I love when Product (RED) launches a big partnership like it did recently with Starbucks. It really thrusts cause marketing into the spotlight and gets nonprofits and for-profits talking about how they can work together to market each other and support their communities.
The Starbucks/(RED) pact has also brought up lots of good comments and questions about what cause marketing is, how it works and how it differs from other types of giving. Here are some of the things that cause marketing IS and ISN’T as it relates to the Starbucks/(RED) program.
Starbucks/(RED) IS a partnership for profit. Cause marketing is a partnership between a nonprofit and a for profit for mutual profit. For the nonprofit, it raises money and visibility. For the for-profit it enhances favorability with consumers, which drives sales. In short, it gives consumers a better reason to buy than just for product or price. Both (RED) and Starbucks have business goals beyond their real and noble intentions to fight AIDS in Africa. (RED) wants to further build its philanthropic brand so it can land more high profile and lucractive partners like Starbucks. Starbucks wants to boost flagging sales with a new promotion that will increase customer thirst for $4 lattes.
Starbucks ISN’T a cheapskate for donating five cents from every holiday drink. I’ve actually heard this standing in line waiting to order my own drink. “That’s it? Five cents on a drink I just paid $4.50 for?” But look at the math of Starbucks’ generosity. How many stores: A LOT. How many customers: A LOT. How many drinks served each day: A REAL LOT. Starbucks will raise millions for (RED) and consumers can easily support the campaign by buying their hot drinks at the same price they’ve always bought them. (RED) will raise more money tying their success to coffee consumption than they could have ever squeezed from the corporate checkbook or from those well meaning folks in community relations. You decide: would you rather have five cents from every drink and a eight-figure check or a nice five-figure community grant? Starbucks and (RED) chose the right course.
What Starbucks spends on marketing (RED) IS good business, for everyone. When Gap launched their partnership with (RED) and people saw all the ads, hoopla and in-store displays, there was an outcry: “Stop spending money on advertising. Just give it to (RED)!” People are saying the same thing to Starbucks. And they are right on one count: among others things, those sharp-looking (RED) aprons behind the counter aren’t free. But to suggest we just take the money spent on promotion and give it to (RED) misses the mark on the power of cause marketing, how it works and how it differs from other types of giving. The fact that Starbucks could partner with (RED) to grow its business and to help a good cause was the impetus for the partnership! Another truth: those Starbucks promotional dollars would not have been re-purposed for charitable giving. But rest assured they’re not wasted because they promote (RED)’s work and mission. Thanks to similar investments by companies like the Gap, Motorola and Apple, (RED) has become a top philanthropic brand IN THE WORLD in just a few years. This accomplishment cannot be understated and the corporate marketing machines of (RED)’s corporate partners deserve a good deal of the credit.
Cause marketing ISN’T an end, it’s a means. Taken by itself cause marketing seems short-sighted, wasteful and stupid. So do glitzy charity fundraisers. So do those silly charity address labels and greeting cards I get in the mail every week. At the hospital I work at in Boston we have a cause marketing program because it raises some money and gives a lot of exposure in the community. But, more importantly, it feeds our major gifts and foundations teams with prospects and opportunities. As we build cause marketing partnerships with individuals and companies we tap other sources of philanthropic wealth that are more lucrative and transformative than cause marketing. We get asked to submit proposals to corporate foundations and senior executives visit the hospital and get to know us.
(RED) is different from most nonprofits in that cause marketing is more of a platform than a springboard into new fundraising opportunities. I have no doubt that after the holidays when the first phase of (RED) ends in Starbucks stores the folks from (RED) will have quietly gathered a sizeable bit of intelligence about the senior team at Starbucks and who might be good prospects for cultivation.
Let’s not forget that while Starbucks will raise a lot of money in the coming weeks, the cash and stock individuals (like Schultz) could give and bequest to (RED) to fight AIDS in Africa could make the companies efforts look like a hill of beans.
One perspective – I bought a (RED) iPod Nano because I hated the other colors, and not necessarily for this campaign.
And of course companies are going to spend cash on promoting their good deeds… not sure if red aprons are needed when a badge or button would be just as not noticed.
mp/m
This is an excellent post, and it makes good sense (as does your math). Certainly donating something anything is better than nothing – and 5 cents x the insane number of Starbucks stores is definitely something. But I have to side with the people who are dismayed by the amount of Starbucks donation. A 1% donation from a company as large as Starbucks is not impressive. The company could certainly afford to donate more than that. While something like 50 cents would cut into their profit, certainly, from a PR standpoint donating more might encourage the anti-Starbucks folks to reconsider – thinking that their purchase would be doing some (real) good.
One thing I think we all have to remember is that Starbucks gives a lot more than just five cents on a cup of coffee. Look at what they do for fair-trade farmers. Consider what they do every March for Boston-baesed Jumpstart with when they sell they Leprechaun Lattes and give 25 cents of every drink back to that organization. Visit the Starbucks website and look at all they do. Taken within that broader context their product RED contribution is quite generous. Thanks for commenting!
While I tend to think that in this economic climate, people are going to be a bit mystified as to why Starbucks is sending their charity abroad (to an admittedly great cause with huge cache these days, but,… ummmm… hopw about local efforts to help those in need?), I cannot agree with people deriding the 1% donation as too little.
Starbucks is closing stores at this point — along with everyone else, it is receding… the fact that while it is contracting it is still willing to donate proceeds is noteworthy. I’m all for donating, but ‘Bucks is a public company that is beholding to its shareholders — I kinda of don’t think they want to hear some personnel had to be laid off while worrying that 2 mill donations are seen as better than 1 mill giveaways.
Nice summary here. I want to expand upon your points.
As cause marketing comes into its own, people will realize that their utility functions include utility of social good. Now we’re just getting complicated!
My own utility function places heavy emphasis on social issues such as women’s rights, racial equality, educational equality, etc., and a smaller emphasis on environmental health.
Smart business will (and already have) take this into account and know how to acquire me as a customer by playing to my socially-heavy utility function.
And by the way, I’m launching a cause marketing campaign of my own in two days at http://iNeedAnInterview.com. Any amount of feedback would be amazing
.
Best,
Ky
While I have been one of those people who complained that Starbucks isn’t giving enough, at least their giving something. Just a little bit of math though for there to be an eight figure check sent to Product(Red) it will take 200,000,000 cups of the 3 drinks sold.
I thought this was worth to share and show that Starbucks wants to do more. In Jan 2009 through Dec 2009 you can purchase a Product(Red) Reload Card that when you use on any drink it donates 5 cents. Check it out http://blogs.starbucks.com/blogs/customer/archive/2008/12/18/coming-soon-the-starbucks-red-card.aspx