Consumer Skepticism and Ad Credibility in Cause-Related Marketing:
The Impact of Donation Size Claim Type and Corporate Social Responsibility
The University of Texas at Austin
Limitations and Suggestions for Future Research
Abstract
While cause-related marketing has been increasingly popular, consumer skepticism has emerged as a major obstacle to the success of a CRM program. The way donation size is communicated in CRM advertising could be one reason for growing concern of cause-exploitation. The present study examined the effect of donation amount claim type and corporate social responsibility on consumer skepticism and ad credibility. The results indicated that consumers were more skeptical about a subjective claim than an objective claim. Consequently, ad credibility was higher when donation size was presented in an objective manner. Corporate social responsibility perception also influenced consumer skepticism and ad credibility although claim type by corporate social responsibility interaction was not observed. Practical implications of the findings and suggestions for future research are discussed.
Introduction
A corporation may engage in various activities to fulfill its social responsibility such as sponsoring cultural events and supporting a specific social issue. Cause-related marketing differs from those activities in that it is specifically contingent on revenue-generating transactions. As such, Varadarajan and Menon (1988) defined cause-related marketing as “the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives (p60).”
Since American Express Card harvested a remarkable success in the Statue of Liberty renovation program, cause-related marketing has been an increasingly popular marketing tool (Andreasen 1996). Avon, for example, has raised more than $200 million for breast cancer education and early detection services through the Avon Breast Cancer Awareness Crusade (Lichtenstein, Drumwright, and Braig 2004). Today, it is estimated that cause-related marketing promotion exceeds $945 million in North America in 2003 (Olsen, Pracejus, and Brown 2003).
The rapid growth of CRM has been driven, at least in part, by supportive research findings. Cone Corporate Citizenship Study 2004, for example, reported that 86% of American adults surveyed indicated a willingness to switch to a brand associated with a cause. More importantly, young consumers (18-25) were more likely to consider corporate support of social cause in their purchase decision-making as well as investment decision making than older consumers. Cause-related marketing has been found to enhance the evaluation of the firm, positively bias the evaluation of a new product from the firm, and consequently increase purchase intent of the product (e.g., Brown and Dacin 1997, Sen and Battacharaya 2001).
However, consumers are not blindly supportive to every single CRM program they encounter especially when CRM has become so commonplace. Some sophisticated consumers indicated that they were skeptical about the underlying motivation of the for-profit side of brand-cause alliance (Webb and Mohr 1998). Others expressed a concern about a possible cause-exploitive practice of CRM (Varadarajan and Menon 1988, Leichtenstein, Drumwright, and Braig 1996). That is, consumer skepticism could be a major obstacle for a success of a CRM program (Webb and Mohr 1998, Swaen 2004, Szykman 2004).
Although many other external factors could affect consumer skepticism such as Enron scandal, some internal factors could also trigger consumers question the fairness and truthfulness of CRM program. Internal factors refer to those are under control of a marketer, such as copy format and corporate social responsibility. Donation size in particular seems to be usually communicated in a very dubious manner (Pracejus, Olsen and Brown 2003), which may trigger consumer skepticism toward the CRM program. Also, corporate reputation for social responsibility also seems to affect consumer skepticism. That is, when a firm that is known to be socially irresponsible engages in a CRM program, consumers are likely to question the authenticity of the program.
The present study examines the effects of copy format and corporate social responsibility on consumer skepticism toward a CRM program. When donation size is communicated in an ambiguous manner, consumers are likely to become skeptical about the program. On the other hand, a specific description of donation amount may be perceived more credible. Also, low corporate social responsibility perception may trigger consumer skepticism toward the program. Therefore, an experiment was designed and carried out online. The findings of the present study provide direct practical implications in terms of how donation size should be communicated in conjunction with varying levels of corporate social responsibility reputation.
