Consumer co-creation in cause-related marketing campaigns: The moderating role of brand familiarity, self-construal and product involvement

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Consumer co-creation in cause-related marketing campaigns:

The moderating role of brand familiarity, self-construal and

product involvement

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1

INTRODUCTION

The term 'prosumer' was coined by Alvin Toffler in 1980 in his book 'The Third Wave'. The word 'prosumer' describes the proactive consumer, who is motivated to actively engage in the process of product and service improvement and shares his/her advices and ideas with the companies, hoping for better alignment of the final offering with own preferences. Despite the fact that this concept has been present in theory of social sciences already for over 30 years, its relevance for business practice became unquestionable only recently with the rise of Web 2.0 technologies that gave the consumers more opportunities to interact with companies and express opinions that would consequently be listened to by businesses. Even closer cooperation between companies and their customers was further facilitated by social media sites (such as Facebook, Twitter, YouTube, etc.). In addition, opportunity to post product reviews on websites such as Amazon gave the consumers the feeling that they can affect product success by rewarding the offerings they are satisfied with through favorable product evaluations and disclosing the shortcomings of purchases that did not manage to live up to their initial expectations. The mobile revolution and the emergence of smartphones with an internet access made it possible to stay in constant contact with companies of interest and interact with them and other consumers at any time and in any place. Ritzer and Jurgenson (2010) suggested that the current times characterized by digital empowerment of the consumers could be seen as a new era of 'prosumer capitalism', where consumers through their various, predominantly online activities, have a vast scope of opportunities to influence corporate strategies.

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5 directions for improvement. Customers have there the opportunity to share their own suggestions for product line extensions or provide tips for enhancing the Starbucks experience. Additionally, it is also possible to discuss the projects proposed by other consumers and vote for the ones that are the most preferred. Other examples of idea generation platforms that facilitated the exchange of ideas between corporations and their customer base are: Simply Innovate from Philips, Ideas Brewery from Heineken or Idea Storm from Dell (Roth, 2012).

Crowdsourcing is also applied in order to improve Corporate Social Responsibility performance of the companies and find new suggestions for sustainable business initiatives. Global projects such as Toyota Ideas for Good or Sony's Open Planet Ideas (Roth, 2012) on the one hand promote the companies as environmentally conscious and caring for human well-being, while on the other hand they could be seen as valuable differentiation opportunities, since the idea generation process often results in original business approaches and new product concepts. Consumers are willing to participate with the corporations in such undertakings since it gives them a sense of control over corporate actions and self-realization resulting from personal contribution to the process of resolving environmental and social issues. As it was discovered in the Edelman GoodPurpose study (2010) consumer actionism is on the rise – people are willing to cooperate with corporations in order to improve living conditions of human beings around the world and reduce the environmental impact of corporate actions.

More and more companies also try to engage consumers in the process of design and implementation CSR campaigns. Specifically in the domain of cause-related marketing close cooperation with customers seems to be particularly attractive for businesses. Cause-related marketing (also called cause-based marketing) was defined by Varadarajan and Menon (1988) as 'the process of formulating and implementing marketing activities that are characterized by an offer from a firm to contribute a specified amount of money to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives'. The most prominent example of a crowdsourced cause-related campaign is Pepsi Refresh, launched in 2010 by PepsiCo. The company over the course of campaign duration awarded $20 million in grants to individuals, businesses and non-profits for projects helping local communities, environment, underprivileged groups of people, etc. In 2012 Coca-cola followed the steps of Pepsi and also implemented large-scale co-creation in its cause-based campaign. The other examples of crowdsourced corporate donation campaigns are American Express with its Members Project, Chase Bank with Chase Community Giving, Kohl's with Kohl's cares or Target with Bullseye Gives.

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6 effectiveness of cause-related marketing actions applying consumer choice with traditional approaches where the company decides which cause should be donated to. Additionally, Robinson, Irmak and Jayachandran (2012) investigated the mechanism that increases the chances of success of cause-based campaigns providing the consumers with the possibility of choosing the donation beneficiary. This article builds on the previous empirical analyses and concentrates on the specific influence of degree of co-creation on brand-related, product-related, campaign-related and cause-related attitudes and behavioral intentions. Two studies are presented in order to enrich current understanding of mechanisms that play crucial roles in the setting of co-created cause-related campaigns. First experiment analyzes the moderating influence of brand familiarity on the relationship between degree of co-creation and attitudinal and behavioral outcomes, whereas the second study takes into consideration the differences between individual consumers and addresses two additional possible moderators: self-construal level (independent vs. interdependent) and product involvement.

I. STUDY 1

1. PROBLEM STATEMENT

This paper aims at exploring attitudinal and behavioral outcomes of engaging consumers in the process of design and implementation of cause-related marketing campaigns. As it was previously stated, only two empirical papers have investigated customer-oriented strategies applied in the field of corporate philanthropy: Arora and Henderson (2007) concentrated on comparing donation campaigns with choice with traditional cause-related campaigns, meanwhile Robinson et al. (2012) explored conditions that should be satisfied for the donation campaign with consumer choice to be successful. Nevertheless, specific effects of customer participation in crowdsourced CSR projects have not yet been empirically tested. This research gap will be partially bridged by means of this paper, concentrating on examining whether higher degree of consumer engagement in cause-related marketing campaigns results in more positive attitudes and behavioral intentions.

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7 crucial to find out whether such initiatives may result in enhanced customer attitudes and more positive behavioral intentions.

The effects of corporate cause donations can differ for familiar and unfamiliar brands (Lafferty, 2009; Arora & Henderson, 2007) and therefore, it is highly likely that also when co-created cause-based campaigns are taken into consideration brand familiarity will play a relevant moderating role.

Consequently, This research will strive to answer two following questions:

1. Do campaign evaluations, purchase intentions, WOM & advocacy behavioral intention, willingness-to-pay improve and does the level of skepticism towards the campaign decrease in the case of a higher degree of customer co-creation?

2. To what extent does brand familiarity affect the consumers’ inferences about engaging in crowdsourced CSR campaigns? Can less familiar brands benefit more from engaging customers in co-creation experiences in the cause-related marketing setting than more familiar brands?

