Addressing the Cause-Related Marketing Paradox for Luxury Brands to Increase Prosocial Behavior and Well-Being

Abstract

Although luxury firms have come under increasing pressure to engage in corporate social responsibility (CSR) initiatives, they have traditionally been hesitant to engage because of the CSR–luxury paradox: the values and motivations underlying luxury consumption (self-enhancement) may conflict with the values and motivations underlying prosocial behavior (self-transcendence), and thus their CSR initiatives may not only be ineffective, they may actually harm the brand. In this commentary, we discuss research on the strategies and tactics luxury brands can use to nudge luxury consumers to engage in their cause-related marketing (CRM) initiatives by aligning the values of their luxury customers with the symbolic values of their CRM offerings and thus increase the impact of the prosocial causes on societal well-being. This research supports the objectives of transformative luxury research (TLR) in integrating luxury consumption into the mission and vision of transformative consumer research (TCR).

Keywords

luxury prosocial behavior transformative consumer research well-being transformative luxury research

Firms have come under increasing pressure to contribute to the societal good, which is typically referred to as corporate social responsibility (CSR). This pressure not only comes from consumers, who increasingly expect firms and brands to behave in more ethical ways, promote social justice, and contribute to improving sustainability (Batat 2022a; Chen and Petersen 2022; Humphreys 2014; Spielmann, Dobscha and Shrum 2023) but also from investors, who are increasingly grading businesses on their ethical and sustainability impact (e.g., Environmental, Social, Governance (ESG) investing; Lee, Raschke and Krishen 2022). At the brand level, CSR initiatives typically take the form of linking the products of a brand to a particular prosocial cause, often a charity, which is referred to as cause-related marketing (CRM; Andrews et al. 2014; Robinson, Irmak and Jayachandran 2012; Varadarajan and Menon 1988). However, engaging in CRM initiatives poses a potential dilemma for luxury brands because of the CSR–luxury paradox: the constellation of motivations and values associated with luxury consumption and those associated with prosocial behaviors are not only different, but may in fact be antithetical and incompatible (Batat and Khochman 2021; Batat and Manika 2020; Torelli, Monga and Kaikati 2012; Wong and Dhanesh 2017). The dilemma for luxury brands is compounded by the often-conflicting research on the effectiveness of CSR initiatives for luxury brands.

Regardless of the dilemmas, luxury brands are increasingly launching CRM initiatives. Thus, the question becomes not whether luxury brands should engage in CRM, but how they can do so most effectively. In this commentary, we address this question. We believe the question is an important one that fits with macromarketing’s focus on the effects of marketing strategy and policy on society (Lee and Sirgy 2004; Sirgy 2008, 2021) and also fits with the objectives of transformative luxury research (TLR; Batat 2022b; Batat and Manika 2020) in integrating luxury consumption into the mission and vision of transformative consumer research (TCR; Mick et al. 2012). To the extent that strategic decisions about how to make CRM initiatives more effective can increase luxury customer engagement in the initiative, it should increase contributions to the prosocial causes and increase well-being, which we define as well-being at the societal level (Batat 2022b; Mick et al. 2012; Sirgy 2021).

We begin by addressing the nature of the CSR–luxury paradox and review research that has shown both positive and negative effects of CRM initiatives for luxury products. We then review recent research that suggests how luxury brands can conduct their CRM campaigns more effectively and maximize the prosocial benefits. We conclude by highlighting important unanswered questions that pose potentially fruitful avenues for future research.

The CSR–Luxury Paradox

To address the paradox, we first need to understand what luxury means and what constitutes a luxury brand. Although the notion of luxury is easy to comprehend, and most people likely have an intuitive feel for what it means, there is little consensus regarding a precise definition. Part of the reason may be that the meaning of luxury is context-dependent and thus changes over time (Belk 1999; Cristini, Kauppinen-Räisänen and Woodside 2022). However, even for recent luxury research, the definitions vary substantially. For example, some definitions require that a product meet several narrow criteria to be considered luxury (e.g., high quality, expensive, scarce, price far exceeding functional value, etc.; Fuchs et al. 2013; Kapferer 2015). Other approaches focus on the dimensional components of luxury to operationalize the concept (quality, authenticity, prestige, premium price, resonance; Ko, Costello and Taylor 2019). Still other research takes a more expansive view to include “frivolous luxuries” such as gourmet foods (Hagtvedt and Patrick 2016; Strahilevitz 1999, p. 215). This perspective fits well with the dictionary definitions of luxury that refer to indulgence, pleasure, abundance, and non-necessity (e.g., https://www.merriam-webster.com/dictionary/luxury) and with the Latin root word luxus, which refers to excess (Fuchs et al. 2013) and also fits well with what consumers generally consider attributes of luxury (Chen, Petersen and Lowrey 2022; Pandelaere and Shrum 2020). Thus, for this commentary, we adopt the broader perspective.