Literature Review
Consumer Skepticism Toward CRM
As mentioned earlier, consumer skepticism could be a major obstacle to a CRM program’s success. It has been argued that green marketing withered, at least to some extent, due to growing consumer skepticism (Mohr, Eroglu, and Ellen 1998, Moore 1993). Consumers’ distrust of marketing practice is nothing new and perhaps desirable to some extent. Consumer skepticism may provide critical viewpoints to evaluate products and help prevent potentially misleading and deceptive marketing practices (Mohr, Eroglu, and Ellen 1998). On the other hand, such distrust can undermine marketing efficiency (Pollay and Mittal 1993). Furthermore, deepening skepticism may expand to the entire cause-related marketing, including genuine programs that truly contribute to the society. Hence, it is critical to elude consumer skepticism in order that CRM continues to thrive.
In fact, many have expressed concerns of potential cause exploitation in CRM (e.g., Andreasen 1996, Drumwright 1996, Varadarajan and Menon 1988, Webb and Mohr 1998). Such concerns have arisen among nonprofits, marketers, scholars, and individual consumers. While it is unclear what constitutes a cause-exploitive program, the issue among the practitioners was in general whether a certain program is perceived as such by consumers (Drumwright 1996). Given the nature of CRM as a marketing tool not philanthropy (Varadarajan and Menon 1988), a CRM program may be seen exploitive by naïve consumers simply because the for-profit partner makes profit out of it.
More specifically, the fit between brand and the cause in CRM may trigger consumer skepticism as well. For example, Szykman (2004) suggested that the sinful industry (i.e., alcohol and tobacco) should exercise extra caution choosing their CRM partner. If a tobacco company supports youth programs, consumers may suspect that the company is in fact trying to sell cigarettes to the young and preoccupy the future consumers. Other researchers have demonstrated that the brand/cause fit may moderate the effectiveness of a CRM program (e.g., Pracejus and Olsen 2004).
Consumer skepticism is important because it may have powerful consequences. Skeptical consumers are likely to question the credibility of advertising claims (Holbrook 1978). Low ad credibility is likely to undermine the acceptance of the advertising claim. Consequently, consumer responses to a CRM program, such as brand attitude and purchase intent, may decrease.
Claim Type
One factor that may influence consumer skepticism toward advertising is claim type. The manner a certain advertising claim is communicated may either trigger consumer skepticism or protect the message against skepticism.
Objective claims are known to be more precise and specific by nature than subjective claims. Objective claims are factual (Holbrook 1978), specific (Viswanathan and Childers 1996), verifiable (Darley and Smith 1993, Edell and Staelin 1983), informative (Puto and Wells 1984) and concrete (Debevec, Meyers, and Chan 1985). On the other hand, subjective claims are evaluative (Holbrook 1978), general (Viswarathan and Childers 1996), impressionistic (Darley and Smith 1993), intangible (Shimp 1979), transformative (Puto and Wells 1984) and abstract (Debevec, Meyers, and Chan 1985). In general, consumers tend to be less skeptical about objective messages due to the perception of high credibility (Darely and Smith 1993, Edell and Staelin 1983, Holbrook 1978, Mobley, Bearden, and Teel 1988, Smith, Ford, and Swasy 1990).
In cause-related marketing, donation size is usually communicated in a very subjective manner (Pracejus, Olsen, and Brown 2003). According to a recent content analysis of CRM messages on the web, the majority used “a portion of proceeds” format to indicate how much is donated to the designated cause. Even more subjective format was “a substantial portion of proceeds,” which consumers were unable to estimate the donation amount and often overestimated (Olsen, Pracejus and Brown 2003). Such a subjective donation size claim may trigger consumer skepticism in that consumers might attribute the use of such ambiguous description to the program being dishonest. Possibly consumers assume that such vague information implies a smaller amount than specific information. The skepticism toward the CRM program in turn may lead to negative consumer responses.
Some may question whether donation size is a truly important factor for consumers in CRM. That is, as long as it is a good thing to do, consumers may not care how much is contributed. However, research has shown that donation size may influence brand choice (Pracejus, Olsen, and Brown 2003) and willingness to pay more for luxurious products (Strahilevitz 1999). Furthermore, donation size will probably become more important in consumer decision-making as CRM becomes ubiquitous and consumers are likely to choose among CRM brands.
