Cause-Related Marketing and Price Endings: Right-Digit Effect: An Abstract
Cause-related marketing (CRM) campaigns have become common features of the marketplace. CRM often involves a for-profit business agreeing to contribute a specified amount to a cause when the business’s customers engage in revenue-generating exchanges (Adkins, 1999; Varadarajan & Menon, 1988). Despite the central role that price is likely to play in a consumer’s decision to purchase or not purchase an offer associated with a CRM campaign, to our knowledge, very few have examined price-framing effects in a CRM context. This paper explores the effect of rightmost digits manipulation in prices on participation intentions for CRM campaigns.
Strahilevitz (1999) concludes that if giving is about feeling good, then the extent to which a promised donation to charity will add value to a product should be a direct reflection of how successful that incentive is in making consumers feel good about their purchases. Strahilevitz and Myers (1998) view this bundling approach (product and a donation) as a method of offering consumers “two distinct positive outcomes,” for the same price. A gain in acquiring the product as well as a gain, in good feelings, generated from knowing that one is supporting a worthy cause, i.e., helping. CRM gives consumers the option of being caring citizens while doing their routine shopping; however, they are more likely to accept a lower and harmless request than a large one because donating less per CRM transaction involves a smaller cost, i.e., a smaller, perceived, cost being passed on to them (Chang, 2008; Strahilevitz, 1999). Jaber (2008) adds that when buyers are presented with a low price CRM offer, they are more likely to deliberate on the benefits of helping, due to the low perceived cost to benefit ratio. On the other hand, as the offer price increases, deliberation on the cost of helping starts to overpower the affective factors; thus potential buyers will contemplate more on the cost of helping. In the case of 99 price endings, subtracting one cent from a round price creates a price “just below” a round number, and the leftmost digits are reduced, thereby creating an illusion that the price is lower than it actually is (Manning & Sprott, 2009).
Overall our results extend previous work on cause-related marketing and right-digit effect in pricing to show that consumers that are exposed to the no ending (even) priced CRM offers tend to be affected less by it compared to consumers exposed to 99 ending CRM offers, who are affected more by the tactic and exhibit an increase in participation intention. We also examine process measures to explain this effect, and our SEM results show that in the 99 ending condition, while offer elaboration has a positive effect on offer attractiveness and ultimately participation intentions, perception of the product quality has a negative effect on offer attractiveness and eventually participation intentions. On the other hand, anticipated guilt and quality perception will have a positive effect on offer attractiveness and ultimately participation intentions.