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Over the past three decades, retailers in the USA have partnered with non-profit organizations to successfully raise over $4bn to support charitable causes (The Cause Marketing Forum, 2018). The question arises, though, what is in it for the retailer? For participating retailers, the answer is encouraging, as a well-designed philanthropy program can provide a myriad of benefits. For example, research demonstrates that partnering with a non-profit organization can increase consumers’ attitudes toward the partnering for-profit firm (Barone et al., 2007; Chaabane and Parguel, 2016; Hamby, 2016; Lafferty et al., 2004) and intentions to recommend and purchase from the retailer (Barone et al., 2007; Chaabane and Parguel, 2016; De Vries and Duque, 2018; Robinson et al., 2012).
Given the potential positive effects of implementing a philanthropy program, retailers should take care when selecting which type of philanthropy program to sponsor. To provide managerial implications, the present research builds on the work of Chang (2008) “to clarify when the impact of a particular cause-related promotion is likely to be effective, reversed, or eliminated, with consideration of marketing variables such as donation framing…” (p. 1106). With this goal in mind, this article compares two philanthropy programs commonly used within the retail industry (pay-what-you-want [PWYW] with charitable giving and mere donation) to determine which produces the most positive effects in terms of consumer attitude and behavioral intentions toward the sponsoring retailer. As both of these programs are common practice in the restaurant industry, restaurants were chosen as the retailing context for the research.
One of the newest ways in which philanthropy programs can be framed, and one of the two investigated here, is PWYW with charitable giving (Park et al., 2017). Although popular press highlights the utilization of this strategy in a variety of retail settings, it has gone largely unvetted in the academic literature. PWYW with charitable giving enables consumers to set the price for a product that they intend to purchase. A portion of the proceeds from the sale of that product are then donated to charity. The price set by the consumer ultimately determines the donation amount. For example, Humble Bundle, a popular online video game store, allows consumers to name their own price for a variety of independently developed downloadable...