The Moderating Role of Numeracy in the Effectiveness of Cause-Related Marketing

Cause-related marketing (CRM) is a well-known selling strategy to improve the success of a product by including a donation to a charitable cause into the product price (Varadarajan, & Menon, 1988). The effectiveness of CRM depends on several factors such as the type and the selling price of the product. Particularly, CRM is usually more effective in hedonic products than in utilitarian ones (Strahilevitz, 1999; Strahilevitz & Myers, 1998) and it works better in low-priced products (Chang, 2008). Research has also shown that CRM is often more successful when the amount of the charitable contribution is provided in absolute amounts (i.e., X Euro of the selling price) than in percentages (Chang, 2008). This effect occurs even though the donation amount in these different presentation formats is equal. A prerequisite to perceive the actual donation amount in each presentation format might be sufficient numerical ability (i.e., numeracy). Individual differences in numeracy influence the comprehension of numerical information, including the transformation of frequencies, percentages and probabilities into each other (Peters et al., 2006; Reyna & Brainerd, 2008). Accordingly, the presentation of numerical information either in frequencies or in percentages changes the meaning of these numbers for less numerate individuals, but does not influence evaluations of higher numerate individuals (for an overview see Peters, 2012). For example, individuals with lower numeracy were willing to donate more if the victim is presented in a frequency format (i.e., 1 out of 100 vs. 1% out of 100), whereas higher numerate individuals are not affected by the format (Dickert, Kleber, Peters, & Slovic, 2011). Therefore, we expect that numeracy moderate the effect of presentation formats on CRM effectiveness. Particularly, we hypothesize that people with less numeracy are influenced by the presentation format of the donation amount, whereas the effectiveness of CRM is not affected by different presentation formats for higher numerate individuals.