosmayer & Fuljahn, 2013). Webb & Mohr (1998) point out that a long-term commitment to a non-profit organization leads to perception of a company’s motives for CRM as being altruistic. The information provided in Group 1 focuses on this long-term commitment, which seems to be what led subjects to perceiving the company’s motive as altruistic. Furthermore, Bae’s (2018) study suggests that a perceived altruistic motive is considered to reduce scepticism toward a company using CRM, and increase purchase intentions. As shown in Table 5, the degree of change in respondents’ impressions of AEON in Group 1 before and after providing information on the company’s motive for CRM is greater than that seen in the Group 3 respondents, who were not provided with information on AEON’s initiative. These changes in impressions of AEON suggest the possibility that AEON’s perceived altruistic motives reduced scepticism toward the company and increased purchasing intention on the part of the respondents.

Fair Trade goods are considered to command a considerable price premium (Samoggia & Riedel, 2018). However, CRM can reduce its effectiveness in Japan. To avoid this, companies need to communicate the motivation behind CRM of Fair Trade products.

Conclusions and Future Research

Our study examined how a company’s motivation for CRM influences the effectiveness of CRM for Japanese consumers. The conclusions of this study can be summarized as follows:

• (a) Products with CRM campaigns make young consumers in Japan hesitant to choose, even if the company’s brand is well known.

• (b) The negative effect of CRM is mitigated when young consumers in Japan are exposed to information on the company’s motive for CRM, emphasizing its long-term commitment, before purchasing products with CRM campaigns.

Our findings that CRM has a strong negative effect on Japanese consumers correlate with previous studies on CRM (Ota, et al., 2019; Ota et al., 2020; Sheikh & Beise-Zee, 2011; Webb & Mohr, 1998). We assume that these negative attitudes are based on ‘Intoku no bi’, and the perception that CRM contradicts this principle makes Japanese consumers hesitant to choose a CRM product. To mitigate such negative attitudes, our study showed the effectiveness of providing information on a company’s long-term commitment to a cause. A company’s motive is shown in previous studies to have a positive impact on consumer purchasing attitudes (Bae, 2018; Barone et al., 2000; Moosmayer & Fuljahn, 2013) and also to mitigate the negative attitudes of young consumers in Japan toward CRM.

Finally, we discuss the limitations and challenges of this study. In this study, university students are used as a sample of Japanese consumers, and focus only on AEON. To ensure the generalizability of our research findings, it is necessary to conduct a similar study with a wider generation of Japanese consumers and with a focus on Japanese companies other than AEON. We also need to conduct similar studies on Japanese consumers with respect to brands with a negative image or whose brands are not well known. We confirmed that PSOLBRA had a positive effect on product choice in Group 1 (which had a bad initial impression of AEON, from level 1 to level 4), but that this result was not significant, probably because of the small sample size. We determined that demonstrating a company’s altruistic motives for a CRM campaign could be effective when consumers in Japan have a negative image of the company.

Footnotes

Funding:

JSPS KAKENHI (grant number 21K13392, 20K01699)

Notes

1

Ota et al.’s (2019) survey was conducted on 1,110 Japanese people in their teens to 70s. Ota et al.’s (2020) survey was conducted on 1,492 Japanese people in their teens to 70s.

2

Questant is an online survey service of Macromill, Inc.

3

In this experiment, a real Japanese company called AEON is used. The real company has an existing corporate image. Therefore, if we use a real company, we can confirm how the existing corporate image is changed by information about the company’s motive for CRM. AEON is a major Japanese retailing conglomerate, which is ranked 115 on Fortune Global 500 in 2020. It has several private-branded chocolates.

4

By using a cross-term, it is possible to check how variable A is influenced by variable B in terms of the option utility (Aizaki & Nishimura, 2007). For example, a positive coefficient estimate of PSOLBRA (PSOLBRA) means that people have a good impression about the company’s major social contributions through business operations and have a strong tendency to select the brand’s products because of the appeal of its social contributions.

5

Each of PSOLBRAj (j = 1, 2, 3) does not necessarily have to be negative.

6

It seems the same as Alexander Pope’s aphorism: Do good by stealth, and blush to find it fame. In this context, Berman, Levine, Barasch & Small (2015) showed that bragging about a pro-social behaviour has a positive effect on the perception of altruism when the pro-social behaviour is unknown.

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