The CSR–luxury paradox is rooted in the definitions of luxury that focus on indulgence, pleasure, and other perceptions associated with luxury products and luxury consumers, such as excess, extravagance, conspicuousness, and superficiality (Amatulli, De Angelis and Donato 2021; Wong and Dhanesh 2017). These qualities, which Torelli, Monga and Kaikati (2012) refer to as self-enhancement values, are in many respects the opposite of the qualities and values that are associated with prosocial behaviors, such as altruism, moderation, and equality (White, Habib and Hardisty 2019; Wong and Dhanesh 2017), which Torelli, Monga and Kaikati (2012) refer to as self-transcendence values. To the extent that these conflicting motivations for luxury consumption and prosocial behavior create tension or disfluency for luxury consumers, then engaging in CRM campaigns for luxury brands may not only be ineffective, it could also potentially damage the brand image and brand sales. If so, the pressure by investors for luxury brands to engage in CSR activities puts the luxury brand in a type of Catch-22 situation (Heller 1961): luxury brands must engage in CSR activities so they are more attractive to investors, but doing so may hurt their brand performance, which makes them less attractive to investors. Indeed, some research suggests that CRM activities that pair luxury brands with prosocial causes have negative effects on brand performance (Achabou and Dekhili 2013; Torelli, Monga and Kaikati 2012). However, other research suggests that CRM campaigns for luxury brands can be effective. These positive effects occur because the prosocial component reduces guilt that is often associated with the consumption of luxury products, and this is particularly true for CRM campaigns for frivolous luxuries (Hagtvedt and Patrick 2016; Strahilevitz and Myers 1998).

Thus, the findings regarding the effectiveness of CRM campaigns for luxury brands appear to be inconsistent. However, there are some potentially important differences in the research methods that may contribute to the inconsistencies. Consider the Torelli, Monga and Kaikati (2012) and Hagtvedt and Patrick (2016) studies. One difference between the two is when and how the CRM information is delivered. Torelli, Monga and Kaikati (2012) found that linking luxury brands to prosocial concepts produces a decline in brand evaluations when prosocial concepts are embedded as part of the core brand identity or positioning strategy (e.g., positioning a luxury brand as committing to a cause in publicity and advertising). In contrast, Hagtvedt and Patrick (2016) found that linking to social causes, if framed as a strategic alliance and communicated at the point of sale, increases purchase intentions and sales.

Although the question of whether CRM campaigns by luxury brands are effective or detrimental is still not clear, as we noted earlier, the issue may now be moot given that luxury brands have apparently yielded to consumer and investor calls to promote prosocial causes and are implementing CRM campaigns. In the next section, we briefly review examples of CRM campaigns and their implications for which types may be the most effective.

Types of CRM Campaigns

Luxury brands that consider engaging in CRM campaigns have several options (e.g., licensing agreements, sponsorships, etc.). One type of CRM campaign that we focus on here occurs at the point of sale and thus directly involves the purchase of luxury products (Hagtvedt and Patrick 2016). There are several recent examples of these types of campaigns by luxury brands. For example, in 2013, Gucci founded a global campaign, “Chime for Change,” to enlighten, encourage, and unite people for gender equality (Chang et al. 2019). Since 2009, Bulgari has raised over $100 million through sales of its special Save the Children collection. The fund has been used to help the “Save the Children” charity to change the lives of children, particularly through education programs. In 2017, Montblanc launched a new collection, “Montblanc for UNICEF,” to continuously support literacy projects for children that it had started to donate to in 2004 (Boenigk and Schuchardt 2013). Supporting important causes casts firms and brands in a positive light and shows that the firms are “giving back” to society. Although consumers are likely aware that CRM actions are not entirely altruistic, the campaigns are often effective at generating positive publicity, attitudes, and purchase intentions (Hagtvedt and Patrick 2016; Krishna 2011; Robinson, Irmak and Jayachandran 2012).

In each of the examples just noted for point-of-purchase campaigns, by purchasing the luxury product, consumers make contributions to social causes linked to the luxury brands. However, there are also notable differences. For example, in the example of Gucci’s partnership with “Chime for Change,” the luxury brand raises money by encouraging direct donations to its charity partner. In that campaign, the fashion house conducted a promotion to persuade customers who purchased their signature perfume products to participate in its “Chime for Change” campaign through a US$5.00 donation. We refer to this as a donation-linked campaign because it involves a direct donation independent of the product purchase. In contrast, in the case of Bulgari’s partnership with “Save the Children,” the campaign raises money by introducing a limited-edition product that is directly linked to the charity product. In that campaign, consumers purchased a limited-edition ring specially designed for the charity, and Bulgari then contributed a proportion of the sales price to the charity. We refer to this as a product-linked campaign because the contribution is directly linked to the product purchase.