Corporate Social Responsibility
Corporate reputation has at least two distinctive dimensions: corporate ability (CA) and corporate social responsibility (CSR) (Brown and Dacin 1997). A company may be well-known for the leadership in the industry or for its community support. CA addresses the firm’s performance as a provider of a certain product or service. For example, Microsoft is known as the market leader. On the other hand, CSR addresses the firm’s performance as a corporate citizen. Starbucks is highly regarded for its generous support for CARE.
Organizational identification theory provides an explanation how CSR may influence consumer behavior (Sen and Bhattacharya 2001, Bhattacharya and Sen 2003). The theory posits that people tend to identify themselves with organizations for self-consistency or self-enhancement purposes. Therefore, consumers are likely to identify themselves with a socially responsible corporate. Consumers who identify with a company are more likely to be loyal to the company and to the brands the company produces, promote them to others, and be resilient to negative information about them. Consumers are likely to identify with corporations that are known to be socially responsible since they offer the consumers a positive and meaningful social identity (Bhattacharaya and Sen 2003). Further, consumers may even individually support the company’s other activities. For example, consumers may make donations to an organization that is linked to the firm with which they identify themselves (Lichtenstein, Drumwright, and Braig 2004).
However, high CSR does not always positively influence consumer behavior. For example, high CSR may raise consumer expectation so high that a new product may fail to meet such a heightened expectation. Interestingly, it seems that consumers expect high CA for a company with high CSR. Perhaps CSR implies the firm’s confidence in financial performance, which in turn suggests quality products. Although CSR is distinctive from CA in theory, CA and CSR may be interchangeable in consumers mind.
Perhaps the impacts of high CSR on consumer behavior may be better explained with assimilation and contrasts effects (Citation). CSR sets a context in which new product information is processed and interpreted. When a new product’s quality is acceptable, high CSR will positively bias the evaluation of the product (assimilation effects). When the new product’s quality is disappointing, high CSR may lead to contrast effects and consumers may evaluate the product even worse than it is.
While most marketers strive for high CSR, they cannot always maintain CSR reputation as good as desired. Interestingly, it appears that the effect of negative corporate reputation is greater than that of positive reputation (Folkes and Kamins 1999, Handelman and Arnold 1999, Mohr and Webb 2005). Folkes and Kamins (1999) demonstrated that a description of unethical corporate behaviors led to negative attitudes toward the firm whereas a description of ethical corporate activities had no substantial effect. Similarly, Handelman and Arnold (1999) suggested that there may be a threshold in the level of CSR. They explained that when a firm surpasses the threshold, consumers evaluate the firm based on its actual attributes and performance. When a firm fails to meet the threshold, however, consumers will not even consider the firm as an alternative option. In the same vein, Mohr and Webb (2005) showed that negative information about a firm’s CSR significantly deteriorated company evaluation and purchase intention while positive information did not have any significant impact on both dimensions. Therefore, it seems that maintaining high CSR should be protection purposes rather than promotion.
The Study
Based on the literature review, the present study examines the following three hypotheses.
H1: Consumer skepticism will be higher when a subjective claim is made than when objective information is given. Consequently, ad credibility will be higher for an objective claim than a subjective claim.
H2: Consumer skepticism will be higher when the corporation is described as socially irresponsible than socially responsible. Therefore, ad credibility will be higher for a high CSR firm than for a low CSR firm.
H3: The effect of claim type on skepticism and ad credibility will be greater for low CSR firms than for high CSR firms.
Independent Variables
Two independent variables were of concern in this study: perception of corporate social responsibility (CSR) and claim type (subjective versus objective). CSR was manipulated by presenting the subjects with a news article about a shoes manufacturer’s overseas factory conditions. Three different articles were adopted from Dean (2003) to create high, medium, low CSR conditions.
