CSR and Consumers: Cause- Related Marketing

Dr. Shubhada Kulkarni1,

1
Associate Professor, KCES’s Institute of Management and Research, Jalgaon, Maharashtra.
425001, smkulkarni2006@gmail.com

Abstratct: The growing concern about the impact of businesses on environment and society is a global
phenomenon. Business is now required to perform not only in terms of financial returns but also in terms of
social returns. CSR is a dynamic and ever evolving concept; has many definitions and interpretations. A number
of forces are driving companies to practice a higher level of corporate social responsibility, such as rising
customer expectations, evolving employee goals and ambitions, tighter government legislations and pressure,
investor interest in social criteria, media scrutiny and changing business procurement practices. The future holds
a wealth of opportunities, yet forces in the socioeconomic, cultural and natural environment will impose new
limits on marketing and business practices. Companies that innovate solutions and values in a socially
responsible way are most likely to succeed. A successful cause-marketing programme can develop a strong,
unique bond with increasingly civic-minded consumers.

Keywords: Marketing, CSR, Social returns

1. Introduction
The growing concern about the Impact of Businesses on Environment and Society is a Global
Phenomenon. The impact is measured in terms of host of dynamic expectations like societal expectations,
societal needs and peer-pressures. Business is now required to perform not only in terms of financial returns but
also in terms of social returns. Performance measurement in terms of Environmental, Social and Governance
impact of Business have become important indicators to achieve sustainable development of an economy.(
Tiwari Rajesh, 2011).
There is a lot of anticipation around the new Companies Bill which mandates 2% of the net profit of a
company, to be spent towards Corporate Social Responsibility (CSR). It will be applicable only to companies
with a net worth of Rs.500 crore or more, or a turnover of Rs.1000 crore or more, or a net profit of Rs.5 crore or
more during a financial year. If this bill becomes a law then India would become the first country with
mandatory CSR requirements.

1.1 Corporate Social Responsibility (CSR)

CSR is a dynamic and ever evolving concept; has many definitions and interpretations. According to the
first World Business Council for Sustainable Development (WBCSD) CSR developed in Netherlands, ‘CSR is
the continuing commitment by businesses to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as of the local community and society at
large’. CSR becomes a holistic concept which comprises of more than just social and environmental
development but also ethics, employee welfare, supplier management, and product life cycle management
translating into good governance, transparency and accountability. This concept of CSR is also used
interchangeably with the term ‘Sustainability’ by many companies. ( Vishali Shah,2013)
The concept of CSR emerged in economies where there was excessive focus on corporate business
responsibility. For instance, in social democratic societies such as Nordic countries, the concept of CSR is quite
nascent and is focused more on sustainability and innovations, as the basic social security needs of health,
education and old-age relief are taken care of by the state. Even in continental Europe, where some kind of state
socialism prevails, CSR has limited appeal. The role of the private sector in these economies is to pay taxes
which then fund social programmes. It is only in liberal market economies such as the US where the private
sector dominates healthcare and education by catering only to the needs of the economically better-off citizens
that CSR has flourished. The primary business responsibility of a company in such a setting is restricted to
earning a profit by conducting its affairs legally. Social concerns were not addressed despite visible and pressing
need as this was seen to infringe personal freedom.

2. Distinct Views about CSR

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 Three distinct views to justify CSR have emerged in these liberal economies. Initially, CSR spending
was seen as an optional marketing expense, essential for building a brand and goodwill in the public at large,
potentially seen as a group of customers or employees. Gradually, as the pressure to spend increased on
companies operating in certain sectors such as mining and energy that used natural resources and caused
noticeable pollution, a new logic emerged. CSR was seen in the light of social contract theory. Such spending
was seen as the fee paid by polluting firms to society in return for their right to carry on business. This view
seems to have gained credibility as firms with high CSR spending are located in highly polluting sectors, or
sectors with large negative externalities, such as mining, tobacco and oil exploration and mineral refining.
Around the end of the second millennium, a third view emerged. This is an interesting viewpoint whereby CSR
was seen as businesses serving the base of the pyramid. Depending on who you are talking to today, all the three
views are common.

The Indian government’s mandate for CSR spending by big Indian companies must be seen in this larger
context. The present government, with the so-called common man as its primary focus, had two options to fund
its social programmes. Increasing tax rates on the private sector was one option. The other option was to
mandate CSR spending by big firms. Given that India is today a de facto liberal economy, with its glaring
inequalities of all hues—economic, social and geographic—we need to evaluate this decision to mandate such
spending by contrasting it with the alternative of raising tax rates for the private sector. (Source: Live Mint)
India remains at the early stages of CSR evolution, real efforts are required to achieve the levels acquired
globally.

