How to present donations: The moderating role of numeracy in cause-related marketing

Purpose – Cause-related marketing (CRM) is a sales strategy that is used to improve the success of a product by including a donation to a charitable cause in its price. While marketers can present CRM donations to consumers as either absolute amounts or percentages, the predominant practice in marketing is to use the latter. As the influence of such presentation formats is not well understood, the purpose of this paper is to systematically examine their effects while taking into account the numerical ability (numeracy) of the consumers. Design/methodology/approach – In two experiments, the presentation format of the donation amounts (absolute vs percentage) were manipulated and individual differences in numeracy were measured. The product type (hedonic vs utilitarian) and sales price were varied. We found this effect for high and low price levels and for hedonic and utilitarian products. Findings – The results of both experiments consistently supported the hypothesis presented in this paper that for people with lower numeracy, their purchase intentions were higher when absolute donation amounts were presented. We found this effect for high and low price levels and for hedonic and utilitarian products. Originality/value – The present paper shows that the current practice of presenting donations in percentages is inferior to presenting donations in absolute amounts because a large number of consumers have trouble interpreting percentages appropriately. Therefore, it indicates that the default option for marketing managers should be to present donations in absolute amounts for hedonic and utilitarian products with low and high prices.