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Marketing Past questions and answers from Karen Fox from live broadcasts aired by the Learning Institute for Nonprofit Organizations collaboration* Other Q & A Topics:
1) What is marketing? Marketing is a central activity of modern nonprofit organizations, growing out of their quest to effectively serve some area of human need. To survive and to succeed, organizations must know their markets; attract sufficient resources; convert those resources into appropriate programs and services; set prices (or provide subsidies or even incentives) to make them attractive and accessible; and effectively promote and distribute them to various clients, customers, and stakeholders. All of these components together constitute "marketing." 2) Why should a nonprofit organization give attention to marketing? Nonprofit organizations need to use their limited resources wisely-their volunteers, donors, and other supporters expect it. Marketing provides a framework and tools for identifying and segmenting markets, thinking clearly about their wants and needs, and developing the appropriate "marketing mix" of program, price, distribution, and promotion to meet the identified wants and needs. A marketing framework helps to unify the organization's efforts so that the elements of the marketing mix work together to yield the greatest value and benefit to the target clients. 3) What are the principal misconceptions about marketing? Fiction: "Marketing is the same thing as advertising and hard selling." Fact: Good marketing begins by understanding prospective clients, and designing what they will want. Effective promotion makes prospects aware of good programs, but does not replace the need for good programs that are affordable and accessible. Lying and over-claiming are inherently bad marketing, not only because they are unethical, but also because clients will soon discover the deception and lack of value, and will reject what the organization has to offer. Fiction: "Marketing should be unnecessary because our programs are so great and our fees are so low." Fact: Good marketing involves attention to program, price, place (location), and promotion. Prospective clients should want great programs that are affordable, but they also need to know about the organization that is offering them, the features and benefits of these programs, and how to access them. The presumption that good products "sell themselves" has sealed the fate of many commercial marketers and nonprofit organizations alike. 4) How is marketing for nonprofit organizations different from commercial marketing? Nonprofit organizations have a legal and societal obligation to undertake activities that further their missions. The mission statement serves as the touchstone for assessing the organization's success, and marketing becomes a tool for the organization to use to fulfill its mission. Success in commercial marketing, in contrast, is typically measured by revenues and profits, and by market share. Of course, both commercial and nonprofit organizations should aim for customer satisfaction. 5) What is the relationship between marketing and strategic planning? They are inseparable. The organization's strategic plan provides the foundation and direction for all the organization's marketing plans and activities. Marketing plans often spell out the steps that will be taken to address specific strategic goals such as to attract more volunteers or funds, to provide services to a new and/or expanded set of clients, and so forth. Without prior strategic planning, marketing plans are likely to be less effective in moving the organization toward better fulfillment of its mission. 6) What is the role of marketing research for nonprofit organizations? Nonprofit organizations should use appropriate research tools to help understand current and prospective clients, and their needs and preferences. Research also can come into play in testing various program ideas before fully implementing them, in tracking client/customer satisfaction, and in other ways. Most "marketing research tools" are the same research methods used in sociology and other applied behavior sciences-methods such as surveys, focus groups, and observation. Some research tools are more distinctly marketing research tools; for example, segmentation studies to determine how best to divide up client and donor markets into segments for marketing purposes; conjoint analysis as a tool to understand the combinations of program features that clients/customers want most; and advertising research. 7) What are the basic steps in marketing for nonprofit organizations?
8) Why is it important for marketing to be understood throughout the organization? It has been said, "Marketing is too important to be left to the marketers." That is, everyone who is involved in program planning and related decisions, and everyone who has some impact on the organization's clients and stakeholders is, at least potentially, a marketer. Effective marketing requires top leadership's commitment, as well as involvement throughout the organization. The board member involved in strategic planning and goal setting is laying the foundation for the organization's marketing effort. The custodian who prepares the meeting room for the evening parenting class, the receptionist who makes sure that all questions about the program are answered cheerfully and accurately, and the staff instructors and volunteers are all involved in delivering value to one of the organization's target audiences. The participants who report their experiences in the program are providing word-of-mouth advertising, extending the organization's promotion efforts. An organization that recognizes that "marketing is everybody's business" will pay attention to and consciously orchestrate the elements that make for marketing success, rather than leaving them to chance. 9) What are the key questions nonprofits should consider in making pricing decisions? What is our overall strategy? For example, do we want to get as many people as possible to use our services? Or serve primarily those who can afford to pay? If fees don't cover our costs, how will we be able to cover them? (Grants, donations, loans, etc.)
