Warm Glow or Cold, Hard Cash? Social Identity Effects on Consumer Choice for Donation Versus Discount Promotions

Karen Page Winterich and Michael J. Barone
Journal of Marketing Research (JMR)
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Executive Summary
With more than half of marketing budgets often dedicated to promotional activities, it is critical for marketers to understand which promotions are most effective in driving sales. Though price promotions are frequently used as sales promotions, donation-based promotions (i.e., those sales promotions in which product purchase triggers contributions to charities) have become increasingly prevalent, rising from approximately $100 million annually in 1990 to more than $1.5 billion in 2009. The current research addresses several interrelated issues: Will consumers prefer discount-based promotions to donation-based promotions? In what instances will this happen and by which consumers? The answers have important implications for marketing managers in forming their promotional strategies and budgets.

The authors demonstrate that when the donation cause fits with the consumers’ identities, consumers who have a greater focus on relationships with other people instead of themselves prefer donation-based promotions. However, the preference for donation-based promotions is minimized when the charity receiving the donation is not relevant to the consumer. Therefore, promotion managers must be cautious when aligning their company with a charity, because the success of the campaign may be dependent on the charity’s fit with customers’ identities. To enhance consumer identification with a charity and boost the response rates associated with donation-based promotions, managers can develop programs that allow customers to choose which charity their purchases support (e.g., K–12 school of choice with Target REDcard).

The authors’ findings indicate that consumer preferences for discount versus donation promotions are also affected by other factors. Consumers who typically prefer donation-based promotions may not do so when the charity handles their funds inefficiently. That is, consumers who focused on others were more likely to choose the coupon offering a donation with purchase (vs. a price discount on purchase) when the charity that received the donation was perceived as being highly efficient in collecting and distributing funds than when it was seen as inefficiently doing so.

Assuming that a brand aligns itself with an efficient charity with which customers easily identify, can it capture those consumers who tend to be more focused on the self as well? Results suggest that even these consumers may be motivated to choose a donation-based promotion when the purchase is indulgent (i.e., a candy bar) rather than utilitarian (i.e., a 90-calorie snack). Therefore, donation-based promotions, or cause-related marketing campaigns more generally, may be most effective when matched with indulgent products, because such promotions may offset the guilt otherwise associated with the purchase of indulgent products.

In summary, understanding the effectiveness of donation-based promotions may be important for managers because these promotions can lead to sales increases without negatively affecting brand image and equity, which are often associated with the use of traditional price promotions (i.e., price discounts). Marketing managers of national or international companies may wish to align their company with one charity as a means of simplifying their promotional strategies, but the current research suggests that sales may benefit from aligning with local charities with which customers may better identify.

Biography
Karen Page Winterich is Assistant Professor of Marketing, Smeal College of Business, Pennsylvania State University. She joined Smeal after serving on the marketing faculty in Mays Business School at Texas A&M University. She received her PhD in marketing from the Katz Graduate School of Business at University of Pittsburgh and has published in Journal of Consumer Research, Journal of Marketing Research, and Personality and Social Psychology Bulletin, among others. Her research examines the effects of cultural and social identities on consumer decisions, brand evaluations, and charitable giving. She also studies effects of consumer emotions on decision-making and consumption.

Michael J. Barone is Professor of Marketing and University Scholar in the College of Business at the University of Louisville. He received his PhD in marketing from the University of South Carolina and has published research on consumer psychology and decision making in several marketing journals, including Journal of Consumer Research, Journal of Marketing Research, Journal of Marketing, and Journal of Consumer Psychology. He also serves on the editorial review board of several leading marketing journals such as Journal of Consumer Psychology and the Journal of the Academy of Marketing Science and has served as a consultant and expert witnesses for several firms, including Fortune 500 companies.

Journal of Marketing Research, Volume 48, Number 5, October 2011
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Karen Page Winterich and Michael J. Barone
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