The rest of this chapter is structured as follows: First, current theoretical advancements in the field of effectiveness of cause-related campaigns are elaborated on. Further, a theoretical background regarding customer empowerment is presented. Consecutive chapters deliver the conceptual model, specific hypotheses and the design of the experiment that is applied in this study. This subchapter will end with thorough analysis of the results.

2. THEORETICAL BACKGROUND

2.1. Corporate Social Responsibility and Cause-related Marketing

There is a visible lack of agreement in the academic literature with respect to the concept of Corporate Social Responsibility. Many definitions have been so far coined for this construct and various frameworks have been applied in this field. Kotler and Lee (2005) define this notion as ‘a commitment to improve [societal] well-being through discretionary business practices and contributions of corporate resources’. Therefore, in the framework of this definition, corporations should not only focus on their own interest and increase of profit, but at the same time they are obliged to concentrate on the environment they are operating in and strive to improve the general welfare of various stakeholders. One of the most prominent theorists of CSR, Caroll (1979), implies that apart from their economic success, the companies ought to pay attention to non-economic criteria as well. In order to become good corporate citizens businesses have to comply with four basic responsibilities: economic (be profitable while delivering a product of a good quality for a fair price), legal (abide by the laws regulating business code of conduct and rules of the game), ethical (doing what is right, just and fair) and philanthropic (social contributions of the corporations to the society) (Caroll, 2000).

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8 the firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives’ (Varadarajan & Menon, 1988). The marketers decide to support causes from the budgets of the corporations and consequently promote these efforts to the wider public, hoping that the consumers will favorably react to such their social endeavors and as a result, customers’ brand associations and interest in company’s products will improve.

Thus, although the constructs of cause-related marketing and corporate social responsibility are interrelated, the difference between these two concepts should be underlined at this point. Corporate Social Responsibility is a broader and more complex notion because of the diverse character of the area of interest (Sheikh & Beise-Zee, 2011). Corporate Social Responsibility embraces the whole range of corporate activities, from human resources management to protection of the natural environment, aiming at positive impact on the society. Cause-related marketing denotes an application of corporate philanthropy for business profits (increase in sales, enhanced company reputation). There are two main objectives of these marketing strategies: improving corporate performance and supporting worthy causes (Varadarajan & Menon, 1988).

2.2. Outcomes of Cause-related Marketing

A broad area of academic research focuses nowadays on the positive effects that supporting good causes can have on companies and brands. McWilliams and Siegel (2001) argue in their theoretical investigation that Corporate Social Responsibility can be successfully implemented by the corporations as a differentiation strategy which could entail higher willingness-to-pay of the customers. Varadajaran and Menon (1988) examine various cases reported in articles and conclude that cause-related marketing projects could be applied in the business model as an attractive tool for gaining national visibility, enhancing corporate image, increasing brand awareness and broadening customer base.

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9 establishing brand credibility, evoking brand feelings and eliciting brand engagement. Nonetheless, it is of focal importance for the brand and the product not to overcommunicate the corporate donations to causes as in this case the customers can easily come to the conclusion that the company is more focused on marketing and promotion than on supporting relevant social issues. There are also advantages of cause-related marketing projects for the non-profits involved, as partnering with a corporation can lead to higher public support of the cause. In addition, the businesses can provide vital resources, such as funds and expertise (Hoeffler and Keller, 2002).

Brown and Dacin (1997) introduced in their empirical study the concept of corporate associations. This construct embraces all the information about the company that a certain person holds. Brown and Dacin (1997) contended that there are two main positioning strategies for the corporations: 1) focusing on corporate ability understood as expertise in producing and delivering product or service offering, 2) focusing on its Corporate Social Responsibility. The customers develop their brand associations on the basis of this positioning. Higher CSR associations held by the customers result in more favorable product evaluations and consequently enhanced responses to the market offerings. Luo and Bhattacharya (2006) have managed to confirm the positive relationship between Corporate Social Responsibility and customer satisfaction, which consecutively enhances firm’s market value measured by means of Tobin’s q indicator.

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2.3. Enhancing the effectiveness of cause-based marketing

Wide scope of academic research focuses on the donation behavior and the factors affecting its effectiveness. First of all, the success of cause-based undertakings can depend on what kind of products are promoted by means of philanthropic actions. Strahilevitz (1999) found that charity incentives prove to be more effective in promoting products seen as ‘frivolous luxuries’ (e.g. a luxury cruise) than in promoting products perceived as ‘practical necessities’ (e.g. new washing machine) when the donation magnitude is large and the monetary incentives (for instance the percentage of the price being discounted) significant. Furthermore, when consumers face the choice between multiple brands that are linked to a charity, large donations turn out to be more beneficial for frivolous products and smaller donations are preferred when associated with practical products. Product type was also confirmed to moderate the relationship between consumers’ self-construal and promotion preference in the study conducted by Winterich and Barone (2011) - consumers characterized by more salient independent self-construal demonstrated preference for cause donations over cash rebates while purchasing indulgent products, whereas when buying nonindulgent offerings (e.g. healthy food products) they became more price conscious rather than socially responsible, concentrating more on their individual benefits. Better performance of donations to charity than cash rebates as purchase incentives for hedonic products was further corroborated by the study of Strahilevitz and Myers (1998).

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11 manner, people were more likely to believe the CSR advertisement in comparison to vague donation statements.

Singh, Kristensen and Villaseñor (2009) conducted research on decreasing the level of consumers’ skepticism towards cause-related marketing campaigns among the Norwegian customers. The researchers found that increasing the familiarity with the CRM claims by repeating them reduces the cynical attitudes of consumers and reduces the adverse effect of skepticism towards advertising. Consumers’ inferences with respect to firm motives and Corporate Social Responsibility projects were also investigated by Folse, Niedrich and Grau (2010). The researchers proved that increasing the purchase quantity required for a firm donation negatively influences participation intentions and intensifies consumers’ skepticism. On the other hand, customers are more willing to participate when the company increases the donation amount.