Usually, the process is as follows:

1. Design a plan for sustainable development.
2. Implement the plan within the organization.
3. Monitor the plan with KPI’s.
4. Write the impact report.
5. Communicate the results to the rest of the world.

2.1 CSR and Marketing

Effective internal marketing must be matched by a strong sense of ethics, values and social
responsibility. A number of forces are driving companies to practice a higher level of corporate social
responsibility, such as rising customer expectations, evolving employee goals and ambitions, tighter government
legislations and pressure, investor interest in social criteria, media scrutiny and changing business procurement
practices. (Kotler, Keller, Koshy, & Jha, 2012). Virtually all firms have decided to take a more active, strategic
role in corporate social responsibility, carefully scrutinizing what they believe in and how they should treat their
customers, employees, competitors, community and the environment. Taking this broader stakeholder view is
believed to also benefit another important constituency-shareholders.
Many now believe that satisfying customers, employees and other stakeholders and achieving business
success are closely tied to the adoption and implementation of high standards of business and marketing
conduct. A further benefit of being seen as socially responsible is the ability to attract employees, especially
younger people who want to work for companies they feel good about. The most admired- and most successful-
companies in the world abide by a code of serving people’s interests, not only their own. Proctor & Gamble’s
new CEO Bob McDonald has made ‘brand purpose’ a key component of the company’s marketing strategy,
noting:”Consumers have a higher expectation of brands and want to know what they are doing for the world.
But it has to be authentic with a genuine desire to do it.” Raising the level of socially responsible marketing calls
for making a three-pronged attack that relies on proper legal, ethical and social responsibility behaviour.

2.2 Socially Responsible Business Model

The future holds a wealth of opportunities, yet forces in the socioeconomic, cultural and natural
environment will impose new limits on marketing and business practices. Companies that innovate solutions
and values in a socially responsible way are most likely to succeed.
Corporations such as Tata Group, the Mafatlal Group, Godrej, Bajaj and others have traditionally
demonstrated socially responsible behaviour. Tata Sons contributes anywhere between 8% to 14% of its net
profit for philanthropic purposes. Corporate philanthropy in India was estimated to be around $ 1.5 billion in
2010. Companies such as Infosys, Wipro, NIIT and GMR contribute significantly to education and health-
related initiatives. Azim Premji has pledged about Rs 10,000 crore in the next few years for improving school
education in the country.

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2.3 Cause-Related Marketing

Many firms blend corporate social responsibility initiatives with marketing activities. Cause-related
marketing links the firm’s contributions to a designated cause to customers’ engaging directly or indirectly in
revenue –producing transactions with the firm. Cause marketing is part of corporate societal marketing (CSM) ,
which Minette Drumwright and Patrick Murphy define as marketing efforts “that have at least one noneconomic
objective related to social welfare and use the resources of the company and/or of its partners” Drumwright and
Murphy also include traditional and strategic philanthropy and volunteerism in CSM.
A successful cause-marketing programme can improve social welfare, create differentiated brand
positioning, build strong consumer bonds, enhance the company’s public image, create a reservoir of goodwill,
boost internal moral and galvanize employees, drive sales and increase the firm’s market value. Customers may
develop a strong, unique bond with the firm that transcends normal marketplace transactions.

Specifically, from a branding point of view, cause marketing can

1. build brand awareness

2. enhance brand image
3. establish brand credibility
4. evoke brand feelings
5. create a sense of brand community, and
6. elicit brand engagement.
It has particularly interested audience in civic-minded consumers.

Millennial Data Points: 18-24 year olds’ Attitudes about Cause

 85% are likely to switch from one brand to another brand that is about the same in price and quality, if
the other brand is associated with a good cause
 86%consider a company’s social or environmental commitments when deciding which products and
services to recommend to others
 84% consider a company’s social or environmental commitments when deciding what to buy or where
to shop
 87% consider a company’s social or environmental commitments when deciding where to work
 86% say when a product or company supports a cause (a social or environmental issue) they care
about, they have a more positive image of that product or company
(Source: 2010 Cone Cause Evolution Study;www.coneinc.com/2010-cone-cause-evolution-study)

Cause-related marketing could backfire, however, if consumers question the link between the product
and the cause or see the firm as self serving and exploitative. Problems can also arise if consumers do not think
a company is consistent and sufficiently responsible in all its behaviour. To avoid backlash, some firms take a
soft-sell approach to their cause efforts. Nike’s alliance with the Lance Armstrong Foundation for cancer
research sold over 80 million yellow LIVESTRONG bracelets for $1 from 2004 to 2010, but intentionally the
famed Nike swoosh was nowhere to be seen.

