NPL 473 Nonprofit Leadership

Marketing for Nonprofit Managers (Brenda Gainer & Mel Moyer)

Preliminaries:

Marketing is about making an exchange

i. Resource provision market (funders, donors, volunteers, etc.) and resource allocation market (clients, legislators, general public)

ii. Transaction marketing (isolated action) vs. relationship marketing (long-term pattern of activity)

iii. Goal is to create mutually beneficial exchanges

Marketing Mix

i. Product

ii. Price

iii. Promotion

iv. Placement (delivery)

Marketing Research & Consumer Behavior

i. Nonprofits are often closer to their customer (locally based, direct contact with customer, which gives substantial personal information about clients)

ii. Service provider may be in better position than user to specify appropriate product

iii. BUT, separation between resource providers and end users may break the customer link, and users do still have a legitimate say about the service they will be provided.

Segmentation & Target Marketing (deciding which groups one chooses to serve)

i. Question is not whether one will serve only some, but how one will decide which ones to serve (resources are, after all, finite)

ii. Begin by dividing market into meaningful segments

1. demographics

2. psychographics (life style, values, etc.)

3. benefits sought

4. behavior (heavy users of service, for example, or responsiveness to marketing variables)

iii. Apply criteria to choosing segments

1. fit with mission

2. alignment with present or potential capabilities (and those of competitors)

3. size of segment (is it large enough to justify program?)

4. ease of measuring and accessing (“rifle” vs. “shotgun” approach)

Competition, Positioning, and Branding

i. Competition is a reality—if nothing else, clients can choose to do nothing

ii. Positioning is place the organization occupies in minds of individuals in target markets

1. What are the important comparative dimensions to those in the target market(s)? (different targets may use different criteria, or evaluate same criteria differently)

2. Develop “positioning map” (grid) placing self & competition in “space” created by criteria

3. Develop positioning strategy—differentiate self from competition

iii. “Brand” is a shortcut means of identifying an organization in a way that differentiates it from alternatives. But can be difficult to achieve (requires great focus).

1. Requires resources to sustain the brand

2. Requires “buy-in” from every element in organization to support the brand

3. Organizational culture must be standardized around brand—difficult in large organizations

Managing Products (and Programs) in the Nonprofit Sector

Analyze organization’s portfolio

i. Identify main programs

ii. Establish set of criteria for judging relative importance of units

iii. Evaluate each program against criteria

iv. Example criteria: program attractiveness, alternative coverage, competitive position

v. Results of analysis

1. Overall strength/weakness

2. Pattern of clustering within portfolio could suggest opportunities for expansion/retrenchment

3. appropriate strategies for individual programs

Product Life Cycle

i. S-curve of Introduction, growth, maturity, decline

ii. At each stage, different market strategies based on consumer behavior and competitive action

Adoption & Diffusion—study of how ideas/trends develop

i. Adoption: At different phases, focused on

1. opinion leaders,

2. early adopters,

3. majority,

4. laggards

ii. Diffusion: Successful innovation depends on

1. comparative advantage

2. compatibility with existing values

3. complexity

4. divisibility (ability to “try it out”)

5. observability/communicability

6. risk (from end user’s point of view)

Pricing (& Cost & Value)

Reducing nonfinancial costs for users (remove deterrents)

i. May be social, psychological, time

Establishing pricing objectives

i. Establish pricing goals, including (but not exclusively) social equity

ii. Establish pricing strategy

1. costs

a. “Break-even analysis”—Number of units at a given price in order to cover all costs

i. Fixed costs (additional users do not increase it)—“contribution per unit” is portion of unit price going to fixed costs

ii. Variable costs (each additional user imposes additional costs)

2. demand—price is the intersection of costs and consumer behavior in response to them

a. “elasticity” is sensitivity of consumption to price—inelastic demand will change little as price increases.

b. Elasticity may vary across market segments

3. competition

a. can help identify price ceiling

b. analyzing competitors’ price (monetary and nonmonetary) can identify opportunities for efficiency

c. Be aware of ethical considerations—unfair competition with private sector, as well as private sector labor practices that might not be acceptable in nonprofit sector (use of lower-skilled workers, lower wages/benefits, etc.)