Claim type was manipulated by varying the way donation amount was described in a CRM ad. Subjective condition ad stated, “a substantial portion of proceed will be contributed to UNICEF.” Proceed was a more ambiguous term than price (Olsen, Pracejus, and Brown 2003), and the word “substantial” was added to increase subjectivity of the claim. In the objective condition ad, donation amount was presented as “14% of the price.” Percentage of price format was selected in order to make donation size estimate straightforward and maximize objectivity and verifiability. It has been reported that people on average estimated that a substantial portion of proceed would be equivalent to 14% of the price (Pracejus, Olsen, and Brown 2003).
Dependent Variables
The dependent variables in this study were skepticism toward ad and ad credibility. Skepticism was measured on a two-item nine-point semantic differential scale, which was adopted from Ford, Smith, and Swasy (1990). The two items were (1) “How likely is it that this claim is true?” anchored by “not at all likely” and “extremely likely,” (2) “How skeptical are you about the truth of this claim?” anchored by “not at all skeptical” and “extremely skeptical.”
Ad credibility was measured on a three-item nine-point scale, which was adopted from Holbrook (1978). The three items were: (1) How convincing did you find the message you have just read? (2) How believable were its claims? (3) How persuasive was the message? All three items were anchored by “not at all” and “extremely.”
Procedure
A 3 (CSR) x2 (info type) factorial design study was carried out via online. An invitation email was sent out to randomly selected 1,015 members of Virtual Consumer Research Group. It was promised a drawing of $150 for those who complete the study. The invitation email included a hyperlink to the study’s login page, which randomly assigned each respondent to one of the six conditions via an imbedded Java Script code.
Upon login, each respondent was presented with a news article that manipulated the level of CSR. To encourage the respondents to pay attention to the article, they were instructed that the article was excerpted from a national newspaper and to read the entire article carefully before proceeding. The article described how company X, a well-known athlete shoe-maker, operated an overseas facility including child labor and sweatshop condition (Dean 2003). Immediately after reading the article, the respondents filled out five manipulation check questions.
Then, the respondents were exposed to an ad. The ad was for a new model of running shoes that company X was introducing to the market. The ad contained an image of a pair of running shoes, which did not show or suggest any specific brand. The image was downloaded from the Google images that were available for free. The ad described that a certain amount, either a substantial portion of proceed or 14% of the price depending on the condition, will be donated to UNICEF. The price for the shoes was set at $69.99, based on a brief survey of 59 people who are affiliated with UT Advertising. Also, 79% of the respondents in the pretest said that they had purchased at least one pair of running shoes over the past 12 months. Therefore, it seemed reasonable to use a running shoes ad in a study that sampled from a broad population. The actual ads used in the study are presented in Appendix.
Next, the respondents filled out the dependent measures and basic demographic questions. The respondents indicated their voluntary participation by clicking on the submit button. Upon the submission of the questionnaire, the respondents were thanked and their responses were stored in a database file.
Analyses and Results
Sample Profile
A total of 197 respondents completed the questionnaire. Among them 60.4% were female and their mean age was 41. However, the distribution of respondents’ age was slightly skewed with the highest mode being 29. In terms of education, over 80% had at least some college experience and 65% held a bachelor’s or higher degree. The mode income was over $100,000 and median income was between $60,000 and $69,999. In sum, the sample was quite highly educated and well-off.
Manipulation Checks
The manipulation of CSR was checked with a five-item seven-point Likert scale, which was adopted from Lichtenstein, Drumwright, and Braig (2004). Cronbach’s alpha of this scale was .92. The five item scores were summed up and averaged. A one-way ANOVA indicated that the three CSR groups were indeed different on this scale (F=77.87**, p<.001). However, Tukey and Scheffe tests indicated that the difference between medium and low CRS groups was not significant (Medium –Low=.46, p > .05) while high CSR was significantly different from medium and low CSR groups (mean difference High –Medium=1.85, p<.001 High –Low =2.31, p<.001). Therefore, medium CRS groups were excluded in the hypotheses testing.
The final sample size was reduced to 142. The characteristics of the final sample were almost identical to those of the initial sample except that the age distribution became quite balanced. This time there were two modes in age: 29 and 36.