2.4 Corporate Philanthropy

Corporate Philanthropy needs to extend beyond giving monitory donations. Corporate can aid
immensely in making the efforts of the non-profit organizations a success. (Kumar & N, 2007)Majority of
corporate contribution programmes are diffused and unfocused. Most consist of numerous small cash donations
given to aid local civic causes or provide general operating support to charities in the hope of generating
goodwill among employees, customers and the local community. Rather than being tied to some social or
business objectives, the contributions often reflect the personal beliefs and values of executives or employees.
Corporations can use their contributions to improve the quality of the business environment in the
locations where they operate i.e. to improve their competitive context. This will help in achieving their business
goals. The corporation can also leverage its capabilities and relationships in support of charitable causes. This
approach produces social benefits far exceeding those provided by individual donors, foundations and even
governments. Context focused corporate philanthropy achieves both social and economic gains. Cisco trains
computer network administrators, which provides job opportunities to people, but which also provides trained
employees to the company. Companies should focus on social needs that affect their corporate context and
should utilize its strengths as corporation to address them.
Economic and Social objectives are not distinct: Companies do not function in isolation from the
society around them. Their ability to compete depends heavily on the circumstances of the location where they

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operate. Improving education is a social issue, but the educational level of the local workforce affects a
company’s potential competitiveness.

3. Corporate Responsibility Summit 2013

Corporate Responsibility Summit 2013 was successfully conducted in Mumbai on 11 Jan 2013. The
prime motive of the event was to delve deeper into corporate responsibility. Champions from the corporate,
government and social sectors provided their views. John Elkington, well known expert in CSR spoke about
‘Breakthrough Corporate Responsibility’, a detailed understanding of what is and what is not included in CSR.
He described how businesses have now started being more aware to corporate responsibility and the same is
being appreciated by their investors buying patterns too. He discussed several concepts of how the Indian
corporates are now moving from the ‘denial to social innovations’ phase in CSR. Concepts like 6D capitalism
and creative destruction helped the audience connect with the new trends easily. His examples like Zeronauts,
Green peace and later case study on Novo Nordisk helped show the impact much further.
Corporate social responsibility spending in India is set to shoot up by around Rs 27,000 crore per year,
with the Companies Bill making CSR mandatory for corporates above a certain threshold. At a workshop on
CSR, ‘Learning by Doing’, organized in Mumbai recently, participants noted that CSR would prosper at the
expense of the broader community, resulting in an adversarial relationship between business and society.
Though CSR helps inspire leaders and businesses to reconnect with society to the mutual benefit of
both, Bhaskar Chatterjee, CEO, Indian Institute of Corporate Affairs, noted that less than 1 per cent of corporate
India actually has a CSR Committee Board, of which just one per cent has a CSR Committee in which there is
an independent Director. “The statistics are pathetic. But, this shows where CSR stands on the boardroom
agenda,” he told the gathering. The New Companies Bill, when it becomes an Act, will mandate the corporate
world to institute a CSR Committee comprising three board members, of which one has to be an independent
director. (The Hindu Business Line)