Additionally, personal relevance of the sponsored cause was confirmed to enhance the effectiveness of the cause-related marketing strategies. Bennett (2003) proved that sympathy and personal relevance of the cause are one of the most focal determinants of the decision to support a particular charity. In the exploratory study of Broderick, Jogi and Garry (2003) the role of the personal involvement with the cause for consumers’ attitudes and behaviors was further substantiated – consumers were demonstrating higher levels of support and stronger emotional attachment to the campaign which was donating money to personally important causes. Empirical investigations of Grau and Folse (2007) and Chowdhury and Khare (2011) further validated this observation.

Providing consumers the possibility of choosing the donation beneficiary constitutes another strategy that has the potential of enhancing cause-related campaign success. Bendapudi, Singh and Bendapudi (1996) in their conceptual paper proposed that charities can improve donor’s willingness to support when they allow them to specify not only the exact beneficiaries of such help, but also the type and timing of it. Thus, it can be inferred that people are more willing to engage in pro-social behavior if they feel at least partially empowered and have some control over the donation process. This conclusion is further corroborated by empirical analysis of embedded premium promotions understood as an enhancement that involves a social cause added on to a product or service, conducted by Arora and Henderson (2007). In one of their experiments, the researchers introduced into the conjoint-based design one product associated with a cause that the consumer was able to select from a provided set of causes. This customization strategy proved to be extremely powerful, as people preferred a product linked with a donation of 1% to a cause that they chose to a product associated with a donation of 5% to a certain cause already preselected by the management team of the company. The results of the study conducted by Arora and Henderson (2007) demonstrate that customers want to influence the pro-social strategies implemented by companies.

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12 found to be more successful when the fit between the causes and the company is lower – in this case customers’ perceived personal role enhances. Furthermore, when consumers are informed about the fact that charities are still far from accomplishing their goal, allowing them to choose the cause would result in less favorable reactions to the campaign.

Willingness-to-pay is a construct that is of special interest from the managerial point of view. The study of Koschate-Fischer et al. (2012) concentrated specifically on the impact of cause-related campaigns on consumers' willingness-to-pay for products associated with donations. The researchers identified 2 important categories of moderating factors exerting influence on this relation: donation-related customer predispositions and cause-donation-related customer predispositions. Within the first category two crucial moderators were distinguished – customers’ attitude towards helping others and the warm glow motive (the desire to feel the warm glow resulting from the activity of donation). Both of them were found to positively affect the relationship between the donated sum and willingness to pay. Three additional moderators belonging to the category of cause-related customer predispositions were recognized in the paper: cause involvement, cause organization affinity and company-cause fit. Both cause involvement and cause organization affinity function as positive moderating factors, thus the higher cause involvement or the higher cause organization affinity, the higher price customers are willing to pay for products associated with larger donations. On the contrary, low fit between the cause and the supporting company and high donation amount evokes positive motive attribution and consequently results in higher willingness to pay.

2.4. Customer empowerment

The concept of empowerment has been applied across broad scope of various disciplines - e.g. in political studies, community development, psychology, education, economics, information systems research and consumer research. Empowerment could be understood as 'the perceived power or control that an individual actor or organizational unit has over others' (Bacharach & Lowler, 1980). In the field of consumer research consumer empowerment is perceived as an outcome of a cooperation with a marketer as a partner (Bendapudi & Leone, 2003).

In the service setting customer empowerment is closely related to customer participation. Customer participation in the literature is defined as 'the degree to which the customer is involved in producing and delivering the service' (Dabholkar, 1990, p. 484). Customer participation in service specification and delivery can have positive influence on future behavioral intentions. Customers participating in service delivery are more willing to recommend service providers and express stronger purchase intentions (Cermak, File and Prince, 2011). Engaging customers in service leads also to improved perceived service quality and greater customer satisfaction (Cermak et al., 2011; Ennew and Binks, 1999).

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13 interviews proposed that the higher self-perceived role of the consumers in service delivery process is, the higher their expectations regarding the quality level of the final offering become. The study of Chan, Yim and Lam (2010) presented consumer participation in services as 'double-edged sword' - on the one hand it drives customer satisfaction and strengthens relational bonds between customer and the company, while on the other hand it can increase employee's job stress and lower their job satisfaction.

The investigation of customer participation in the service setting has been recently extended to the market of tangible goods (products). While in the service setting customers have always constituted a crucial, often even indispensable component of service encounter (Mills & Morris, 1986), in the market of products only after the origin of web 2.0 technology consumers started to be perceived as relational partners taking part in value creation process. Essential role of the consumer in the production process is emphasized by service-dominant logic (Vargo & Lush, 2004). Contrary to the goods-dominant logic where the producer was the creator of value and customer was only the user, in service-dominant logic both producer and the customer are perceived as ‘resource integrators’ and ‘co-creators’. The interaction between the producer and the end user according to this new rationale constitutes one of the most important processes in the course of production. Thus, this particular marketing logic focuses especially on interactivity, connectivity and building ongoing relationships (Vargo & Lush, 2004).

In both product and service setting service-dominant logic is predominantly implemented through co-creation. Hennig-Thurau et al. (2009) define co-creation as a term that embraces consumers’ collaboration with companies or other consumers to create some kind of value. Van Doorn et al. (2010) included co-creation next to other customers' voluntary behaviors under the umbrella term of 'customer engagement behaviors' defined as 'behavioral manifestations that go beyond transactions, have a brand or firm focus and result from motivational drivers.'

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14 process perceive companies incorporating consumers in their value creation as more customer-oriented (Fuchs & Schreier, 2011). Also stronger behavioral intentions (e.g. purchase and WOM) and improved company attitudes are a consequence of consumer engagement in NPD for external observers of the co-creation (Fuchs & Schreier, 2011).

Nevertheless, co-creation in the NPD does not only result in positive outcomes, therefore before implementing strategies empowering consumers in the process of product / service design it is of focal importance to be aware of border conditions of co-creation effectiveness. For instance, Fuchs et al. (2013) researched the perception of co-created products in the setting of luxury fashion industry. The findings of this study indicate that the demand for luxury fashion products designed by customers is lower than in the case of company design. Such negative effect of user design results from the lower perceived quality of co-created luxury fashion products and their failure in signaling high status.

