Brand Building Through Cause-Related Marketing: Coca Cola Artic Home Project - Essay Example

?Brand Building Through Cause-Related Marketing: A Case Study of Coca Cola Artic Home Project By In today’s marketplace, consumers have a wide variety of products and services to choose from. Moreover, the quality and prices of the products and services are vastly similar (Grewal, 2000). In order to distinguish their products and services from those of other businesses, businesses are increasingly adopting cause-related marketing strategies (Lamb, Hair, & McDaniel, 2012). Cause-related marketing is believed to be an effective tool for building and/or improving or sustaining brand and/or corporate reputation (Varadarajan & Menon, 1988). This research study tests the hypothesis that cause-related marketing can build and/or improve or sustain brand and/or corporate reputation. The hypothesis is tested by conducting a qualitative case study of Coca Cola’s Artic Home Project. Coca Cola is chosen as the subject of this study because it has a long and rich history as a global brand. The case study is conducted in two parts. The first part of the study involves 20 semi-structured interviews with some members of Coca Cola’s supply chain retailer managers. The participants are asked about the trends in coca sales and whether or not those trends correspond with the ongoing Artic Home Project. The second part of the study involves the distribution of a questionnaire to 100 random consumers. The questionnaire focuses on questions seeking to determine the extent to which cause-related marketing and in particular Coca Cola’s Artic Home Project promotion influences the decision to purchase a particular product over another. Table of Contents Abstract 2 Introduction 4 Primary Research Question 6 Secondary Research Questions 6 Literature Review 6 Research Methodology 11 Data Collection 12 Research Philosophies 13 Research Approach 14 Findings 15 Semi-structured Interviews 15 Questionnaire 16 Conclusion 17 Further Research 18 Bibliography 22 Introduction Cause-related marketing (CRM) brings together a number of features: fundraising/marketing for non-profit organization, corporate philanthropy, promotion, profit, public relations and corporate social responsibility (Varadarajan & Menon, 1988). At its core, CRM involves a partnership between non-profit organizations and for-profit organizations and is characterized by “profit-motivated giving” (Varadarajan & Menon, 1988, p. 58). CRM is a unique method by which firms communicate with consumers through the use of advertising, packaging, promoting, campaigning and other communication tools about the business’s connection to a social cause and link to a non-profit organization (Bronn & Vrioni, 2001). Pringle and Thompson (1999) argue that CRM deliberately connects a business and it brand to a specific cause in a way that promotes both the cause and the brand. Linton (2005) argues further that businesses choose a social cause via CRM because it is generally assumed that consumers will typically choose a brand that is both “practical” and “expressive” (p. 604). Put another way, businesses will choose a cause via CRM with the intention of promoting consumer loyalty to a brand. In this regard, CRM is used to heighten or tap into consumer social awareness. When a consumer is decidedly already committed to a specific brand, CRM can be used as a method of “brand extension” (David, 2000, p. 132). The Coca Cola Company has always managed to create and maintain brand value despite intense competition from rival companies such as Pepsi and despite the fact that its primary product, Coke is associated with contributing to obesity (Kapferer, 2008). Coca Cola is arguably a household name worldwide and has maintained brand loyalty based its high visibility, availability and its long and sustained logo and marketing and packaging familiarity (Kapferer, 2008). More than a billion Coca Cola products are consumed daily in approximately 200 countries (Bodden, 2008). Coca Cola is arguably the most recognized brand globally (Bodden, 2008) and its success in brand building justifies this case study on its CRM strategies. The initial drink giving rise to this world recognized brand was invented in Atlanta, Georgia in 1886 (Bodden, 2008). Coca Cola uses CRM to improve and sustain its brand and its connection with consumers. In particular, in 2007, the Coca Cola Company teamed up with World Wildlife Fund to raise both awareness and funds for addressing the receding water in the Artic that threatens wildlife habitat. The primary purpose of the Artic Home Project is to ensure that polar bears will be able to remain in a safe and healthy home. The Coca Cola Company has pledged US2$ million in donations and has also pledged to match consumer donations. Corresponding with the donations, the Coca Cola has from time to time, particularly during the holiday season repackaged its Coke soft drinks in white (Coca Cola Artic Home Project, n.d.). This research study analyzes the Coca Cola Artic Home Project and determines whether or not it is a viable CRM strategy for building or extending brand. The Coco