4. PSU Practices and Problems

Even as the government tries to coax private companies to spend more money in fulfilling their
corporate social responsibilities, public sector undertakings remain laggards. Ten large PSUs, which were
together mandated to spend 1,313 crore in FY12, managed to disburse less than half that amount.
According to Department of Public Enterprises (DPE) norms, Central Public Sector Enterprises
(CPSEs) with net profit of over 500 crore need to spend 1%-2% of their profits on CSR activities. The 1,679
crore allotted for CSR is based on 2% of net profit.
As private companies transition to the new norms, PSUs are still struggling to live up to norms on CSR
spends laid out by DPE three years ago. Some PSUs struggle for want of dedicated CSR professionals who can
direct the money well, others for an insular mindset and lack of partnerships with the NGOs, yet others for
inability to identify good social projects or, simply put, lack of a top management vision for CSR.
State Bank of INDIA has a five-member central CSR team, but only one of them is dedicated to CSR.
Others also handle corporate communications. This team allocates budgets to circle heads who dole out funds to
regional branch heads who then disbursed the money to projects. While decentralizing and working in the local
communities is helpful, the process is cumbersome. “Such loosely held bureaucratic structures cause delays in
money reaching projects which results in the inability to spend allocated funds within a specified time period,”
says a senior executive of the CSR division of a public sector company. Jayanti Shukla, executive director,
United Way, India said:”They don’t have dedicated teams and one person handles two or three functions with
CSR as an added responsibility.” She feels companies need dedicated teams for CSR.
PSUs also struggle to find good social projects. “Companies (often) don’t know how to address these
issues which are so different from their particular industry and core competencies. They would be well advised
to engage with the leading edge NGOs,” says John Elkington, a global authority on CSR and sustainability, who
conceived the ‘triple bottom line.’ “Far too often, we come across instances where NGOs are run by the wives
of bureaucrats as a medium to extract money in the form of donations from us. We are very careful in selecting
the projects which we support,” a senior executive of the CSR division of a PSU reveals.
Finding sustainable projects is ONGC’s biggest challenge.”We are unable to get good projects. In tier 3
and tier 4 towns, we find that there aren’t good organizations to partner with,” says an ONGC spokesperson.
ONGC supports causes in areas like education, healthcare, entrepreneurship, environment protection and
protection of heritage sites etc.
Coal India, too, spent only 27% of its allocated CSR budget last year. Ajit Kumar, general manager,
Human Resources and CSR says there are two reasons for this gap – absence of a monitoring system and lack of
manpower to implement projects at ground level. To address this, Coal India has recently signed a MOU with

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Tata Institute of Social Sciences to carry out needs assessment on projects. Their NGO partners work with
Kumar’s team to implement projects and carry out reporting on impact created by the projects. Coal India is
streamlining its dedicated CSR team to be more efficient in monitoring project work.
SBI, which has not partnered with NGOs for CSR on projects is reconsidering this. SBI could soon
work with NGOs to disburse more money on larger projects over 25 lakh soon after the new Companies Bill
becomes law. CSR works better if it is related to the core business needs. For example, their rural branches work
with schools to distribute purified drinking water filters. While the local branch employees interact with the
students, they know they are recruiting future customers. “CSR is about sustainability of our business and not
about philanthropy. When our employees engage with the community they are building a good brand image
which is good for business,” says the SBI spokesperson.
PSUs are showing intent in taking CSR seriously. “In the last 2 years, there has been an enormous shift
in the mindset of top management of companies. People at the level of COOs are now sitting in on these
meeting with us. It’s a clear indication they are taking CSR seriously,”says United Way’s Shukla. Organisations
like United Way are now helping companies connect with NGOs that work in the kind of social projects the
former is interested in. (The Economic Times,29 Jan 2013)
In terms of the guidelines issued by the Department of Public Enterprises, GAIL has allocated an
annual budget of 2% of the previous year’s Profit after Tax for CSR activities, which is effectively used for
carefully chosen programmes. Today, CSR & sustainability development is accorded high priority in the
organizational ethos and attempted to be interwoven in all the business activities and the projects that are being
undertaken by the company. During the year 2010-11, the company has taken up programmes of a value of
approximately Rs.57.5 Crs for implementation under the seven thrust areas, which include
CommunityDevelopment,InfrastructureHealthcare/MedicalSkillDevelopment/Empowerment, Educational Aids,
Environment Protection, Drinking Water/Sanitation.

Table 1 : Wide Responsibility Gap

Company Funds spent in Cr Rs Funds allocated in Cr Rs (2% PAT FY ’11)

IOCL 82.70 161.7
BPCL 7.76 34.8
HPCL 26.50 34.0
SBI 71.20 82.0*
ONGC 121.08 456.5
NTPC** 49.40 186.9
CIL 82.0 271.3
SAIL 61.00 98.7
MMTC 3.00 2.54
BHEL Not Disclosed 121.1
(Source ETIG database)
*SBI has been under RBI which mandates 1% of profits to be spent on CSR
**NTPC has spent 0.5% of profits in 2011-12
Total funds spent-504.6 Cr Rs against fund allocated 1,313.4 Cr Rs.