Crowdsourcing could be seen as co-creation implemented on a large scale. Various approaches are applied nowadays by companies in order to profit from the wisdom of the crowd and to improve product and service design by using the ideas obtained from a wide group of consumers. Crowdsourcing is frequently applied in a wider context of open innovation, uderstood as 'the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the markets for external use of innovation, respectively' (Chesbrough , 2006, p. 1). In the framework of open innovation consumers constitute one of the crucial target groups (next to for instance experts, non-profit organization, think-tanks, etc.) from which ideas for product and service development, and business process improvement could be derived. Open innovation gives the companies the possibility to benefit from expertise originating from different sources and gain new perspective on their business strategy (Whitla, 2009).

The research examining the success factors and boundary conditions of the effectiveness of crowdsourcing strategies is still in its early stage. The most interesting question related to participation of consumers in crowdsourced projects was answered by Poetz and Schreier (2012). The researchers examined how creative are the ideas originating from co-creation contests in comparison with ideas delivered by professionals working for a certain company. The results of the empirical investigation showed that the ideas suggested by consumers score on average higher in novelty and customer benefit, but lower in feasibility. Furthermore, ideas proposed by users are included among the very best regarding novelty and customer benefit more often than it could be expected (Poetz & Schreier, 2012).

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3. THEORETICAL FRAMEWORK

The following section presents the conceptual model that constitutes the foundation for this research. Furthermore, on the basis of current findings and developments in the academic literature regarding the Corporate Social Responsibility and cause-related strategies the specific hypotheses are going to be derived.

3.1. Conceptual model

Figure 1 depicts the conceptual model designed for the purpose of this study. This scheme presents all the relationships between the specific constructs related to customer co-creation in cause-related marketing that are hypothesized in this research. The main independent variable employed in this study is the ‘degree of co-creation’ which was first suggested and defined in the academic literature in the paper of Hoyer et al. (2010). The degree of co-creation corresponds in this article to the level of customers’ engagement in co-creation process. The concept of degree of co-creation will be of particular interest for the current study as it captures the general involvement of customers in the co-production process at the early stages of campaign development. The six dependent variables that are hypothesized to be directly influenced by the degree of co-creation have been selected on the basis of the previous research from the field of Corporate Social Responsibility and cause-related marketing. In various scientific articles it has been already countenanced that the customers evaluate the campaigns more positively when they are associated with donations to the good causes they are more involved with (Grau and Folse, 2007) and that they demonstrate more positive attitudes towards companies that are more focused on Corporate Social Responsibility (Sen and Bhattacharya, 2001; Brown & Dacin, 1997; Murray and Vogel, 1997; Handelman and Arnold, 1999). Moreover, also other behavioral intentions implemented in the current study (purchase intentions [Sen & Bhattacharya, 2001; Pringle & Thompson, 1999; Lacey & Kennett-Hensel, 2010; Mohr & Webb, 2010], willingness to pay [Meyer, 1999; De Pelsmacker, Driesen & Rayp, 2005; Elfenbein & McManus, 2007], WOM and advocacy intentions [Du et al., 2007; Lacey & Kennett-Hensel, 2010], donation intention [Lichtenstein et al., 2004]) have been confirmed to be affected positively by company’s initiatives in the field of cause-related marketing. Since skepticism towards the campaign has been recognized in various publications (Webb & Mohr, 1998; Vlachos et al., 2009; Bronn & Vrioni, 2001) as one of the crucial obstacles for cause-related undertakings also this variable is added to the model, as it is likely that consumers will be less skeptical towards campaigns that they have the possibility to co-create. The greater the empowerment of customers in the cause-based campaign design and implementation process, the greater should be the relational and behavioral outcomes of the company’s donations to specific good causes, as engaging customers can entail positive cognitive, attitudinal and emotional consequences (Van Doorn et al., 2010). Additionally, Schreier et al. (2012) and Fuchs and Schreier (2011) showed that empowerment strategies have a positive effect not only on consumers who participate in the co-creation process, but also on those who are external observers of such engaging corporate undertakings. Therefore the higher the degree of co-creation, the higher the perceived customer engagement and customer orientation of the company and consequently, the more positive attitudinal and behavioral benefits should originate for the businesses donating money to good causes. On the basis of this rationale the conceptual model depicted in figure 1 has been developed.

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16 positive/negative word-of-mouth for known and unknown brands can differ significantly. It is probable that similar phenomenon occurs in the case of co-creation in cause-related marketing setting.

Figure 1 depicts conceptual framework constituting theoretical backbone of study 1.

Figure 1. Conceptual framework developed for study 1

3.2. Hypothesized main effects

3.2.1. Influence of degree of co-creation on campaign evaluations

Robinson et al. (2012) showed that choice in cause-related campaigns positively affects perceived personal role that the customers play in the donation process. Subsequently, this enhanced perceived importance of own contribution that consumers experience in choice-based campaigns leads to more positive attitudes towards campaign and increased willingness to pay for products. The research on control and freedom of choices corroborates this finding, showing that choices made independently in comparison with the ones imposed by others lead to higher task enjoyment and enhanced evaluation of the end results (Langer, 1975; Taylor & Brown, 1988). Botti and McGill (2006) proved that consumers, when provided with choice, experience greater personal causality, which leads to more positive evaluation of the final outcomes (Botti & McGill, 2011). The higher degree of co-creations, the greater empowerment of consumers in campaign execution process. Consequently,

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17 both feelings of perceived personal role and perceived causality should be enhanced to a greater extent through engagement, what would result in improved campaign evaluations. Moreover, consumers are more involved in co-created projects as they exert some perceived control over the whole process of their design and implementation. The sense of control that customers have in the service environment influences positively their judgments of service validity and reliability and as a consequence drives customers’ satisfaction (Van Raaij & Pruyn, 1998).

Further, as Song and Adams (1993) contend in their conceptual paper, participation of the customers in the production or delivery can be used as an opportunity for the product differentiation which is vital for evoking more positive feelings about a certain market offering (Kotler & Keller, 2006). Additionally, providing co-production opportunities for the customers enhances customer experience (Lusch et al., 2007). As a result, giving them the possibility to co-create cause-related marketing campaigns could be perceived as a more entertaining activity related to the helping behavior than the traditional corporate philanthropy undertakings and enhance campaign evaluations. The company has to put also more effort into the process of campaign execution when the cause-related project is co-created with the customer base (Prahalad & Ramaswamy, 2004a) and consumers were found to evaluate the CSR projects more favorably when the firm engaging in donations dedicates more resources over the course of campaign implementation (Ellen et al., 2000). Consequently,

Hypothesis 1: The degree of consumers’ co-creation of cause-related campaign will positively affect

campaign evaluations.

