The Effectiveness of Donation Promises in Charity Auctions as a Cause-Related Marketing Strategy

36 Pages Posted: 4 Jan 2011 Last revised: 30 Jan 2013

Date Written: June 30, 2010

Abstract

A donation promise is the amount to be donated by the seller as part of a cause-related marketing transaction. As CRM campaigns increase in popularity and donation promises serve a competitive attribute between products, it is important to determine how consumers perceive and respond to varying donation promises. In this paper we study the relationship between donation promise and charity auction revenue. Using charity auctions we can determine consumers’ willingness to pay for different levels of donation promises. Results of two controlled field experiments indicate that higher donation promises lead to increased selling prices, but at a diminishing rate. Furthermore, relative donation promises influence selling prices by serving as a comparison frame and contrast to a target donation promise – where higher relative donation promises result on higher selling prices. Finally, we observe significant overpayments for low to medium levels of donation promises, suggesting that sellers can profit from their charitable associations. Overall results have important implications for the relative appeal of CRM offerings in a fixed-price setting and suggest that charity auctions are cost-effective as part of corporate social responsibility strategy.

Suggested Citation

Popkowski Leszczyc, Peter T. L. and Wong, Leo T., The Effectiveness of Donation Promises in Charity Auctions as a Cause-Related Marketing Strategy (June 30, 2010). Available at SSRN: https://ssrn.com/abstract=1734505 or http://dx.doi.org/10.2139/ssrn.1734505

Peter T. L. Popkowski Leszczyc (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Leo T. Wong

Independent

No Address Available

Register to save articles to
your library

Register

Paper statistics

Downloads
267
Abstract Views
1,281
rank
114,153
PlumX Metrics