Skepticism Toward Ad Claims
Table 1. Mean Skepticism Scores
CSR |
Claim Type |
Mean |
Stdv |
n |
High |
Objective |
4.7 |
1.7 |
38 |
Subjective |
5.4 |
1.5 |
31 |
|
Total |
5.0 |
1.7 |
69 |
|
Low |
Objective |
5.0 |
2.2 |
36 |
Subjective |
5.7 |
1.9 |
37 |
|
Total |
5.3 |
2.1 |
73 |
|
Total |
Objective |
4.8 |
2.0 |
74 |
Subjective |
5.6 |
1.7 |
68 |
|
Total |
5.2 |
1.9 |
142 |
Skepticism score ranged from 1 to 9 and the intercorrelation between the two items was .63, indicating quite low reliability. A visual examination of the descriptive statistics suggests that skepticism was higher in subjective claim conditions than in objective conditions. Also, skepticism was higher in low CSR conditions than in high CSR conditions. As presented in Figure 1, claim type by CSR interaction effect was not present.
Figure 1. Skepticism
Table 2. ANOVA Summary Table: Skepticism
Source |
Type III SS |
df |
MS |
F |
Sig. |
Model |
24.420 |
3 |
8.140 |
2.216 |
.089 |
CSR |
2.789 |
1 |
2.789 |
.759 |
.385 |
Claim Type |
20.649 |
1 |
20.649 |
5.622* |
.019 |
CSR * Claim Type |
.002 |
1 |
.002 |
.001 |
.980 |
Error |
506.869 |
138 |
3.673 |
||
Total |
531.289 |
141 |
a R Squared = .046 (Adjusted R Squared = .025)
A two-way ANOVA results indicated that claim type had a significant main effect on consumer skepticism toward the ad (F=5.622**, p<.05) although CSR main effect was not significant (F=.759 ns, p> .3). As hypothesized, consumers were more skeptical when donation size was communicated in a subjective manner than an objective manner (mean difference = .8, t=2.4**, p< .01). Claim type by CSR interaction was, as illustrated in Figure 1, not significant (F=.001 ns, p>.9). Effect size of CSR was estimated to be very small (Eta squared=.005) while claim type effect was small to medium (Eta squared =.04).
Ad Credibility
Table 3. Mean Ad Credibility Score
CSR |
Claim Type |
Mean |
Stdv |
n |
High |
Objective |
5.2 |
1.9 |
38 |
Subjective |
4.5 |
1.9 |
31 |
|
Total |
4.9 |
1.9 |
69 |
|
Low |
Objective |
4.4 |
2.1 |
36 |
Subjective |
4.0 |
1.7 |
37 |
|
Total |
4.2 |
1.9 |
73 |
|
Total |
Objective |
4.8 |
2.0 |
74 |
Subjective |
4.2 |
1.8 |
68 |
|
Total |
4.5 |
1.9 |
142 |
Ad credibility ranged from 1 to 9 with a higher score meaning greater credibility. Cronbach alpha of this scale was .90, indicating acceptable reliability. As presented in Table 3, the subjects perceived higher ad credibility in objective claim conditions than in subjective claim conditions. Also, high CSR led to higher ad credibility than low CSR. As illustrated in Figure 2, there seemed to be claim type by CSR interaction albeit weak.
Figure2. Ad Credibility
Table 4. ANOVA Summary Table: Ad Credibility
Source |
Type III SS |
df |
MS |
F |
Sig. |
Model |
31.663 |
3 |
10.554 |
2.751 |
.045 |
CSR |
17.434 |
1 |
17.434 |
4.545* |
.035 |
Claim Type |
11.392 |
1 |
11.392 |
2.970 |
.087 |
CSR * Claim Type |
.904 |
1 |
.904 |
.236 |
.628 |
Error |
529.374 |
138 |
3.836 |
||
Total |
561.037 |
141 |
a R Squared = .056 (Adjusted R Squared = .036)
As presented in Table 4, the main effect of CSR was significant (F=4.545*, p<.05). High CSR led to higher ad credibility than low CSR (mean difference =.74, t=2.25*, p<.05). The main effect of claim type was marginally significant (F=2.970, p<.10). The objective claim led to higher ad credibility than the subjective claim (mean difference =.60, t=1.81*, p<.05). However, claim type by CSR interaction was not significant (F=.236 ns, p>.60). Estimated effect sizes were small for both factors (Eta squared for CSR =.03, for claim type =.02) although they were found to be statistically significant. Interaction effect size was even smaller (Eta squared = .002). R squared value also suggests that only a limited portion of variace in ad credibility can be accounted for with the two factors in this study.