3.2.2. Influence of degree of co-creation on purchase intentions

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Hypothesis 2: The degree of consumer’s co-creation of cause-related campaign will positively

influence purchase intentions.

3.2.3. Influence of degree of co-creation on WOM and advocacy intentions

The other very likely outcomes public’s participation in community-based marketing projects are word-of-mouth and advocacy behaviors. Customers’ co-creation in cause-related marketing campaigns could be perceived through the theoretical lens of market orientation (Fuchs & Schreier, 2011) as in case of these campaigns the company undertaking the cause-based projects has to cooperate more closely with the public and take into account the needs of the customer base to a higher extent. The construct of market orientation is defined in the literature (Kohli & Jaworski, 1990) as the implementation of the marketing concept - achieving sustainable competitive advantage by means of identifying and satisfying customers’ needs better than the other companies present on the market (Day 1994; Kotler 2002). Narver et al. (2004) stipulate that the organization can apply the market orientation concept in its operations in a twofold manner – reactively, while discovering, understanding and satisfying the expressed needs of the customers and proactively, whilst discovering, understanding and satisfying the hidden needs of the consumers. The second, proactive approach to market orientation can be associated with customers’ co-creation, as it implies cooperation with them in the process of value creation (Kristenssen et al., 2007). Market orientation enhances customer satisfaction (Slater & Naver, 1994; Kohli & Jaworski, 1990) and customer satisfaction is often observed in the academic research as an important antecedent of word-of-mouth behavior (Anderson, 1998; Szymanski & Henard, 2001; Swan & Oliver, 1989; Westbrook, 1987, Sudaraman et al., 1998). Some academics contend also that there is a direct relationship between the level of market orientation of a specific company and the positive word-of-mouth spread by its customers (Kohli & Jaworski, 1990). Furthermore, other related to the market orientation constructs, namely interaction orientation of a company, defined as firm’s ability to interact with customers and to use information obtained from them to establish profitable customers’ relationships, are also believed in marketing theory to enhance customers’ willingness to generate positive word-of-mouth (Ramani & Kumar, 2008). Interaction orientation applied in the cause-related marketing context could be related to co-creation strategies as these approaches to corporate philanthropy empower customer base in the process of campaign execution and customer empowerment is one of the cornerstones of the theory of interaction orientation (Ramani & Kumar, 2008). Additionally, File et al. (1992) analyzed the effect of customer’s participation in the service encounter on positive word-of-mouth and referrals and managed to confirm the positive relationship between these two constructs. Also the research of Cermak and File (1994) confirmed that the customer participation during the service encounter in the non-profit sector is positively correlated with future referral intentions. Last but not least, customers were also found to be more willing to engage in positive WOM in case of rewarding and enjoyable co-creation experiences (Füller, 2010b). Hence,

Hypothesis 3: The degree of consumer’s co-creation of cause-related campaign will positively affect

consumers’ intention to engage in positive WOM and advocacy behaviors.

3.2.4. Influence of degree of co-creation on consumers' skepticism towards the campaign

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19 which results from the fact that consumers have an opportunity to influence the decision of the company about the selection of the causes to be supported. Higher engagement of the consumers with specific causes was found to increase customers’ level of support and to strengthen the personal emotional link in the exploratory research of Broderick, Jogi and Garry (2003). In the study focused on co-creation (Füller et al., 2009) perceived empowerment has been confirmed to positively influence intentions of future participation in the co-creation experiences as consumers have the feeling that their opinion is valued by the company. More positive corporate associations that result from the empowerment process (Fuchs & Schreier, 2011) are likely to counteract skeptic feelings towards corporate donation to causes. Further, Du, Bhattacharya and Sen (2010) in their conceptual paper about Corporate Social Responsibility communication strategies have suggested that higher relevance of the causes in the eyes of the consumers should lead to more favorable attitudes, higher CSR awareness, increased level of trust and consequently, lower skepticism. Also cognitive psychology provides some evidence that consumers’ skepticism towards cause-related projects could decrease in case of co-creation as this co-operation with the company in the process of design and implementation of a specific campaign could result in meeting intrinsic needs that could be more likely achieved via creative pursuits (Csikszentmihalyi 1996; Deci and Ryan 1985). Hence, the co-creation process can help consumers to reap some psychological benefits. Moreover, consumers often find the co-creation experience highly enjoyable (Lakhani & Wolf, 2005; Shah, 2006) which can also lower their level of skepticism towards the cause-related campaign. Thus,

Hypothesis 4: The degree of consumer’s co-creation of cause-related campaign will negatively

influence consumer’s level of skepticism towards this campaign.

3.3. Hypothesized moderating effects

3.3.1. Moderating effect of brand familiarity

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20 the unfamiliar brand. Arora and Henderson (2007) have elaborated on this observation similarly to Fazio (1986, 1989) contending that unknown brands are comparable to a clean slate, and consequently customers’ attitudes and behavioral intentions towards them are highly flexible and can easily change. This phenomenon could be further observed in other three studies analyzing the effect of different marketing actions on customers, whereas brand familiarity is manipulated. In the research focusing on the effect of WOM and advocacy behaviors on brand evaluations (Sundaram & Webster, 1999) it was shown that positive and negative word-of-mouth have a stronger effect on less known brands than on familiar brands. Similar stronger effects for unfamiliar brands were reported in the case of sponsorship of sport events (Carrillat, Lafferty & Harris, 2005). Last but not least, the study conducted by Morrin and Ratneshwar (2000) proved that pleasant ambient scent improves brand evaluations to a higher extent when the brand is unknown. Consequently,

Hypothesis 5: Brand familiarity will moderate the relationship between the degree of consumer

participation in cause-related marketing campaigns and

a) campaign evaluations b) purchase intentions

c) WOM and advocacy intentions d) skepticism

so that the effects of degree of customer participation on abovementioned dependent variables will be stronger for less familiar brand than for more familiar brand.

