B1G1 Virus and the Cause Marketing Paradox

This post is part of a blogging series by marketing students at the Presidio Graduate School's MBA program. You can follow along here.

By Gomathi Sadhasivan

There is a rapidly spreading virus called B1G1 (no relation to the H1N1) and far from being alarmed by its spread, people are willingly getting infected in droves.  I am referring to Buy One Give One (B1G1 or BOGO) which involves customers paying a premium on a product so that the company may conduct philanthropy on the customer's behalf.   In the case of B1G1, the product or service donated is typically in the same category as the original purchase that helps fund the donation.  For example - a pair of shoes donated for every pair purchased.
This example brings to mind TOMS, the footwear company that is the poster child for B1G1.  B1G1 is a specific case under the umbrella category of cause marketing or social marketing.  The latter term is not to be confused with social media marketing, although social media can be an effective channel to market products or brands that are involved with social marketing.  Cause marketing has made partners of fashion and AIDS charities (Gap and BONO’s Project RED), fashion and water donations (Giorgio Armani’s Acqua for Life & the UNICEF Tap Project), beverage industry and water donations(ETHOS Water by Starbucks), and cosmetics and cancer (Avon Crusade “pink ribbon” products to support cure for cancer research) to name just a few.

As a consumer, I feel pretty virtuous when I purchase a product that allows me to indirectly have a positive impact elsewhere.  It might even motivate me to shop more if my indulgence could save/help someone.  This sentiment is captured in TOMS’ mission –“Using the purchasing power of individuals to benefit the greater good is what we’re all about.”   As Martha Stewart would say, "It’s a good thing!”

But is it really? A recent study conducted by Aradhna Krishna at the University of Michigan examines the “cause marketing paradox” which relates cause marketing to reduced donations, overall.   The author differentiates between egoistic giving, where the purchaser derives the primary benefit and altruistic giving where the charitable donation accrues no tangible benefit to the donor.  The study says that the altruistic giving not only provides the donor with a higher level of happiness, but also generates a greater amount in charitable donations than the egoistic giving that occurs with cause marketing.

There seems to be higher potential for a diversity of causes being supported when individuals do the giving as opposed to a corporation that aggregates funds and diverts to a chosen cause.  So, why do we succumb to the B1G1 virus?  We are, in effect, simply sub-contracting the corporation to conduct the philanthropy instead of contributing directly to a cause.  Ultimately, the spread of B1G1 could be ascribed to convenience for the customer and a successful business model for the company.  In macroeconomic terms, cause marketing could just be termed as bundling with a “feel-good” name that works for the shopper and the company!