Discussion
The present study was an initial attempt to understand how marketers might overcome consumer skepticism in CSR. The study investigated the effects of donation size claim type and CSR. It appeared that donation size claim type had a significant effect on consumer skepticism toward a CRM ad. Consumers were more skeptical when donation size was described in a subjective manner than in an objective manner. As a consequence, consumers perceived higher ad credibility with an objective claim than with a subjective claim. Therefore, it is recommended to communicate donation size in a transparent manner in order to elude consumer skepticism in CRM although it is not a common practice today.
Given the results of this study, regulation of CRM advertising may be unnecessary. Instead, marketers should exercise caution in the way they communicate donation amount, which will become increasingly important in consumer decision-making.
Corporate social responsibility also appeared to affect consumer skepticism and ad credibility. Consumers tend to be less skeptical about and perceive higher credibility for a CRM ad when the firm is known to be socially responsible than irresponsible. Therefore, high CSR firms have advantages in cause-related marketing. Firms are encouraged to invest in CSR along with a CRM program in order to get away with consumer skepticism.
The present study expands the claim type research into the realm of CRM donation size. Previous studies examined product attributes and price reduction claims. The current study demonstrated that the superiority of objective claims in terms of credibility holds in donation size information as well.
To date, cause-related marketing research has focused on how a CRM program is organized and operated. Little research has shed light on the communication aspects of CRM. The present study was an initial attempt to better understand how communication may help maximize the effectiveness of CRM. It is hoped that more research will illuminate how CRM should be communicated in order to realize its greatest potential as a marketing tool that contributes to the society.
Limitations and Suggestions for Future Research
The current study has several limitations that prompt guidelines for future study. First of all, the study used only one level of donation size: 14% of the price. It is possible that claim type has the different effects with varying levels of donation size. For example, consumers may perceive 50% of price would be too good to be true in a CRM program. It is imperative to examine the effect of claim type in various levels of donation amount.
Secondly, the outcome variables of the current study may be of lesser interest among marketers and advertisers. Perhaps ad credibility and skepticism are important as mediators that explain how claim type influences more ultimate outcome measures such as brand attitude, purchase intent, or brand choice. By including those outcome variables, future research will be able to provide a more complete picture of how claim type influences the effectiveness of CRM advertising.
Additionally, the reliability of the skepticism measure of this study was not quite acceptable. The scale had only two items and the correlation of the two items was unsatisfactory. Development of a more reliable and valid measurement for consumer skepticism toward CRM is therefore imperative.
Another downside of the current study is the assumption that a substantial portion of proceeds is equivalent to 14% of the price. Although the assumption was based on a Pracejus, Olsen, and Brown (2003), consumer estimate varied greatly when donation size was described. Therefore, the mean estimate is, in fact, not reliable. Since academicians have very limited access to the information how much a CRM program contributes to the designated cause in reality, future research is directed to a close cooperation with the marketing practitioners.
Finally, the current study is bound to the inherent limitation as an online study: lack of experimental control. Although convenient for both the researcher and the participants, an online method typically introduces noises since the participants tend to be less involved in the study and would not pay attention to the same degree as they would in a laboratory experiment. Perhaps the small effect sizes in this study were due to such noises. In order to accurately demonstrate the effects of claim type, replication in a controlled setting should follow up.
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Appendix. Ads used in the study
Yeo Jung Kim is a first year doctoral student in Advertising, the University of Texas at Austin.