4. RESEARCH DESIGN

4.1. Sample and sampling technique

The research uses samples from two countries: the Netherlands and Poland. Not only citizens, but also inhabitants of these two countries are targeted as potential respondents. Snowball sampling is considered to be a suitable for this setting sampling technique because of its scope and low costs (Malhotra, 2007). Despite the fact that this is a convenience technique, it is applied in this research due to the easiness of administration and possibility to reach enough respondents in order to obtain valid results of the research. The survey is distributed via various online channels – social networking sites (Facebook), mailing facilities of the University of Groningen (three master students communities are approached, namely students specializing in marketing, operations & supply chain and international economics & business) and AEGEE Polish mailing list. All the people that received the questionnaire were also informed that in order to fill it in they should drink instant coffee and live currently or come from one of the countries investigated in this research. The approached respondents were also asked to forward the questionnaire.

4.2. Data Collection Method

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21 Figure 1 the 4 (degree of co-creation: no co-creation/customers’ choice of the donation beneficiary/customers suggesting the ideas and company selecting the donation beneficiary/customers suggesting the ideas and customers choosing the donation recipient) by 2 (brand familiarity: low/high) between-subject factorial design has been used in this experiment. Each participant was randomly assigned to one of the eight treatment conditions.

4.3. Manipulation of the independent variable

The degree of co-creation has been manipulated in this study by means of scenarios presenting a specific description of the campaign. In the basic scenario the customers were informed that the given company is donating a specific amount of money (in survey distributed on the Polish market it was 60 groszy, in the questionnaire designed for the Netherlands – 15 cents) from every product sold to a Rainbow Trust Children’s Charity – an organization providing emotional and practical support to families who have a child with a life threatening or terminal illness all over Europe. The description of the campaign with the 1st degree of co-creation provided the information that the donation will be given to one of the five presented charities (Rainbow Trust Children's Charity Europe, Advancement via Individual Determination Europe, International Child Art Foundation, Canines for Disabled Kids Europe or Action for Children) that got the highest number of votes from the customers. In this scenario the customers had the possibility to influence the decision-making of the donating company by making a choice of the most preferred charity. The third scenario empowered the customers even further – in the campaign description they read that the company gives them the opportunity to provide their own ideas for projects that could improve the well-being of the society, but the final selection of the donation recipient was supposed to be done by the company. The 3rd degree of co-creation presented in the last description gave the customers the most possibilities to influence the cause-related campaign – they were said that they are a given a chance not only to provide ideas for the projects that could help the society, but also vote for the projects that in their opinion should get the donation. Recapitulating, the higher was the degree of co-creation of the cause-related campaign, the higher the empowerment of the customers in the process of campaign design and execution. Across all the conditions the respondents could read that a certain company engaging in a specific cause-based campaign is willing to improve the conditions in the local communities and strive for equality. Thus, the good causes presented in campaign descriptions to the respondents belonged to a given cause category. This approach increased the level of comparability of various experimental conditions. All the scenarios used in this experiment are presented in Appendix 1.

4.4. Manipulation of the moderating variable

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22 United Kingdom and Ireland, Dao – sold in China, Cambodia, Lao, Thailand and Vietnam) and some fictitious coffee brands (Freeway, Columbina, Delicioso). In total 14 various coffee brands have been included in this pre-test study. The results of the pre-test showed that customers on both targeted markets are the most familiar with Nescafé (30 out of 31 respondents have chosen this brand among three brands of coffee they are most familiar with). From the brands that are not familiar for the customers Dao coffee has been selected for further experiment, as none out of 31 respondents has selected this brand among the ones they are the most familiar with.

4.5. Dependent variable measures

After reading the descriptions of various cause-related campaigns (see Appendix 1) associated with one of the two brands selected for this research, the respondents were asked to answer several questions related to the effect of the campaign on the dependent variables applied in this study (see Figure 1). First, they were requested to evaluate the campaign that they just read about. For this purpose four 7-point bipolar adjective scales (‘extremely favorable/extremely unfavorable’, ‘extremely positive/extremely negative’, ‘extremely good/extremely bad’ and ‘extremely likable/extremely not likable’ (Yoon, Gurhan-Canli & Schwarz, 2006)) were used. Further the respondents were asked about their willingness to engage in word-of-mouth and advocacy behaviors (Maxham III & Netemeyer, 2002), their purchase intentions (Putrevu & Lord, 1994) and their skepticism towards the campaign (Dean, 2002). All these questions were measured on a 7-point Likert scale. All the constructs and items adapted for the purpose of the current study from the scientific literature are listed in Table 1.

4.6. Manipulation checks measure

In order to check whether the manipulation of the moderator variable turned out to be successful each of the respondents was asked three questions about his/her level of familiarity with a given brand. The scales for the manipulation checks are adapted from Simonin and Ruth (1998) and measured on a 9-point Likert scale. They are also included in Table 1.

Constructs/Items Scales Source

Campaign evaluations

Please evaluate this campaign

CE1: Extremely unfavorable/extremely favorable CE2: Extremely negative/extremely positive CE3: Extremely bad/extremely good

CE4: Extremely not likable/extremely likable

Seven-point semantic differential items

Yoon, Gurhan-Canli & Schwarz, 2006

Purchase intentions

PI1: It is very likely that I will buy (brand). PI2: I will purchase (brand) the next time I need a (product).

PI3: I will definitely try (brand).

Seven-point Likert Scale (strongly disagree/strongly agree)

Putrevu & Lord, 1994

Skepticism towards the campaign

S1: There is an ulterior motive hidden in this campaign.

S2: By means of this campaign the company acts in its own self-interest.

S3: By means of this campaign the company acts to benefit itself.

S4: In this campaign the company has something other than altruistic intentions.

Seven-point Likert Scale (strongly

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WOM and advocacy intentions

W1: How likely are you to speak positively about (FIRM NAME) with your friends/family?

W2: I would recommend (FIRM NAME) to my friends. W3: If my friends were looking for a new, I would tell them to try (FIRM NAME).

1: Seven-point Likert scale (completely not probable /completely probable) 2/3: Seven-point Likert Scale (completely agree/completely disagree)

Maxham III, Netemeyer, 2002

Manipulation checks

F1: This brand is for me ………

F2: To what extent do you recognize this brand? F3: Have you heard before about this brand?