Cola Artic Home Project was selected because of Coca Cola’s long and rich brand history and reputation. By conducting a qualitative case study on Coca Cola’s Artic Home Project, we can determine if CRM contributes to sustaining or extending Coca Cola’s brand. Since it has been determined that in today’s competitive and globalized market, companies are looking for viable ways in which to improve or build brands that distinguish their products and services from those of others. It would appear, that in a fiercely competitive soft drink market, the Coca Cola Company has managed to distinguish itself from its competitors for a very long time. Its brand value is unquestionably responsible for this distinction. It is therefore important to examine the marketing strategies of Coca Cola. Attention is focused on CRM because it has emerged as a way in which companies seek to distinguish their goods and services from those of others. Thus this research study is guided by a primary research question and a number of secondary research questions. Primary Research Question The primary research question is: Does CRM effectively build or extend corporate or product brand? Secondary Research Questions The secondary research questions are: What is CRM? How does CRM impact consumer choices? Does CRM via the Coca Cola Artic Home Project impact Coca Cola’s brand? Literature Review CRM is characterized by a corresponding relationship between non-profit organizations and for-profit organizations predicated on obtaining common benefits (Kahle & Close, 2011). The for-profit organization typically attempts to realize an increase in sales and thus profits, while the non-profit organization attempts to raise or increase funds already raised for a specific cause (Kahle & Close, 2011). In this regard, CRM is regarded as a tool for marketing and positioning and in doing so consciously links the business or its brand to a specific “cause” or “issue” for the mutual benefit of the business and the cause or issue (Pringle & Thompson, 1999, p. 3). CRM marketing strategies typically involve engaging consumer emotions so that the consumer is with the impression that upon purchasing a specific product or service, the consumer is contributing to a social cause or issue in a positively meaningful way (Strahilevitz, 1999). According to Strahilevitz (1999), CRM can assist the for-profit business organization in two main ways. Firstly, CRM can have a long-term benefit in that it improves the business’s brand or image. Secondly, CRM can have a short-term or immediate benefit in that it can influence an increase in sales (Strahilevitz, 1999). CRM was first identified in 1887 and involved a campaign by Sunlight Soap in the UK when it rewarded a the Royal National Lifeboat Institution a Sunlight life boat for winning a Sunlight Soap Competition (Benjamin & Stoler, 2001). The term CRM was formally introduced during the 1980s when the American Express Company commenced a fundraising campaign for restoring the Statute of Liberty (Ciconte & Jacob, 2009). The campaign involved the American Express Company pledging one cent to the restoration project every time a consumer was issued a new AMEX care or whenever a consumer used one of the company’s products (Ciconte & Jacob, 2009). Since the American Express CRM campaign during the 1980s, CRM has become increasingly popular, particularly among Western businesses (Taylor, 2007). According to Till and Nowark (2000), firms maintain that CRM has proven to be effective in increasing sales. Companies also report that they are convinced by the results of their respective CRM strategies that CRM improves and builds brand and corporate reputation (Till & Nowak, 2000). In a study carried out by the UK-based Business in the Community in 1998, findings indicated that more than 70 per cent of the managers participating in the study felt that CRM will continue to grow. 75 per cent of the participants reported that CRM had a direct connection to the corporate reputation and/or its brand and image. Over 80 per cent of the participants expressed the view that companies had an obligation to be responsive to social causes and issues (Benjamin & Stoler, 2001). It can therefore be concluded from the results of the UK-based Business in the Community Survey that companies have confidence in the merits of CRM and are prepared to invest in it. This is confirmed by Hebb (2007) who reports that CRM is one of the most rapidly growing and frequently used marketing techniques among Western companies. From the perspective of the for-profit organization, CRM is a viable method for distinguishing its business from that of others. From the perspective of non-profit organizations, CRM is a feasible method for raising revenue for specific projects and for heightening public awareness of a cause or issue (Hebb, 2002). Theories used to understand consumer habits arguably justify the use of CRM as a marketing strategy. For example the theory of planned behavior which expounds upon the theory of reasoned action takes the position that consumers are directed by their personal views and attitudes (Verdurme & Viaene, 2003). Therefore