40 Devleena Ghosh and Amit Jain
Cause-related marketing
Many governments have now instituted environmental regulation mandating
sustainable business practices. In India, the Environment Protection Act was
implemented in 1986 (Government of India 1986), and the environmental auditing
of industrial units was formally introduced in March 1992 with the overall objective
of minimizing consumption of resources and generation of waste through the use of
clean technologies in industrial production (Mahwar et al. 1997).
New Delhi, the Indian capital, was one of the most polluted cities until the
Supreme Court of India intervened in favor of alternative fuels. A historic Supreme
Court judgment in 1998 forced all public transport vehicles, an estimated 100,000,
to switch to cleaner compressed natural gas (Ghosal and Chatterjee 2015). More
recently, the Indian government passed the “The Companies Act 2013”, a bill that
(among other things) mandates corporate social responsibility (CSR) for companies
over a certain size and registered in India. Beginning in the fiscal year 2014–2015,
the Act requires corporate entities that meet the criteria to spend at least 2 per cent
of their average net profit in the previous 3 years on CSR activities (Prasad 2014).
Such laws have helped to increase the popularity of cause-related marketing
(CRM) as a model through which for-profit entities (for example, corporations),
nonprofit entities (for example, non-governmental organizations [NGOs]), and
consumers can intervene and ameliorate social issues. Under the CRM model, a
corporation makes a donation to an NGO each time a consumer purchases their
branded product. For example, each time a consumer in India buys a packet of
Tide washing powder, Procter & Gamble donates to a group of education-focused
NGOs, Project Shiksha. Since these donations are triggered by consumer purchases,
cause-related marketing can be understood as a form of ethical consumption. It
has become an important strategic tool for businesses wishing to build a positive
corporate image among consumers and increase their sales and profits.
For consumers, alliances between for-profit firms and nonprofit organizations
(with nonprofit causes) have become increasingly popular (Gourville and Kasturi
Rangan 2004). Customers who were attracted to cause-related marketing were
more likely to pay a premium price for the product promoted. These commercial
and philanthropic sponsorships thus helped the corporations involved to achieve
profits as well as improve their corporate image and brand recognition (Nicolau-
Gonzalbez, Mas-Ruiz, and Calderon-Martinez 2005). Generally, commercial
sponsorships generated positive returns for the organizations concerned and firms
financing socially responsible activities as well as their core business improved
their stock prices and were more competitive in the marketplace (Dennis et al.
2008). Increasing consumer concern about environmental issues (Juwaheer 2005)
and with green values has translated their real-world changes in consumption
patterns and a move to eco-friendly appearing products (Bhatia and Jain 2013).
The case of India
However, the choices offered to most consumers in wealthy countries such as
Australia or the United States are very different from those available to buyers