Dr Brian's SmartaMarketing 2

Smarta Marketing Ideas for Smarta Marketers

Month: July, 2012

Developing Marketing Strategies for Not-For-Profit Services

Dr. Brian Monger

The process of developing strategies in the not for profit sector are the same as those for services in the profit sector, identifying opportunities, defining target segments, positioning the service, developing a marketing mix, and evaluating and controlling service delivery.

Identifying opportunities for not-for-profit services

Research of not for profit service organisations customers’ (described alternatively as donors, subscribers, or contributors) and non-customers will often reveal potential new services for attracting additional revenue. For example, not many people were aware of the Sudden Infant Death Syndrome (SIDS) until Red Nose day was launched

Define target markets for not-for-profit services

Not for profit organisations must identify target segments for their efforts, from the standpoint of identifying both clients and donors. Thus, schools and universities identify donor targets from their alumni list based on income, age, and past history of donations.

Target Segments

Various segments exist in the not-for-profit organisation’s target segment. They all exchange a “payment” to receive the organisation’s value offering. One typical Target segment is contributors – those individuals and organisations who supply funds to the organisation. The contributor’s objective is to help the NFP organisation complete its mission rather than to consume the primary service offering. In general, they exchange donations for some sort of psychological return (like feeling good)

Positioning not-for-profit services

The importance of positioning services in the not for profit sector can he seen in recruitment advertising for the armed forces.

Marketing mix for not-for-profit services

Like other service firms, marketers of not-for-profit services must develop a mix of brand, advertising, distribution, and pricing strategies to attract funds and deliver services to clients.

Brand identity

The Red Nose campaign conducted by SIDS has, effectively, given this appeal a brand identity, symbolised by the red noses worn by people and attached to motor cars. This branding has created high community awareness of SIDS and a focus for the fund-raising activity.

Advertising

Advertising is used by not for profit organisations to influence both donors and clients. Given decreasing government funding, a number of not for profit organisations public service advertising (see Chapter 17 )and direct-mail for attracting sponsorship, contributions, and donor funds.

Personal Selling

Not for profit agencies use personal selling to attract funds from larger donors. Personal selling is most effective where there is a concentration of donors, such as corporate sponsors. Many NFP’s employ business managers, whose main role is to attract funds. These business managers frequently call on key organisation executives to negotiate sponsorships and other types of donations.

Distribution

Unlike for profit firms, distribution strategies for not-for-profit services are usually directed to both donors and clients. Increasing the number of locations where donations can he made can stimulate contributions.

Pricing

Most not for profit firms do not expect to do more than recoup costs, if that. For example, most of the social agencies provide free or low-cost services which are subsidised by grants and their fund-raising activity.  Not for profit organisations must also take account of the other investments incurred by their users. This can include waiting time, inconvenience, discomfort, and the psychological costs involved. Minimising such costs helps to attract more customers.

Production or Sales Orientation

The nature of NFP organisations often results in a strong production orientation because social marketers tend to have strong beliefs in the righteousness of the cause. Not-for-profit organisations stand to gain by being consumer oriented instead of production or sales oriented.

Marketing for Not-For-Profit Service Organisations

Brian Monger

The emergence of organised marketing efforts in not-for-profit organisations deserves special attention.  Marketing principles are applicable to both profit-seeking and not-for-profit organisations.

Not for profit institutions represent a significant part of our economy. The not for profit sector accounts for over 20 per cent of GDP in Australia. There are over 100 000 not for profit organisations in Australia.  Institutions such as universities, museums, charitable organisations, cultural centres and religious institutions are not motivated by profit-maximising goals in providing services to the public.

The nature of not-for-profit services

Types of not for profit organisations:

  • Cultural (for instance, museums, operas, and symphonies).
  • Knowledge oriented (universities and colleges, schools, research organisations).
  • Philanthropic (foundations, charities, welfare organisations).
  • Sporting and recreational organisations
  • Social causes (environmental, consumer, feminist groups).
  • Religious (churches and religious associations).
  • Public (city, state, federal services; quasi-governmental services such as Australia Post and the various state instrumentalities such as for electricity, gas and water).

Slow acceptance of marketing in NFP organisations?

The reality is that not-for-profit organisations (like everyone else) have used marketing for centuries.  Charities have sought donors and sponsors, politicians have tried to sell their ideas universities have actively tried to recruit students, and foundations have sought out appropriate causes. These activities differ from marketing only in the terminology used. Theatres might speak of “audience building” not “promotion to increase sales”.

