The use of cause-related marketing (CRM) appears to be increasingly popular in the sporting industry (McGlone & Martin, 2006). According to Adkins (1999), cause-related marketing is defined as an “activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefit” (Pharr & Lough, 2012).
Such marketing approach often benefits all parties involved. However, adopting CRM campaigns in the sport arena does not come without risk and has the potential to reduce the return on investment (ROI). One example of CRM in sport is the LiveStrong® campaign (McGlone & Martin, 2006).
Fig. 1: Nike LiveStrong® brand identity
LiveStrong® was founded by Lance Armstrong, an American professional cyclist who broke the record for winning the Tour de France six times. His success brought him lucrative contracts and endorsement deals such as Nike. However, after signing the deal with Nike in 1996, he was diagnosed with cancer that nearly ended his professional cycling career (McGlone & Martin, 2006).
Despite the obstacles he faced, in 1997, while he battling with cancer, Armstrong solicited Nike for financial aid to help establish the Lance Armstrong Foundation (LAF). The foundation’s main aim was to provide a network of support for cancer survivors and their families via advocacy, education, public health and research (McGlone & Martin, 2006).
In 2004, the LAF launched LiveStrong®, a fundraising and awareness campaign that involved selling a bright yellow, silicon rubber wristband stamped with the LiveStrong® logo. Nike assisted by undertaking the production and distribution costs for the first five million wristbands, and donated an additional one million dollars to the LAF (McGlone & Martin, 2006). As of June 2005, 47 million wristbands have been sold (Lance Armstrong Foundation).
Fig. 2: LiveStrong® wristband
Due to the success of the wristband, Nike went on to initiate a LiveStrong® T-shirt campaign (McGlone & Martin, 2006). In my opinion, I felt that this was a brilliant move by Nike to ‘exploit’ the hype of the LiveStrong’s wristbands and branch into various products. In addition, as they strategically limited the place of purchase (the only place to purchase these shirts was at a Niketown or Nike store as they are not available through the LAF), it was evident that they wanted to capitalised on LiveStrong® products to lure customers into their physical stores.
Fig. 3: LiveStrong® campaign advert
This ‘ploy’ is attributed to consumers’ attitudes towards CRM in sports. A study by Roy and Graeff (2003) found that a considerable percentage of consumers agreed that CRM influence their purchase intentions. For e.g. 59% of the study’s respondents indicated that they would be more likely to buy tickets to a team’s game and team merchandise if they knew the organization supports community charities or causes. To put it simply, the benefits of CRM campaigns include an enhanced company image (Rigney & Steenhuyson, 1991), positive publicity (Nichols, 1990), a differentiated image (Shell, 1989), and favourable attitudes by consumers about sponsoring companies (Ross et al., 1991). All these benefits have one thing in common: they have the potential to increase sales (Pharr & Lough, 2012).
Fig. 4: CRM participation and purchase intention (Adapted from Roy & Graeff, 2003)
Furthermore, cause-related marketing has also been shown to have a positive influence on consumers’ perceptions of corporate reputation after a company has engaged in unethical behaviour (Cone & Roper, 1999). This is known as the halo-effect. Since 1996, Nike has been accused for its labor practices overseas (e.g. issues of low wages for overseas workers, use of child labor). These allegations lead to a public outcry and negative public relations. Therefore, the positive emotion and image transfer affiliated with the halo effect may help to positively reposition Nike in the consumer’s mind (McGlone & Martin, 2006).
Nonetheless, some may argue that Nike utilises CRM as a strategy for selling rather than a strategy for giving. In my opinion, CRM is a strategy that leverage on both the concepts of selling and giving; therefore it is impossible to separate the two. Businesses will naturally perceive CRM as a tool for increasing sales and a form of corporate giving; similarly, some consumers will perceive CRM as a form of social responsibility for them as well as the businesses, whereas other (cynical) consumers will regard CRM as a form of exploitation…Rather than trying to conceptualise CRM as a selling or giving strategy, it is more important to find a balance between the two concepts.
Indeed, adopting the CRM approach is risky as it involves walking a fine line between increased sales and an improved image and facing charges of exploitation. However, if managed carefully, CRM can bring both the company and the cause immense benefits. The company acquires an effective marketing tool while building a more positive public image. The charitable organization or cause, on the other hand, gains greater visibility and important new sources of funding and support.
Frankly, I feel that Nike has address their CRM approach with a sufficient level of authenticity and commitment. They ensured that the cause resonates with their target market and that they are consistent with the image or belief system of the partnering organization and cause (Pharr & Lough, 2012). Unfortunately, validation of Armstrong’s performance-enhancing allegations in 2012 caused Nike’s involvement with the LAF to backfire. Although Armstrong was the spark to the fire, the affiliation implicated Nike as well. This reinforces the drawbacks of CRM.
Despite the many risks, I strongly believe that CRM is a strategic approach to enhance a company’s image and increase sales by giving the cause-corporation association a moral dimension. The key to harness the positive effects and minimise the negative outcomes however, lies within the management of the strategy.
McGlone, C. & Martin, N. (2006). Nike’s Corporate Interest Lives Strong: A Case of Cause-Related Marketing and Leveraging. Sport Marketing Quarterly, 15(3), 184-188.
Pharr, J. R., & Lough, N. L. (2012). Differentiation of Social Marketing and Cause-Related Marketing in US Professional Sport. Sport Marketing Quarterly, 21(2), 91-103.
Roy, D.P. & Graeff, T.R. (2003). Consumer Attitudes Toward Cause-Related Marketing Activities in Professional Sports. Sport Marketing Quarterly, 12, 163-172.
Crescenzi, D. Nike LiveStrong Brand Identity. Darrin Crescenzi — Design. [Online image]. Retrieved 9 October 2016, from http://www.dcrsnz.com
Holloway, C. (2011). The Marketing of the LiveStrong Bracelet. Personal Record. [Online image]. Retrieved 9 October 2016, from https://personalrecordinpr.wordpress.com/2011/02/23/the-marketing-of-the-livestrong-braclet/
LIVESTRONG®. (n.d.). Shop the LIVESTRONG Foundation Store. LIVESTRONG®. [Online image]. Retrieved 9 October 2016, from http://store.livestrong.org/wristbands.html
Nike, Inc. (2012). Nike Team Livestrong. Nike. [Online image]. Retrieved 5 October 2016, from http://news.nike.com/livestrong