It is becoming increasingly essential for firms to achieve social improvement. Consumers no longer support firms that solely seek profits. A worldwide consumer survey found that 66% of respondents are willing to pay premium prices for brands from firms concerned with social well-being (Nielsen Report, 2015). Therefore, many firms actively engage in various societal marketing activities to elicit positive responses from consumers. As societal marketing continues to increase in importance, many studies have focused on the effect of corporate social responsibility activities. As one such activity, cause-related marketing (CM) is defined as “the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives” (Varadarajan & Menon, 1988, p.60). This enables a firm to improve its brand image or reputation and increase sales (Henderson & Arora 2010; Pracejus & Olsen 2004). A firm that employs CM can differentiate itself in competitive markets, which leads to increase in consumer’ purchase intention and their willingness to pay more for the firm’s brands (Müller, Fries, & Gedenk, 2014; Strahilevitz, 1999; Winterich & Barone, 2011). Therefore, CM expenditures are predicted to reach 2.06 billion dollars in 2017 (IEG Report, 2016). Further, CM growth continues worldwide in both developed and developing countries (Adkins, 2008; Wymer & Samu, 2009). Therefore, we focus on CM among various societal marketing activities. Many firms conduct CM in markets that differ both economically and culturally. However, cross-country or cultural research on consumers’ responses to CM is scarce. Although some studies consider cultural factors, most are based on Western-Eastern or individualism-collectivism typology (Ralston, et al., 2008; Yuan, Song, & Kim, 2011). It is dangerous to assume a bi-cultural continuum without considering the multiple variations within the Western or Eastern worlds. The current research addresses this limitation in literature, by exploring CM within the Asian market. We specifically examine Korea and China, as these countries are included in Asian culture, but differences exist between the two. The majority of previous research has discovered factors for successful CM, including the donation magnitude and quantifier, product traits (e.g., type, involvement), the company’s characteristics such as reputation or image, and the cause’s familiarity or importance (Barone, Miyazaki & Taylor, 2000; Lafferty, & Edmondson, 2014; Pracejus, Olsen, & Brown, 2003; Samu & Wymer, 2009). The results regarding the product type’s effect on consumer responses toward CM, revealed that guilt received considerable attention. It has been found that guilt generated by hedonic consumption compels consumers to purchase CM products. Further, the consumer regards the product’s CM as a means of justifying their hedonic product purchase. Many studies demonstrate that consumers choose CM products to reduce guilty-feeling regarding consumers simply as beings who seek to maximize utility. However, CM must also be illuminated, as CM is marketing strategy that involves donation. In summary, we take both economic and ethical perspective based on the dual process theory. From an economic view point, we examine the effect of guilt on consumers’ preferences for CM products. We then propose a new factor from an ethical perspective. Further, we study the two factors’ impacts on consumers’ decision-making through a cultural comparison. We conducted a between-subjects experiment. It was found that Korean consumers felt guiltier and the mean of perceived value of CM was higher in Chinese consumers (Table Ⅰ). As the below Figure Ⅰ illustrates, there was significant interaction effect between countries (Korea versus China) and product type (utilitarian versus hedonic). We also confirmed that the underlying consumer response mechanism to CM products differs between Korean and Chinese. These results support prior studies’ conclusions, in that guilt is the key factor in consumers’ decision-making processes regarding hedonic CM products. And we present the value perception as new influential factor. This paper provides several implications. First, we attempt to overcome previous research’s narrow viewpoint toward CM. As research is scarce regarding the ethical or philanthropic aspect of CM, we focus on that aspect with a particular focus on consumers’ perception of CM value. Second, this paper draws on the dual mode theory, to proposes another new influential factor that affects consumer behavior. As dual processes’ relative effects may differ depending on context (Sonenshein, 2007), therefore, and third, this study examines these effects using a cultural context. Korea and China have a substantial ripple effect on the global economy, thus, it is valuable to study the two countries’ different responses toward CM. Finally, our study provides more insight and practical implications for firms in the Korean and Chinese markets.

Consumers who play a key role in the Marketing 3.0 era tend to prefer socially responsible firms to profit-seeking firms. Hence, when creating a vision statement or setting a goal, firms make an effort to project an image of someone who cares for human and societal values. When managing relationships with consumers, many firms actively engage in various societal marketing activities and try to elicit positive responses from consumers. An example of such an activity is cause-related marketing (CRM), “the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives” (as cited in Varadarajan & Menon, 1988, p. 60). CRM positively influences consumers’ attitudes and purchase behavior (Olsen, Pracejus, Brown, 2003; Pracejus & Olsen, 2004; Henderson & Arora, 2010), and has become a strategic tool for increasing firm value and improving financial performance in the long term (Dean, 2004). As a result, investment in CRM in the U.S. is rapidly increasing, with annual average growth of more than 12%. In Korea, CRM came into the spotlight after the mid-1990s. In China, a successful implementation by Nongfu Spring in 2006 attracted more interest and more investment in CRM. As firms worldwide increasingly employ CRM, researchers have become more interested in CRM as well. Most studies focused on finding factors that affect the effectiveness of CRM. However, most studies were conducted in the West, so the strategies or guidelines they offer are not directly applicable in other cultural contexts. A successful implementation of any marketing tool, including CRM, requires understanding its cultural context. Understanding culture is essential for effective marketing, for entering and growing in foreign markets (Steenkamp, 2001; Mueller, 2004). In this paper, we study the effect of CRM, taking into account cultural factors. We focus on Korea and China. We chose these two countries because they are both part of the larger Asian market, yet have different cultural characteristics. Our study thus extends prior research that was mainly conducted in the West. We examined Chinese consumer responses to CRM. CRM is not a common concept in China, but Chinese consumers demand that both national and foreign companies offer socially responsible products and services. Despite the recent slowdown, China is still a market with a big potential, attractive to multinational corporations. Hence, our study carries practical significance. This comparative study may be especially useful to Korean firms, as they show the highest rate of entering the Chinese market. We tackle several issues in this paper. First, we examined the responses of both Korean and Chinese consumers to CRM from a comparative perspective. Second, we analyzed the moderating effect of product type on consumer response to CRM. Product type has been treated—with contradictory results—as an important variable in previous research (Strahilevits & Myers, 1998; Burnett & Lunsford, 1994; Winterich & Barone, 2011). Our study provides more insight into those results, and suggests what the practical implications are for firms in the Korean and/or the Chinese market. Third, we explored the response of Chinese consumers to CRM by regional groups. The Chinese economic reform of the early 1990s allowed for many different lifestyles to emerge in China (Wei, 1997). There are regional differences also in economic, social, and cultural aspects, consumer characteristics, or consumer behavior (Schmitt, 1997; Cui & Liu, 2000; Sun & Wu, 2004). Rather than treating China as one single market, segmenting markets becomes a prerequisite for effective marketing in China. Building on results and insights from previous research and taking account of differential consumer responses, we found that there are regional differences in how Chinese consumers react to CRM.