Which Campaign Type Works Best?

Given that luxury brands have the choice of which type of campaign to use (donation-linked vs. product-linked), an important question then is which is likely to be more effective. This is an important question because the effectiveness is directly tied to how much money is donated during the campaign–the higher the donation levels, the more effective the campaign. There are also the other considerations raised earlier about how luxury brand consumers view luxury brands who engage in CRM campaigns, and whether the campaigns potentially damage the brand image. Thus, which type of campaign might fit best with the brand image? We argue that the answer to this question starts with consideration of the target market–materialistic consumers.

Target Market Considerations

Although the target markets for luxury brands can be segmented along many dimensions, broadly speaking, the target market is arguably materialistic consumers. Note that we are not using the term materialistic (and materialists) as a pejorative, but simply to indicate that the target market scores higher on conventional measures of materialism. Relative to nonmaterialists, materialists place a higher value on possessions, particularly status-enhancing ones like luxury products (Richins and Dawson 1992). Materialists use possessions to construct and maintain their self-identity (Shrum et al. 2013) and luxury brands are particularly useful for signaling status (Han, Nunes and Drèze 2010), which is especially important for materialists (Kasser 2016; Richins 1994; Srivastava, Locke and Bartol 2001). Materialism is positively correlated with preferences for luxury and status products (Flynn, Goldsmith and Pollitte 2016; Hudders and Pandelaere 2012), and priming luxury products increases scores on the Kasser Money Aspiration Index (Bauer et al. 2012). However, luxury brands that engage in these types of CRM campaigns that involve prosocial causes also face another paradox: although materialistic consumers highly value luxury products, they also tend to not be that prosocial. Relative to nonmaterialists, materialists are less generous, donate less to charities, and are less interested in prosocial causes (for a review, see Shrum, Chaplin and Lowrey 2022).

The question then is which of the two types of campaigns–donation-linked or product-linked–is better at leveraging the attributes of luxury products that materialists highly value, such as status enhancement, yet overcoming materialists' relative reluctance to contribute to prosocial causes. We propose that product-linked campaigns do this best. Even though both types of campaigns involve donations to charitable causes in some form, there are key differences, and these differences may make product-linked campaigns more attractive to materialists. First, although both types involve the purchase of a luxury product, the products in product-linked campaigns are typically limited editions, and thus by definition scarcer, which potentially conveys higher status. Second, the limited-edition products have visible markers (e.g., charity-related logos, emblems, and trademarks on limited-edition products) that signal participation in the prosocial cause, which can be both status-boosting and self-affirming for materialists (Griskevicius, Tybur and Van den Bergh 2010). Third, the limited-edition products are typically more expensive than the standard offering, which can serve a costly signaling function (Durante and Griskevicius 2018; Nelissen and Meijers 2011; Sundie et al. 2011), which also boosts status.

The proposition that product-linked campaigns for luxury brands will be more effective than donation-linked campaigns for the target market recently received support (Kim, Park and Shrum 2022). In a series of four studies that both manipulated and measured materialism, materialists were consistently more willing to engage in product-linked campaigns than donation-linked campaigns, and this effect was driven by the superior status-signaling qualities of the limited-edition product. Interestingly, nonmaterialists showed just the opposite, preferring the donation-linked over the product-linked campaign. Although this finding for nonmaterialists doesn’t have practical relevance given that nonmaterialists are not the target market for luxury brands, the overall pattern of results highlights the need to consider target market issues when conducting and interpreting research. Because materialists and nonmaterialists showed opposite (crossover) effects, there was no main effect of campaign type. In other words, without considering materialism as a factor, the two types of campaigns appeared to be equally effective, but when the target market was considered, the product-linked campaign was strongly preferred over the donation-linked campaign.

The CSR–Luxury Paradox and Transformative Luxury Research (TLR)

One of the ambitious goals of TLR is to encourage research on how luxury marketing can increase well-being. In this commentary, we have discussed the paradox that luxury brands face in decisions to engage in CRM campaigns: the values and motivations associated with luxury brands and luxury consumption and the values and motivations associated with prosocial behavior are viewed by many as conflicting and incompatible, and this may be particularly so for luxury brands' target markets. Thus, luxury brands may be reluctant to engage in CRM campaigns because they worry that tensions resulting from the value conflict may hurt brand performance, thereby reducing luxury brand participation in CRM and its potential positive effects on societal well-being.

