Agency selling or reselling: The role of cause marketing

Cause marketing (CM) is commonly adopted to pursue profit growth or/and achieve corporate social responsibility (CSR). In online retailing, to facilitate CM for the products, e-retailers are increasingly implementing CM programs for the firms that sell products directly to consumers, i.e., suppliers under agency selling mode or themselves under reselling mode. Motivated by this, we examine how CM for the product influences the equilibrium outcomes under the two selling modes and the selling mode preferences of the supply chain members. Our results suggest that CM for the product is beneficial to both the supply chain members but can render the e-retailer to be hurt by a higher agency fee. Significantly, the supplier can prefer agency selling mode only when the agency fee is lower, whereas the e-retailer can prefer it even if the agency fee is lower. As a result of the changes in the selling mode preferences, the CM program can hurt the e-retailer when the selling mode is determined by the supplier. We further consider the cases where either of the supply chain members cares about CSR and fulfills it with CM. The results indicate that the concern for CSR of either of the supply chain members can coordinate their selling mode preferences. Specifically, the concern for CSR of the supplier (e-retailer) can induce them to prefer agency selling mode (reselling mode), thereby eliminating (further exacerbating) the adverse impact of the CM program on the supply chain members.