CONSUMER PERCEPTION OF CORPORATE DONATIONS Effects of Company Reputation for Social Responsibility and Type of Donation

Abstract

In cause-related marketing (CRM), a company agrees to donate money to a charity each time a consumer engages in a revenue-producing transaction with the firm. Since the company benefits first before any obligation to donate is accrued, consumers might perceive this practice to be less altruistic than an unconditional donation to a cause. If so, CRM could backfire, injuring corporate image. This study investigated the effects of type of donation (conditional or not conditional upon corporate revenue) and reputation of the firm making the donation (firms described as scrupulous, average, or irresponsible in the discharge of their social responsibility) on consumer regard for the firm; perceived mercenary intent of the firm; and whether the social performance of the company is consistent with "good" management. Consumer responses were predicted based on the contrast effect and attribution theory. Results suggest that irresponsible firms increased their favor with consumers by pursuing either type of donation. The average firm enhanced its image by pursuing an unconditional donation, but a conditional donation did not damage firm image. Perception of the scrupulous firm was little changed after unconditional donation, but a scrupulous firm suffered a loss of favor by pursuing CRM. It is concluded that the average firm does not risk a loss of public goodwill when using CRM.