Persuasive Advertising - J. Scott Armstrong [101]
5.13.2. Tie purchases to popular causes
In 1983, an American Express ad campaign stated that it would donate a penny to the renovation of the Statue of Liberty for each use of its credit card, and a dollar for each new card it issued in the United States. Compared with the same period in the prior year, it claimed a 28 percent increase in credit card usage, a huge increase for such a small offer.
Donations for charity are more persuasive for hedonic (enjoyment) products, than for utilitarian products. One possible explanation is that donations allow people to justify guilty pleasures.
To develop long-term relationships with customers, inform them about the amount that is being donated. While this might sound like obvious advice, only 4 percent of charitable donation offers state clearly how much they donate, as this example does so well: “Paul Newman, as sole owner of Newman’s Own, donates all his profits and royalties after taxes for educational and charitable purposes.” Another 26 percent of claims can be estimated. The remaining 70 percent of cause-related marketing claims are vague, such as the claim by Nike that “A portion of your purchase supports youth community programs around the world” (Pracejus, Olsen, and Brown 2003).
There are ethical and legal considerations for clearly stating the amounts being donated. Attorneys General in 19 U.S. states prepared a “Draft report on cause marketing in 1999” which stated, “Advertising arising from all corporate nonprofit arrangements shall not mislead, deceive, or confuse the public about the effect of consumer purchasing decisions on charitable contributions.”
Evidence on tying profits to causes
The conclusion that cause-related marketing is more effective for hedonic than for utilitarian products was supported in a series of lab experiments (Strahilevitz and Myers 1998; Strahilevitz 1999).
It is difficult to clearly inform customers about the amount being donated. In a lab experiment, 500 students were shown an advertisement for an ink-jet printer priced at $149.96. Half of the subjects were told “As part of our continuing commitment to the community, 5 percent of the retail price will be donated to a local charity,” while the other half was given the same ad, but the words, “retail price,” were replaced by “profit from the sale of this item.” There was much confusion when the donation amount was expressed as a percentage of profits; nearly all subjects over-estimated the amount being donated. Their median donation estimate was $7.50 (which assumes that profits are 100 percent of sales revenues). Estimates by subjects with formal accounting training were little better. Olsen et al. tested possible solutions. The only practical solution they found was to word the ad “profit is defined as the sales price minus the cost paid by Office Warehouse for each printer.” However, even with this description, only about 30 percent of the subjects made reasonable estimates (Olsen, Pracejus, and Brown 2003).
Checklist 5 Resistance
5.1. Distraction
5.1.1. For products that have neither advantages nor disadvantages, consider using distraction.
5.1.2. For products offering clear benefits, consider distraction only if the message will be understood.
5.1.3. When customers might resist traditional appeals, surprise them with an unusual approach.
5.1.4. For low-involvement goods that are for immediate sale, consider disruption then reframing of an offer.
5.1.5. Create an unrelated problem, then remove it.
5.2. Perspectives
5.2.1. Present an offer from a new perspective.
5.2.2. Focus on benefits or features rather than choices.
5.3. Stories
5.3.1. When the target market has an opposing viewpoint, consider using a story.
5.4. Barriers
5.4.1. Offer credit for currently owned products.
5.4.2.