5. Corporate Examples: Where and How it works

Delloitte celebrates an ‘Impact day’ where all 17 thousand employees are asked to work for one day
across several causes they support. Mr Sandeep Singh from Toyota talked about how they are driving the cause
of eco-friendly vehicles and community responsibility. All the companies capture employee CSR impact in
their respective systems. Ms Srimathi Shivashankar from HCL discussed how employees are becoming more
responsible and engaging with the local communities to help and support them.
Mr Bakshi discussed how innovative products like detergents that require less water and campaigns
like regular hand washing, can help drive greener initiatives and get consumer support in the mass market. Mr
Santosh Desai too expressed his views w.r.t. how CSR is shaping up in Corporate India. As it came with the
discussion people today are more aware and less can be hidden in today’s world of hyper communication and
connectedness
Marie discussed how Aviva is impacting life of several street kids, a cause chosen and supported by its
stakeholders. Pooja and Shanta highlighted how still several thousand children are forced to child labour and
become a victim of a few government or corporate vices who see them as a mere source of cheap labour.
Tata Group in India has a range of CSR projects, most of which are community improvement
programs. For example, it is a leading provider of maternal and child health services, family planning, and has

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provided 98 percent immunization in Jamshedpur. The company also endorses sports as a way of life. It has
established a football academy, archery academy, and promotes sports among employees. It offers healthcare
services all over the country with programs like rural health development.
Tata Group also has an organized relief program in case of natural disasters, including long-term
treatment and rebuilding efforts. It did laudable work during the Gujarat earthquakes and Orissa floods. It also
supports education, with over 500 schools, and also is a benefactor of the arts and culture. It has done abundant
work in improving the environment and local populations around its industries.
Aptech a leading education player with a global presence that has played a broad and continued role in
encouraging and nurturing education throughout the country since its inception. As a global player with
complete solutions-providing capabilities, Aptech has a long history of participating in community activities. It
has, in association with leading NGOs, provided computers at schools, education to the deprived, and training
and awareness-camps.
Infosys is aggressively involved in a variety of community growth programs. In 1996, the company
created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1 percent of profits after tax
every year. Moreover, the Education and Research Department at Infosys also works with employee volunteers
on community development projects.
The management team at Infosys continues to set examples in the area of corporate citizenship and has
involved itself vigorously in key national bodies. They have taken initiatives to work in the areas of research and
education, community service, rural outreach programs, employment, healthcare for the poor, education, arts
and culture, and welfare activities undertaken by the Infosys Foundation.
At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the
purpose of promoting education. Its vision is to renovate the lives of people in India through education and
financial assistance across age groups and across income strata. The K. C. Mahindra Education Trust undertakes
a number of education plans, which make a difference to the lives of worthy students. The Trust has provided
more than Rs. 7.5 crore in the form of grants, scholarships and loans. It promotes education mostly by the way
of scholarships. The Nanhi Kali (children) project has over 3,300 children under it and the company aims to
increase the number to 10,000 in the next two years by reaching out to the underprivileged children, especially
in rural areas. ( India Briefing July 10, 2012 )
Jain Group of companies have always been doing business with a social conscience. Jains believe that
education, health, culture and environment are the pillars of vital and vibrant society. Recognizing their social
responsibility, founded 'Jain Charities’ as a Public Charitable Trust in 1982. The Trust is a secular body and is
there to help worthy cause of every community whether Christian, Hindu, Jain, Muslim or Parsi. This Trust has
its roots in Rural India. The trustees are native of villages. They believe in paying special attention to this
neglected rustic society. In keeping with the pillars of the dynamic and energetic society, the Jain Charities has
prepared its goals as below:

1. Advancement of education and literacy.

2. Providing of medical relief,
3. Promotion of games, sports and physical fitness.
4. Initiation of and support to cultural and other projects for society.
5. Furtherance of environment and rural development.

6. Conclusion

The diverse views about corporate social responsibility have led to distinct practices undertaken by
corporate. Yet we find some common areas on which many of them have focused attention and efforts. The
impact of such activities may not be spectacular but still it does make a difference in the lives they touch. The
evolution as observed over the years now may accelerate. The good intentions and good deeds should result in
better tomorrow.

7. References:

Kotler, P., Keller, K. L., Koshy, A., & Jha, M. (2012). Marketing Management: ASouth Asian Perspective. New
Delhi: Pearson.
Kumar, A., & N, M. (2007). Marketing Management. New Delhi: Vikas.
Narkhede, P. (2011). Corporate Social Responsibility. Jalgaon: Prashant Publication.

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http://www.iccsr.org/knowledge.htmlPosted by: Mr. Rajesh Tiwari (Founder– ICCSR)
1/9/11
http://www.livemint.com
http://www.indiacsr
http://www.gail.nic.in/final_site/aboutcsr.html
http://www.india-briefing.com/news/corporate-social-responsibility-india-5511.html/(July 10, 2012)
www.jains.com
The Hindu Business Line
The Economic Times,29 Jan 2013