when a brand is connected to or is consistent with a consumer’s values and views, the consumer has a positive connection with the brand (Page & Luding, 2003). Based on the theory of planned behavior, consumers purchasing trends are linked to their own personal values and beliefs and they can be influenced when brands or products manage to invoke or support those beliefs and values. This is particularly important since marketing messages are calculated to improve brand awareness and influence attitudes toward s a brand with a view of influencing purchasing behavior (Belch & Belch, 1998). Even so, CRM requires a consumer market or a market segment that is socially conscious or committed to a cause. Much will depend on the firm’s ability to identify a viable cause or issue and a market segment that the cause and the product can appeal to. Otherwise, the marketing strategy via CRM becomes more complicated in that the company must educate the targeted consumer (Youn & Kim, 2008). There have been a number of studies conducted and reported in the literature establishing a link between CRM and consumer choices. For instance, Barone, Miyazaki and Taylor (2000) conducted a study involving 165 students who were divided into two groups: Group A and Group B. Both groups were presented a products with a strong CRM strategy and products with a relatively weak CRM strategy. Group A was tested for product performance and Group B was tested for price trade-offs. All participants were asked to choose products and to provide their reasons for choosing the products (Barone, et. al., 2000). The results of the study conducted by Barone et. al., (2000) revealed that when product performance and prices did not correspond, the participants were more likely to choose weaker performing products at higher prices when they were satisfied that the product was linked to a strong CRM cause and strategy. The study also found that the participants were more likely to choose products with strong CRM strategies over products with weak CRM strategies even where product quality and pricing was the same (Barone, et. al., 2000). This study therefore illustrates that it is important that CRM strategies are detailed and convincing. Merely linking a product to a social cause will not be sufficient to persuade a consumer to purchase a specific product. Baghi, Rubaltelli and Tedeschi (2009) confirm that CRM communications are entirely important. In this regard, Baghi et.al., (2009) conducted a study in which vivid and passive messages were used. Baghi et.al.’s (2009) study consisted for 610 students with an average age of 22. The participants were offered two food products, two mobile phone chargers and two dry goods. The products were priced and their respective causes were described. The passive products were described as being connected to a non-specific world hunger campaign. The active products were described as being linked to a specific cause in a specific region. All pairs of products were priced exactly the same (Baghi, et.al., 2009). The results indicated that the students were more inclined toward the products associated with a more active CRM message (Baghi, et.al., 2009). Pracejus and Olsen (2004) undertook a study in which the link between brand and CRM was tested. The participants were comprised of 28 students from the University of Florida. The students were required to fill out a questionnaire which attempted to discern the social causes or the kinds of social causes the students supported. The students were divided into four groups and were provided with two ads for two theme parks with essentially the same brand value. However the price of admission, the facilities, and distance to the parks were different. The ads promised to donate US$5 for every ticket sold to either the Children’s Miracle Network or the Kennedy Center (Pracejus & Olsen, 2004). The study found that students were motivated to purchase the tickets supporting a cause that they themselves supported regardless of distance, prices or facilities (Pracejus & Olsen, 2004). It would therefore appear that businesses might have to invest some time and resources into identifying the more appropriate cause and target consumer group prior to investing resources in a CRM campaign. Hebb (20020 conducted a study of a number of national surveys carried out in the US and Canada and was satisfied that the results demonstrated that CRM is positively connected to consumer choices and purchasing behavior. For example a survey carried out by the Conference Board of Canada demonstrated that more than 70 percent of participants were motivated to purchase products associated with social issues or causes and 68 percent of the participants were more likely to purchase from businesses that were openly supporting causes or issues (Hebb, 2002). A similar survey conducted in the US by Time in 2001 also indicated that American consumers were more likely to purchase products that were connected to a social issue or cause if the price and quality were reasonable (Hebb, 2002). In other words, CRM alone will not compensate for quality and price. Marketers are required to ensure that