1: Nine-point Likert scale (unfamiliar/familiar)

2: Nine-point Likert scale (Do not recognize/Do recognize)

3: Nine-point Likert scale (Have not heard/Have heard of)

Simonin & Ruth, 1998

Table 1. Measurement of Constructs

5. RESULTS

5.1. Description of the final sample

319 unique responses to the questionnaire were collected - 127 Polish customers and 192 respondents from the Netherlands filled in the questionnaire. The average age of the respondents participating in this survey was 25 years (SD =4.00) and they were between 15 and 40 years old.

5.2. Reliability of the scales

As it is visible in Table 2, the internal consistency of all the scales used in the study is good – Cronbach’s alpha for each construct exceeds 0.8. The scales measuring the skepticism towards the campaign could be improved by deleting the first item used to measure this attitude, as the value of Cronbach’s alpha in this case increases from 0.844 to 0.886 and similar improvements in the construct measurement would result from deleting first item from the scales evaluating brand familiarity of the consumers. Therefore, these two items will be excluded from the consecutive analysis. As the unidimensionality of the constructs applied in this study has been demonstrated by Cronbach’s alpha, the averages of all item’s score measuring a specific construct will be calculated and used in further analysis.

Construct Cronbach's alpha Cronbach's alpha when particular item is deleted

Campaign evaluations 0.833 NA

Purchase intentions 0.881 NA

WOM and advocacy intentions 0.873 NA

Skepticism towards the campaign 0.844 0.886 - when S1 is deleted (see Table 1) Brand Familiarity 0.980 0.986 - when F1 is deleted (see Table 1)

Table 2. Scale reliability (NA - not applicable)

5.3. Manipulation checks

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24 producing instant coffee: Nescafé and Dao is highly significant [t(317) =89.887, p < .01)]. Dao coffee turned out to be highly unfamiliar for the respondents (M = 1.33, SD = 0.84), while Nescafé was recognized by most of them without problems (M = 8.69, SD = 0.61).

5.4. Main effects of degree of co-creation

The comparison of means conducted by means of one-way ANOVA analysis disclosed one marginally significant main effect of degree of co-creation on the suggested dependent variables (see Table 3). Degree of co-creation in cause-related setting was found to exert an influence on campaign evaluations (F(3,297)=2.589, p=.053). Figure 2 presents a detailed overview of the comparison of means across the four conditions applying different degrees of co-creation in cause-related campaigns. Campaign evaluations are visibly affected by greater customers' empowerment and as a result, consumers are more positive towards the campaigns that give them the opportunity to co-create. The post-hoc Bonferroni analysis shows that the only significant difference exists between traditional cause-based campaigns with no level of empowerment (M = 5.10) and the crowdsourced campaigns employing the greatest extent of empowerment (M = 5.48) - allowing consumers not only to select their most preferred causes that should be financially supported by businesses, but also to suggest own ideas for corporate donation beneficiaries (p=.042). Thus, hypothesis 1 is accepted.

Dependent Variable F Significance Campaign Evaluations 2.589 .053 Purchase Intentions .403 .751 WOM .929 .427 Skepticism 1.113 .344

Table 3. Main effect of degree of co-creation on the considered dependent variables

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25

5.5. Moderating effects of brand familiarity

5.5.1. Campaign evaluations

No moderating effect of brand familiarity on the relationship between the degree of co-creation and campaign evaluation has been disclosed (F(3,315)=1.342, p=.261) (complete results of the analysis are presented in Appendix 2). As a consequence, hypothesis 5a is rejected.

5.5.2. Purchase intentions

The relationship between the degree of co-creation in the setting of crowdsourced corporate donation campaigns and purchase intentions was not found to be moderated by brand familiarity either (F(3,315)=.269, p=.848). Complete results of the analysis are presented in Appendix 3. Additionally, as a consequence of obtained results, hypothesis 5b needs to be rejected.

5.5.3. WOM and advocacy intentions

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26 Tests of Between-Subjects Effects Parameter Estimates

Variable F Significance Variable Level Parameter

Intercept 3384.839 .000 4.009***

Degree of co-creation .966 .409 No co-creation reference category

1st degree of co-creation -.035 2nd degree of co-creation -.493* 3rd degree of co-creation -.035

Brand Familiarity 30.457 .000 Familiar brand .102

Unfamiliar brand reference category

Degree of co-creation X brand familiarity 3.238 .022 1st degree of co-creation X familiar brand .852** 2nd degree of co-creation X familiar brand 1.236*** 3rd degree of co-creation X familiar brand .718*

Table 4. Dependent variable - WOM (*** p < .01; ** p < .05; *p < .10)

Figure 3. Moderating influence of brand familiarity (dependent variable: WOM)

5.5.4. Skepticism

Last but not least, no moderating effect of brand familiarity on the relationship between the degree of co-creation in the cause-based setting and consumers' skepticism towards the campaign (F(3,315)=.542, p=.654, see Appendix 4 for complete overview of the results). Hence, hypothesis 5d needs to be rejected.

5.6. Summary of the results

In order to recapitulate the findings of study 1, all the results of hypothesis testing have been summarized in Table 5.

Hypothesis Hypothesis supported

Yes/No H1. The degree of consumers’ co-creation of cause-related

campaign will positively affect campaign evaluations. Yes (Significance at 10%)

H2: The degree of consumer’s co-creation of cause-related

campaign will positively influence purchase intentions. No

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H3: The degree of consumer’s co-creation of cause-related campaign will positively affect consumers’ intention to

engage in positive WOM and advocacy behaviors No

H4: The degree of consumer’s co-creation of cause-related campaign will negatively influence consumer’s level of

skepticism towards this campaign. No

H5a: Brand familiarity will moderate the relationship between the degree of consumer participation in cause-related marketing campaigns and campaign evaluations so

that the effects of degree of customer participation on this variable will be stronger for less familiar brand than for

more familiar brand.

No

H5b: Brand familiarity will moderate the relationship between the degree of consumer participation in cause-related marketing campaigns and purchase intentions so

that the effects of degree of customer participation on these variable variables will be stronger for less familiar

brand than for more familiar brand.

