Cause marketing decisions in supply chains: cause effect and marketing effect

This paper studies a cause marketing (CM) design problem incorporating donation amount, marketing expenditure, and product pricing as decision variables in a manufacturer-retailer supply chain context. We investigate five CM decision models: centralized supply chain conducting CM (Model C), manufacturer conducting CM (Model M), retailer conducting CM (Model R), manufacturer leading CM collaboration (Model MC), and retailer leading CM collaboration (Model RC). The models incorporate not only the 'cause effect' of consumers' increased willingness to purchase but also the 'marketing effect', meaning the market-base expansion associated with marketing efforts in a CM campaign. A key insight is that CM should never be adopted in the absence of marketing effect but can be adopted in the absence of cause effect. Comparing different models reveals that there can be consistency or conflict in CM mode choice among supply chain members. It is also found that an influencing parameter in CM collaboration is the allocation proportion of marketing expenditure rather than that of donation amount. These results indicate that the marketing effect, which has long been neglected in the literature, is a driving factor for firms to conduct CM, and the impact of corresponding marketing efforts should be emphasised.