the quality and price of the goods remain competitive, otherwise, CRM campaigns may not succeed. A review of the literature therefore reveals that CRM is a popular and effective method for improving brand value as CRM strategies, when conducted effectively makes a positive connection with the consumer. A review of the literature also reveals that consumers will not automatically purchase products merely because it is connected to a cause. Pricing and quality are entirely important to consumers and they will not ordinarily purchase a product or service if the price and quality are not competitive. This suggests that branding is important to consumers. If a product or service comes with a pre-established reputation, consumers are more likely to purchase that product over another equally strong brand when the product is attached to CRM strategies. If the product is of particularly good quality and has a competitive price, but with little or no brand value, consumers will more likely purchase the product if it is attached to a CRM campaign. Thus it can be concluded that CRM is an important technique for brand building or brand extension. Research Methodology This is a qualitative research study and this method is selected because qualitative case studies are designed to discover “meaning” as well as to help researchers gain an understanding of the issue under investigation (Merriam, 2009, p. 39). The qualitative case study helps in the discovery of meaning and understanding by allowing for a sample selection that is has either experienced or is experiencing the “phenomenon” under investigation (Merriam, 2009, p. 40). For the purpose of this research project, the qualitative case study delimits the issue by focusing on a specific category of participants conducting a specific CRM project and its connection with brand value of a specific company. When we identify the factors connecting CRM to Coca Cola’s brand, we can find meaning and understanding relative to the connection between CRM and brand value. This qualitative case study is conducted by studying Coca Cola’s Artic Home Project. Coca Cola is a major multinational corporation with a strong brand and its Artic Home Project is well known. The case study will allow the researcher to focus on a specific CRM project and its impact on brand value of a corporation with a long and sustained history of brand value. Thus a qualitative research study allows the researcher to gain a robust understanding of a specific phenomenon in the research context (Morris & Wood, 1991). Data Collection The data collected in the course of this research are comprised of primary and secondary data. The secondary data is comprised of textbooks, articles/journals and internet sources. These sources are necessary for providing background information and for analyzing the primary data in the context of assumptions and theories as well as previous studies reported in the literature. The primary data consists of semi-structured interviews and a questionnaire. The semi-structured interviews are used for facilitating the exploratory nature of this research study. The value of the semi-structured interviews is that the researcher reserves the right to go off script and may ask follow-up questions to clarify responses or to triangulate data obtained in the course of the interview and the collection of other data. Active observation during the interview process can also determine whether or not a participant is confused or is holding back. Thus a semi-structured interview will allow the researcher to ask additional questions to help the participant feel more comfortable. Thus credibility and reliability can be checked during active observation in the course of a semi-structured interview. The semi-structured interview is conducted among 20 retail managers in Coca Cola’s supply chain. Of particular concern is whether or not the packaging of Coca Cola during the holiday season of 2011 reflected a gain in sales of Coca Cola products or whether or not the sales were comparable to other competing products that were not related to a CRM campaign. The prepared list of questions asked during the semi-structured interview are attached as Appendix A. The questionnaire is distributed among 100 random consumers and is designed to determine whether or not CRM has an impact on consumer choices. The questionnaire also attempts to determine whether or not consumers were more likely to purchase Coca Cola as a result of its Artic Home project. The questionnaire is a blind item and the names of the participants are not revealed. The questions are categorically scaled in that participants are asked to select answers scaled as follows: Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree (See Appendix B). Research Philosophies Research philosophies engage the collection of and paradigms of knowledge (Collins, 2011). Even if the research project does not specifically or satisfactorily answer the primary research question, new knowledge will be obtained nonetheless (Collins, 2011). The research philosophy selected dictates that some presumptions are subscribed to in terms of how the researcher