No

H5c: Brand familiarity will moderate the relationship between the degree of consumer participation in

cause-related marketing campaigns and WOM and advocacy intentions so that the effects of degree of customer participation on abovementioned dependent variables will

be stronger for less familiar brand than for more familiar brand.

No, but opposite moderating effect than expected was found - familiar brands can benefit from greater intentions

of spreading WOM while engaging consumers in cause-related campaigns

H5d: Brand familiarity will moderate the relationship between the degree of consumer participation in cause-related marketing campaigns and skepticism so that the effects of degree of customer participation on this variable

will be stronger for less familiar brand than for more familiar brand.

No

Table 5. Results of hypothesis testing

II. STUDY 2

6. PROBLEM STATEMENT

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28 2009), it is very probable that similar effect will be observed in the case of co-created cause-related campaigns. Furthermore, most of the research in the field of cause-related marketing has so far focused on the effects of donation campaigns on corporate performance (product-related, brand-related and campaign-brand-related attitudes and behaviors), overlooking the possible influence of such strategies on consumers' support for specific causes. Lichtenstein et al. (2004) showed that perceived corporate philanthropic performance positively impacts not only customer purchase behavior, but also donations to non-profits supported by a particular company. Co-creation opportunities in the cause-related campaigns are likely to establish not only closer relationships with companies implementing such campaigns (Prahalad & Ramaswamy, 2004; Chan, Yim and Lam, 2010), but also strengthen bonds with causes that are supported by businesses, what consequently should impact monetary transactions, thus in this particular setting - donation behavior (Liu & Gal, 2011).

Two variables related to consumer characteristics are likely to play a relevant moderating role in the co-creation process in cause-related marketing setting. These are: product involvement and self-construal level (independent vs. interdependent). As Broekhuizen and Alsem (2002) suggest when the consumer is not involved with a particular product, s/he will not be willing to exert extra effort needed for additional configuration of the final outcome. Similar argumentation could be applied to the cause-related setting, where consumers are expected to be actively involved in the process of campaign design and implementation. On the one hand such campaign design could be for them an opportunity for self-expression and self-realization in the domain of socially responsible behavior, on the other hand these additional advantages are very likely to be overlooked if they are not interested in a particular product category in the first place.

Additionally, the interdependent and independent self-construal is seen in this paper as another factor affecting the strength of the relationship between the degree of co-creation and selected dependent variables. Independent self is related to belief in autonomy and self-reliance (Lalwani, Shavitt, & Johnson, T., 2006; Markus & Kitayama, 1991). Higher degrees of co-creation give the customers the opportunity to come up with their own, unique ideas for helping the world, what should be especially attractive for individuals characterized by independent self-construal. Co-creation gives them the chance to express their value systems and partially disclose their personality in an online environment by showing what causes they care for. Customers with interdependent self-construal concentrate more on interconnectedness, perceive themselves as a part of an larger group and prefer conformity and harmony (Liao, 2012). As a consequence, they should be less interested in the act of self-expression through suggesting causes that companies could sponsor in their opinion. As a consequence, this research will strive to answer three following questions:

1. How does co-creation in cause-based campaigns influence consumers' willingness-to-pay for products associated with corporate donations?

2. How does co-creation in cause-related setting affect customers’ attitudes towards supported causes and consequently, their donation intentions?

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29 The rest of this chapter will first present the theoretical background regarding the current state of scientific research concerning the effect of self-construal and product involvement on consumer behaviors and attitudes. Subsequently, the conceptual model, specific hypotheses and the design of the experiment implemented in study 2 will be delivered. This subchapter will end with thorough analysis of the results. Afterwards, conclusions, managerial implications, limitations and future research outlook will be elaborated on taking into account the results of both study 1 and study 2.

7. THEORETICAL BACKGROUND

7.1. Product involvement

The concept of involvement has been used across various disciplines so far and it could be applied to describe a subjective psychological state reflecting the importance or personal relevance of an issue (Petty & Cacioppo, 1979), of an advertisement or a specific product (Krugman, 1967) or of an individual's job (Brown, 1996). Zaichkovsky (1985) defined product involvement as 'a person’s perceived relevance of the object based in inherent needs, values and interests'. The other definitions that are suggested in the consumer science literature for the concept of product involvement relate to product class involvement - enduring interest in a certain product category (Mitchell, 1979; Higie & Feick, 1989; Richins, Bloch, & McQuarrie, 1992; Bergadaa, Faure, & Perrien, 1995). In this context also another name has been used to indicate this important construct, namely enduring involvement. It has been distinguished from another type of involvement - situational involvement or purchase decision involvement (Celuch & Evans 1989; Richins, Bloch, & McQuarrie, 1992; Zaichkowsky 1986, 1987 & 1994), reflecting temporary feelings of involvement induced by a particular situation. Thus, a person needing to buy a new car could be transiently involved in this specific product category, but when the need of replacing the old vehicle is satisfied, the temporary involvement disappear (Mittal, 1995). On the other hand, another consumer can be characterized by his/her enduring involvement in the car category when s/he tries to be up-to-date with novelties appearing on this market, engages online with the car manufacturers, spreads WOM about favorite brands, etc.

Mittal and Lee (1989) found that product involvement is an important antecedent of brand-decision involvement. Thus, highly-involved in a certain category consumers make careful decisions about which specific brand of a product they are willing to purchase. Further, consumers who are highly involved in a particular product category tend to be more loyal (Dick & Basu, 1994). Moreover, people who could be described as highly-involved in particular category engage in more in-depth information search about products belonging to this specific class (Bloch et al., 1986; Engel et al. 1993; Schmidt & Spreng, 1996) and also are more likely to share the obtained insights with the other people through Word-of-Mouth (Richins & Root-Shaffer, 1988; Sundaram, Mitra, & Webster, 1998; Dholakia, 2000). High level of product involvement constitutes one of the crucial characteristics of opinion leaders - well-connected consumers with a central position in the network who possess expertise in a specific product category (Flynn, Goldsmith, & Eastman, 1996) and are motivated to talk about market offerings that they find worth their attention.

Consumer co-creation in cause-related marketing campaigns: The moderating role of brand familiarity, self-construal and product involvement