Understanding Not For Profit Marketing

Not-for-Profit marketing  – NFP (sometimes called non-business marketing) is defined quite simply as the application of marketing concepts and management to not-for-profit organisations.  In other words, organisations use  the tools of marketing managers – such as the marketing mix – in order to meet those goals

Not-for-profit marketing can involve the marketing of people (politicians and entertainers), places (museums and operas), ideas (right to life, safe driving) and organisations.  There are many different issues, for example, drunk driving, mental health, prayer in schools, suicide hot lines, and so forth, that have been and continue to be marketed for non-profit objectives.

Types of NFP Organisations

Not-for-profit organisations are found in both the public and private sectors and are categorised in different ways.’ Those organisations in the public sector have been categorised by source of funds and nature of political control..

Non-profit organisations in the public sector can be categorised in five different ways

(1) costs covered entirely by tax revenues

(2) costs covered entirely by revenues from direct user charge

(3) a combination of 1 & 2

(4) largely independent of political control

(5) under tight political control

Thus the armed forces have their costs covered by tax revenues and are under tight political control, while the costs of toll road authorities are covered by users and tend to be independent of such control.

Nt-for-profit organisations in the private sector can be categorised in four different ways:

(1) donative-mutual, (rely on donations

(2) commercial-mutual, (controlled by members and patrons)

(3) donative-entrepreneurial, (controlled by professional fund raisers)

(4) commercial-entrepreneurial.. (rely on user fees)

Those organisations that rely on donations and are controlled by patrons (donative-mutual).  On the other hand, those that rely on user fees and are controlled by professionals (commercial-entrepreneurial)

The Publics of Not-for-profit Organisations

Recall that these organisations seek objectives other than profit for maintaining survival.  To better understand how marketing plays a role for them, let’s look into the concepts of publics and exchange transactions.

When we think of a business organisation and its publics, the following groups come to mind:

Shareholders

Customers

Members of a community

Various local, state, and national governmental offices

The term “public” connotes something external to the organisation those groups that have an “outside” impact on it.  Publics, however, are much more encompassing, as illustrated in the following definition:

A public is a distinct group of people and/or organisations that have an actual or a potential interest and/or impact on an organisation.’

INPUT PUBLICS

Support Publics

Supplier Publics

Regulatory Publics

INTERNAL PUBLICS

Organisational Publics

Employees

Unions

Professional Associations

AGENT PUBLICS

CONSUMING PUBLICS (Markets)

Client Publics

As well as:

Special Interest Publics

General Publics

This definition suggests several different categories of publics.Consider the following publics in the case of a university:

1.         Support publics: Alumni, foundations, and the business community

2.         Supplier publics: Computer suppliers, paper suppliers, and janitorial service suppliers

3.         Regulatory publics: Federal, state, and local regulators

4.         Internal publics: Trustees, faculty, and staff

5.         Agent publics: Faculty, mass media, and high school counsellors

6.         Client publics: Prospective students, current students, and prospective employers

7.         General publics: Mass public, parents of students, competitive universities, and other educational alternatives

There is much interaction among the publics of the university, although the degree of involvement and interaction varies widely.

Exchange Transactions in Not-for-profit Marketing

There are two basic requirements of exchange transactions.  The first is that there be at least two parties involved.  The second is that each party involved have something of potential value to the other(s).

In some transactions, money is exchanged for products (goods or services); in others, goods and money are exchanged for good feelings and tax benefits; in still others, time and effort were exchanged for money and feelings of comfort and/or responsibility.  Thus exchange is involved in a variety of transactions, many (or maybe most) of which do not include commercial transactions.  The concept of exchange clearly is broader than the way in which we have defined marketing previously; it goes beyond the exchange of money for goods and services.

The willingness of one party to become involved in an exchange transaction with another can be analysed through a cost-benefit analysis.’ The benefits or utilities can be categorised into five groups:

1.         Sensory benefits are derived from the senses of taste, smell, sound, feel, appearance, and so on.

2.         Psychic benefits come from spiritual upliftings, a sense of accomplishment or achievement, and so forth.

3.         Place benefits such things as convenience, comfort, and attractiveness.

4.         Time benefits include convenience and speed.

5.         Monetary benefits include actual or potential monetary gain.

These same five groups illustrate costs:

1.         Sensory costs are negative sensory attributes.

2.         Psychic costs include bad feelings, unhappiness, depression, and so on.

3.         Place costs are inconvenient or unattractive locations.

4.         Time costs represent effort.

5.         Monetary costs are out-of-pocket outlays.

Integrating Marketing into Nt-for-profit Organisations

Marketing becomes more and more important for those organisations that find themselves in the following situations:

1.         They have a need to identify their target groups and better understand their needs, wants, and desires.

2.         They are faced with a continuing increase in tough, smart competitors.

3.         They must confront diminishing markets due to changing demographics or behaviours.

4.         Their customers, constituents, or publics are becoming increasingly needy and/or demanding.

Marketing has been the last of the business functions to become actively involved and incorporated into the not-for-profit scene.’ One of the major reasons is that NFP organisations have not understood the need for engaging in marketing activities-they have faced market situations in which they have had all they can do to supply the heavy demand confronting them.  In short, they have been in “seller’s” markets.  The need to effectively persuade publics to use their services has not always existed.  In a way, demand has been “captured.”  Lower per capita donations, the diminishing pool of baby boomers for university, and others

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