perceives the problem or issue investigated and the research philosophy will guide the researcher accordingly (Collins, 2011). This research study is guided by the interpretivism research philosophy because it is guided by an attempt to determine how a specific phenomenon is perceived as opposed to how “reality works apart from these interpretations” (Schutt, 2012, p. 86). In other words, this research attempts to determine who consumers perceive CRM and how corporations perceive CRM in terms of brand value. Interpretivism looks for an understanding of the experiences of an identifiable and observable group. Interpretivism takes the position that reality is not constructed in a fixed realm and depends in large part on individual experiences and biases as well as relationships (Schutt, 2012). Put another way: Objects and events are understood by different people differently, and those perceptions are the reality – or realities – that social science should focus on (Schutt, 2012, p. 86). In adopting the interpretivism research philosophy, constructivism which is an extension of interpretivism is also used. Constructivism emphasizes the importance of exploring how diverse “stakeholders” in a specific environment “construct their beliefs” (Schutt, 2012, p. 86). In other words, constructivism focuses on the researcher’s own goals and the participants and attempts to understand the issue under investigation (Schutt, 2012). Research Approach The inductive approach is used in this research as it does not have specific rules or structures and therefore allows flexibility (Merriam, 2009). The flexibility is reflected in the semi-structured interview which allows for the interview to go off-script for the purpose of triangulation and for ensuring reliability and trustworthiness. The inductive approach is compatible with the qualitative research methods as it allows the researcher to change the research methods at will. By taking this approach, the researcher is in a position to change the data collection methods as needed. The deductive approach is less suitable for a qualitative case study as it requires the gathering specific data and attempts to prove theories (Merriam, 2009). Thus the reductive approach is more compatible with the qualitative research methods as we are not attempting to prove a theory, but rather we are attempting to understand and explore the experiences of a CRM project and its impact on brand value with a specific organization. Findings Semi-structured Interviews The results of the semi-structured interview indicate that a majority of the retailers (17) found that sales for Coca Cola increased during the holiday period of 2011 and that consumers purchased more of the white Coca Cola packaged goods than the usual red and white Coca Cola although both were offered at the same price at the same time. The remaining three participants noted that sales generally went up only when prices were reduced and the same was true for other competing products that did not have a CRM campaign. More than half of the participants reported that there was a marginal improvement in Coca Cola sales since the launch of the 2007 Artic Home promotion. However, all of the participants noted that Coca Cola’s sales have always been quite good. Four of the participants believed that Coca Cola’s sales were primarily driven by discount prices and that those were the only times they noticed an appreciable increase in sales. In fact one participant noted that consumers purchase soft drinks based on discounts and quality. For instance if Pepsi was offered at a discount and Coca Cola was not, Pepsi’s sales would be better than Coca Cola regardless of the CRM campaign. However, when the prices were the same, Coca Cola’s sales during the holiday season were better than other competitive brands. These findings are consistent with the findings in the literature. In particular, Barone et. al., (2000) found that CRM related products will typically sell better than non-CRM related products. It was also determined that when prices and quality are competitive, CRM may make the difference in whether or not a consumer will purchase a product (Hebb, 2002). It therefore follows that CRM marketing can build brand value and in this particular case, can function as brand extension. Questionnaire The questionnaire results indicate that consumers are more concerned with price and quality. 75 respondents indicated that quality is more important to them by selecting “strongly agree”. The remaining respondents were largely neutral or more concerned with price. 70 of the respondents however, indicated that they would be more likely to purchase a product if it was connected to a social cause, provided the quality and the price was competitive. These findings are consistent with Hebb’s (2002) report that American consumers are more likely to purchase a product if it promoted a social cause or issue provided its prices and quality were competitive. 