As the holiday season closes in, you may notice a growing number of stores trying to tug at your heartstrings — and your wallet — by advertising charitable donations alongside traditional holiday promotions.
According to the Cause Marketing Forum, everyone from the retail giant Target to the niche candy purveyor, Seattle Chocolate Company, is launching some kind of charitable initiative this season. Mazda, too, announced it will donate $150 to charity for every car purchased or leased between Nov. 21 and Jan. 2. Similarly, retailers such as Kmart, Kohl’s, Bloomingdale’s, Seattle Chocolate Company and Williams-Sonoma have promised to donate a percentage of sales on certain products to various nonprofits.
The initiatives are designed to lure charity-minded holiday shoppers into spending more at their stores. And research shows the tactics work.
According to a forthcoming study in the Journal of Marketing, for example, buyers are substantially more likely to purchase a new product if a retailer promises to donate a portion of the sale’s proceeds to a good cause.
“Consumers are attracted to opportunities that stoke a ‘warm glow’ from having ‘done their bit’ toward improving society,” write study authors Michelle Andrews, Xueming Luo, Zheng Fang and Jaako Aspara in the report. When consumers purchase a product that’s linked to a charity, they can pat themselves on the back for contributing to a good cause — without actually having to plunk down a significant amount of cash.
The tactic is even more effective if the retailer also includes a moderate 10 to 30 percent discount, found researchers, since price reductions are also a time-honored way to get people to spend. “When a firm demonstrates effort by discounting its product price and sacrificing some of its revenue for a charitable cause, consumers can experience positive feelings of gratitude and consequently may be more willing to reciprocate and reward the firm with more purchases,” the authors theorize.
Inside the study
The researchers came to their conclusions after conducting a series of field experiments on mobile phone users that tested their likelihood to take advantage of an Imax movie promotion.
In one experiment, researchers sent Imax movie ticket offers to nearly 12,000 randomly selected mobile phone users and recorded how many people responded. Some of the mobile phone users were told that a portion of the sale’s proceeds would be donated to a local university to help defray students’ tuition costs. Others were offered just the tickets.
The consumers who were told that a part of their purchase would go to a good cause were significantly more likely to buy the tickets. “Offering the donation nearly doubled the number of purchases,” said the authors in a Nov. 11 news release.
A better way to give
The study confirms what many retailers already know: Shoppers love to make purchases that feel good and are particularly moved by brands that appear to share their values. For example, according to a study by the public relations group Cone Communications, 71 percent of Americans expect companies to promote some kind of cause during the holidays, while 75 percent overtly prefer brands that support the greater good.
But according to some researchers, this may not actually be the best way to give. For example, a 2011 study published in the Journal of Consumer Psychology found that consumers who purchased an item linked to charity tended to give less overall. “Consumers think of their purchase as a charitable act,” noted study author Aradhna Krishna in a news release, and, as a result, they tend to reduce how much they give. “The higher the cause-marketing expenditure, the lower was the individual charitable giving.”
Consumers also tended to be less happy with their giving when they spent their money on a cause-related purchase rather than a direct donation to a charity or nonprofit, she said.
In an October 2014 interview with Consumer Reports, Krishna noted that consumers would be better off skipping the store-directed donations and instead giving directly to the charity of their choice. Rather than fall for a marketing ploy that links purchasing to doing good, ask yourself: “Are you buying a $30 T-shirt from which $2 will go to the charity? Or could you give $30 to the charity and do without the T-shirt?” advised Krishna.