There has been a tendency by many not-for-profit organisations to eschew “marketing” because of its traditional association with a “commercial” profit motive. In avoiding the use of marketing theory, these organisations also forgo the benefits they might gain – customer orientation, integrated strategies, long-term thinking, and better performance and funding.

The emergence of a marketing orientation

Many not for profit organisations have adopted marketing techniques and have employed marketing managers or business managers to both attract funds and sell their services. Charitable organisations such as the National Heart Foundation use advertising to create community awareness of the dangers of heart disease and the Royal Guide Dogs Association uses direct marketing techniques for revenue generation.

Difficulties in marketing not-for-profit services

Developing marketing strategies for not-for-profit services can be difficult because of several characteristics of such services.

First, non-profits market to multiple publics since they must attract resources from donors as well as allocate resources to clients. Marketing to donors is different from marketing to customers.

A second characteristic of non-profits is the use of multiple exchanges of resources in dealing with donors and clients. Charitable organisations must deal with individuals, corporate contributors, and government agencies in trying to attract funds. They then have to allocate funds to projects ranging from public education campaigns, research and patient welfare.

A third characteristic of not for profit companies is that they are more likely to he influenced by agencies such as governments, lobbyists and other publics than are organisations with a profit centred focus.

Another reason it is more difficult to market services in the not for profit sector is that many not for profit organisations are trying to change people’s behaviour by selling ideas, such as trying to influence people not to drink and drive (TAC), not to drop litter (‘Keep Australia Beautiful-). Such goals are beneficial to society, but represent either inconvenience or added cost to individual consumers. Trying to convince people of the dangers of smoking, drinking, or drug abuse is difficult because these actions are often habitual, and, a marketing strategy is more likely to be effective when it reinforces current behaviour than when it attempts to change it.

Finally it should be remembered that some NFP marketing strategy has meant cannibalisation of other NFP orgs. The problem in getting the consumer to choose “us” sometimes means others NFP’s loosing market share (OK in the commercial world but harder in the NFP sector?).

NFP support is created through understanding what the market wants and feels and being able to give it to them.

Still another difficulty in marketing not-for-profit services is that what they have to offer is often more vague than services for profit. The benefits of air travel, telecommunications, or bank services are easier to convey than the benefits of religion, culture, or knowledge. Often the level of awareness of the activities of not for profit organisations is often low.

Finally, marketers of not-for-profit services may find it harder to control their promotional campaigns. In many cases, not for profit organisations must use space and air time that is donated by media and thus have no say as to when their ads will be shown or heard.

How Brands Deliver Value

Good Marketing is about adding value – To build a brand, you have to focus on what you do that adds value for customers. Do you deliver on the promise of your value offer – on time, every time? Do your clients get value by investing in you?

Branding integrates quality, customer service, marketing communication and value to present a unified message about the organisation, its products.

Your brand will integrate all your marketing around a core idea and vision. As a result, you will find it easier to sell yourself, because your message will be uniform and powerful.

Brands represent a cluster of benefits to both the supplier organisation and the buyer/consumer.  Brands create value for organisations and buyers through the following:

  • As Legal Identifiers – a legal mark of ownership
  • By Creating Identity, Uniqueness, Image and Personality
  • By Providing the Focus for a Relationship – between supplier and buyer
  • By Providing the Organisation with Vision – the reason for the brands existence
  • By Assisting Marketing Communication – a brand is a shorthand description of the many positive (and negative) elements that a value offer/product represents

Brands act as risk reducers (performance; financial; time, psychological) when buyers can identify their previous purchases

Because buyers can express preferences for a brand, organisations can better forecast demand and plan production and distribution

Good Brands Should:

  • Communicate Value Clearly and Simply – make clear promises to their target segment
  • Be Carefully Named – simple to understand, pronounce and remember; be distinctive; lack foreign meanings; suggest product benefits;
  • Have An Easily Recognised Symbol Or Logo Associated With Them
  • Deliver on the promises they make
  • Have logical extensions

Brand Awareness  – is defined in terms of two components, brand awareness and brand image.

Brand awareness relates to brand recall and recognition performance by consumers.

Brand image refers to the set of associations linked to the brand that consumers hold in memory.

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