80 percent of the respondents indicated that brand was important to them, but they would consider purchasing a different brand if it was related to a cause or issue that was important to them. It therefore follows that CRM strategies can build brand or can compete with established brands. The results of the interview also indicated that consumers when consumers are committed to brands, that commitment can be fortified when the brand is associated with a cause. This conclusion is drawn from the fact that a 45 participants admitted to having purchased coca cola only because it was related to a CRM project while 50 participants admitted that they would have purchased Coca Cola regardless of its affiliation with another cause. Thus it can be concluded that CRM is a capable of building and extending brand value and image. Conclusion Research findings indicate that CRM is a valuable tool for distinguishing products and services from other like products and services in a highly competitive global market. Our qualitative case study found that a company with a long and rich history of brand value globally was able to extend its brand by virtue of a specific CRM campaign. However, the literature reveals that CRM campaigns can only be successful when certain conditions are satisfied. To begin with, prices and quality must be competitive. Secondly, the CRM campaign must be active in that consumers must be in a position to identify and relate to the social issue or cause that is connected to the product or the cause. Thus market segmentation and prior research is entirely important prior to selecting a CRM project. In the final analysis, CRM strategies can help build brand value and where consumers are already loyal to a brand, CRM strategies can help to extend brand value and loyalty. Brand value and loyalty can apply to existing consumers, ensuring that they do not switch products. Brand value and loyalty can also apply to new consumers who are otherwise loyal to other competitive products and services. Further Research This research was useful for studying the experiences of a specific company’s CRM strategies with respect to a specific product. However, further research will assist with determining the impact that CRM has on consumers in different locations where social issues and causes are directly important to consumers in that market. This research focused on a social cause at a remote location and managed to demonstrate positive results. It would be interesting to know what impact a CRM campaign linked to a more observable and relatable cause or social issue to which the consumers are more closely connected would have on brand value or building brand value. Perhaps in this kind of CRM campaign, consumers would purchase the product regardless of price or quality. Most of the research explored in the literature were directed toward charities that were of an international character. Research in specific markets where CRM campaigns are linked with social causes or issues in that market might have a different result. Further research in this area would be instructive to organizations in targeting specific markets and specific social causes or issues. Appendix A Semi-Structured Interview Questions 1. How were Coca Cola’s products packaged during the holiday season of 2011? 2. Were Coca Cola prices comparable to other similar products during that time? 3. How were Coca Cola’s sales compared to other similar products during that time? 4. Have you noticed a difference in the sale trends of Coca Cola products since the introduction of the Artic Home Project? 5. Do consumers generally spend more on products that are promoting a social cause or issue? 6. In your opinion are consumers more concerned with prices or quality? 7. In your opinion are does CRM strategies influence consumer spending habits? Appendix B Questionnaire Please circle the appropriate response 1. When you purchase a product you are concerned with price, not quality. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 2. When products promote a social cause you are more likely to purchase these products regardless of price or quality. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 3. When products promote a social cause you are more likely to purchase these products only if prices are competitive. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 4. When products promote a social cause you are more likely to purchase these products if the quality is good. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 5. Brands have more value to you when they promote a social cause or issue. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 6. Brands only have meaning to you if they have competitive prices and quality? Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 7. You purchased Coca Cola’s Home Artic products over other products because of its link to preserving a habitat for polar bears. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 8. Your decision to purchase Coca Cola’s Home Artic products had nothing to do with its link to preserving a habitat for polar beers. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree. 9. You would not have purchased Coca Cola had it not been for the Home Artic products. Agree. Strongly Agree. Neutral. Disagree. 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