I write this post from my home office in my basement, which is heated, well-lit and comfortable. The floor beneath my feet is carpeted. Had the basement lacked any of these features, we probably wouldn’t have bought this house. Such amenities are assumed.
But as a college student I lived in one of those classic ‘pit’ kinds of apartments. The house was about 100 years old back then and the foundation was made of rock rather than concrete. The basement floor in that old house was compacted dirt.
Increasingly cause marketing is assumed as well for companies that face the consumer, notably grocers. This was made clear in several questions the SuperMarketGuru.com asked its 1800-member consumer panel about cause marketing.
‘Guru’ asked four cause marketing questions in addition to its other questions:
- Were consumers more likely to shop in a supermarket that supports causes?
- Would consumers be tolerant of price increases that allow for donations?
- Were consumers likely to travel further to shop in a store that supports causes?
To the first question one-third of those survey said ‘no’ they weren’t more likely to shop at a ‘cause store.’ Just 13 percent said yes and the rest said it depends on things like the store’s pricing and the cause in question or some combination of the two.
- If private label goods generated charitable donations and prices for such goods rose, would consumers still buy as much?
That sounds a lot like it dramatically undercuts Cone’s similar question which found that 85 percent of people would switch brands. But it really doesn’t. Cone’s question has always stipulated that pricing was equivalent and that the cause was one that the consumer personally cared about.
‘Guru’s’ second question was more interesting still. Some 56 percent said they’d be OK with price increases of 2 percent or less. That sounds like not much, but Kroger’s operating margin last quarter (Operating Income / Revenue) was 2.47 percent. Kroger is the first or second largest grocer in the United States depending on how you count WalMart.
By contrast, Coke’s operating margin last quarter was 5.61 percent.
In short, 2 percent is a lot in the grocery business.
The travel question also produces interesting results. Fifty-four percent said they wouldn’t travel any further to a ‘cause store.’ But of the remainder, 24 percent would go a mile or two extra, 16 percent would go up to five miles and almost 6 percent would go up to 10 miles further. In my city, a 10 mile radius would put me within the range of about 6 different grocers and perhaps 10 stores total. Being a cause store thereby would represent a meaningful competitive advantage.
Finally to the question about paying more for private label items that support a cause. The survey found that 62 percent would continue to buy private label items in the same amount even if prices rose to pay for the donation.
A lot of us old timers in cause marketing came up telling sponsors and prospective sponsors that cause marketing helped a company stand out from competitors. In some businesses it still does.
But grocers have been doing cause marketing for more than 25 years. No industry has more experience with the practice of cause marketing than the grocery business.
My analysis of these survey results is that after 25 years consumers expect grocers to be cause marketers.
Why aren’t consumers more likely to patronize a ‘cause store?’ Because the preferred grocer is almost certainly a ‘cause store,’ too.
Just as my wife and I expected a functional basement when we bought our home, consumers expect their grocer to do cause marketing.
Labels: business benefits of cause marketing, Coke, Cone Inc., Kroger