We also discussed recent research that suggests ways in which CRM campaigns can potentially reduce this tension and make their more materialistic target market more willing to engage in these CRM campaigns. Unlike donation-linked campaigns that ask for direct monetary contributions at the point-of-purchase, product-linked campaigns embed the monetary contribution into the product itself through a (slightly) higher price. In return, target market consumers derive the same type of benefits that luxury products provide more generally: higher price, greater scarcity, and greater visibility. In this case, the visibility is not merely the luxury product itself, but also the special markers such as logos or colors that signal to others participation in a prosocial behavior, which in and of itself can be status-enhancing. Put differently, the characteristics of the product-linked campaigns (higher price, visible logo linking to the prosocial cause, limited supply) add an extra dimension to status signaling and allow luxury consumers to signal the desired qualities associated with prosocial behavior, both to themselves and to others. Thus, to the extent that product-linked CRM campaigns can reduce the perception of conflicting values within the target market, they encourage luxury consumers to engage in CRM campaigns, thereby boosting the societal benefits through increased donations. In addition, unlike donation-linked campaigns and brand-level links to prosocial causes (like the examples in Torelli, Monga and Kaikati 2012), product-linked campaigns are instituted at the product (i.e., model) level and not at the brand level, and are thus not clearly incompatible with the traditional notion of luxury, which may reduce the reluctance of luxury brands to engage in CRM campaigns, further benefiting society.

Concluding Remarks

We have suggested that certain types of CRM campaigns may be more effective because they may reduce the tensions created by the CSR–luxury paradox. However, we also do not want to overstate the case. First, we have focused on a particular, narrow type of CRM campaign, one that involves charitable donation campaigns. Second, the tensions underlying the CSR–luxury paradox may be easing on their own. Younger generations (e.g., Generation Z, roughly, those born between 1993 and 2005; Turner 2015) are not only expecting more from companies (including luxury) in terms of their prosocial contributions (Youn and Cho 2022), but they are also very comfortable with status and luxury consumption as a means of self-expression (Goldring and Azab 2021; Shin et al. 2021). Thus, future research would benefit from a focus on how different target market segments (e.g., age, age cohorts) perceive such CSR initiatives.

We think it is also important to highlight that the social causes that are currently in vogue for luxury brands and their customers are more about social justice and the environment (Batat 2022b), and luxury brands are increasingly focusing on concepts such as sustainability in their mission and branding statements (Wells et al. 2021). Thus, what originally appeared to be a value conflict that created tension and even suspicion about underlying motives may no longer be viewed as conflicting, but rather as normative, which bodes well (or at least better) in terms of the contribution of the luxury industry to societal well-being. Transformative luxury research would benefit from future research that explores whether CSR initiatives by luxury brands on these types of social causes (sustainability, social justice) are better received, generate more engagement, and are perceived as less of a value conflict compared to more traditional initiatives that attempt to increase donations to important social causes.

Footnotes

Acknowledgments

The second author acknowledges a research grant supported by the Institute of Management Research, Seoul National University. The third author acknowledges financial support from the HEC Foundation of HEC Paris and Investissements d’Avenir (ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047).

Special Issue Editors

Wided Batat and Danae Manika

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the Investissements d'Avenir, Foundation HEC, (grant number ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047).

ORCID iDs

Kiwan Park

L. J. Shrum

Author Biographies

Sukhyun Kim is a marketing executive at Tripbtoz Inc. As a marketing expert, he has worked for Korean IT companies including Samsung SDS, Krafton, and Tripbtoz. He received his PhD in marketing from HEC Paris and has authored two books on sustainable marketing.

Kiwan Park is a Professor of Marketing at the Seoul National University Business School. He visited the MIT Sloan School of Management in 2004 as an International Faculty Fellow and the USC Marshall School of Business in 2014-15 as a visiting scholar. With expertise in consumer behavior and psychology, he has published more than 40 articles in scholarly journals including the Journal of Consumer Research, Journal of Consumer Psychology, and Organizational Behavior and Human Decision Processes. His research interests cover a variety of topics on attitudes and persuasion, prosocial behavior, and branding, among others.

L. J. Shrum is a Professor of Marketing at HEC Paris. He holds a PhD in Communications and an M.S. in Advertising (University of Illinois-Urbana-Champaign), and a BBA in Finance (University of Houston). His research applies social cognition concepts to understand the determinants of consumer judgments. He has written extensively on how media information influences the construction of values, attitudes, and beliefs. His most recent research focuses on the multiple roles of the self in consumer judgment, particularly concerning self-threats and their influence on materialism and conspicuous consumption. His research has appeared in leading journals in marketing, psychology, and communication, including the Journal of Consumer Research, Journal of Marketing Research, Journal of Marketing, Journal of Consumer Psychology, Journal of Personality and Social Psychology, Public Opinion Quarterly, and Human Communication Research.

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