10) How do you get not-for-profit boards to make marketing a priority? One of the key functions of a board is to ask the question, "How can this organization be even more effective in achieving its mission?" Marketing plans and activities must be based on a client-centered understanding of needs and a clear plan for addressing those needs. The organization's plan needs to identify the seven "Ps"--program, price, place (where and how we deliver our services), promotion, people, processes, and physical evidence. Board members must understand the organization's mission and must understand the importance of board support and action to further the mission. As was emphasized in the program, everyone associate with an organization has a role to play in marketing. In my experience, not-for-profit boards "get" the importance of marketing under the following conditions:
In some instances, board members have a better understanding of marketing than does the management of the organization they serve. Sometimes, however, board members with business experience may view marketing as advertising and other forms of promotion. For this reason, it is almost always useful for the nonprofit's management and board members to have some training--or do some reading--on the application of marketing to nonprofit organizations, so they better understand the differences. 11) We have a mission statement but no strategic plan. While we develop a strategic planning process, what should we use as our guide to develop a marketing plan and prioritize the actives and resources needed to implement this plan? Your situation is not unusual. The most useful advice is to get started with the strategic planning process. Frank Martinelli spoke about the strategic planning process in the September 1998 program, and a copy of his strategic planning model document is available at http://www.uwex.edu/li/nonprofit/.learner/martinellidoc.html. But to get practical, I'm including a marketing plan template to make clear what information you need to gather and discuss to have a useful plan. Every marketing plan should go though several stages of review and discussion, to make sure that a range of useful ideas and suggestions are taken into account before settling on a unified plan of action. At the end of the plan development process, everyone needs to know what the plan is and how it will be implemented--including their part in its success. 12) What are some practical suggestions for helping with the paradigm shift of missionary work to a more sophisticated system of service delivery? There are excellent resources on marketing of services that will be very helpful to you and your board members. My favorite, listed in the Bibliography on page 20 of your print packet, is Christopher Lovelock's book, Product Plus. While it is not specific to nonprofits, it is a highly readable (it even has cartoons in the Table of Contents!) and practical guide to doing service right, from planning to implementation and evaluation. 13) Where would you place the marketing function in an organization in terms of staffing... by itself, marketing/fund development, either of the above? Since marketing depends on the efforts of everyone associated with the organization, there is a lot of variation in who gets the marketing title. One view is that no one person/office should have the marketing title. One risk in having one person with the marketing title is that other people may feel that someone else is now "taking care of" marketing and that they are off the hook. The development office needs to understand and apply marketing, since the development staff are asking people (including foundations, etc.) to give to support the nonprofit. The communication office may be in charge of preparing print and other materials to support the various tasks of the nonprofit--fund raising, media relations, brochures and ads to reach prospective clients, and so on. The programs of the nonprofit need to understand and apply marketing in developing programs that will be sought after and successful in furthering the nonprofit's mission. In all seriousness, the organization's executive director must be the lead marketing person. This person ideally has a solid grounding in marketing for nonprofit organizations (through academic background or workshop participation) and believes that his/her role is a key marketing role. With that conviction, the executive director will be better able to recruit, select, and guide other people within the organization who are involved in marketing. 14) How does a nonprofit organization with limited resources attract the resources we need to implement and develop a marketing plan? I'm assuming you already have a strategic plan, understood and approved by your board, which spells out the mission, key constituencies, and direction of the organization. Developing a marketing plan takes insight,(often) some research, and time. If staff have these resources, then you're ready to begin. Where do the resources come from? You may find some practical assistance from a board member or other volunteer in your organization. Many people involved in small businesses have had to develop their own marketing plans and may be available to share their expertise. In many parts of the country there are groups of retired businesspeople who volunteer their time and business skills to help small businesses and nonprofits. You may approach the chairperson of the marketing department of your local college or university, to see if a faculty member would be willing to work with you, possibly as a course project. (This option is not a panacea: The faculty member may be overloaded with requests; student teams will usually be learning relevant skills but have little insight into the issues and concerns that underlie your marketing plan.) Some MBA programs have student consulting groups, which are student-run clubs where members gain experience by working on practical problems. A further option is to hire an MBA student with the skills you need, to work as a summer intern. In this case, there must be someone within the organization who can knowledgeably mentor the intern. One source of MBA interns is the MBA-Nonprofit Connection (MNC), where I serve as a board member. The MNC is a California-based nonprofit that is unique in the United States. The MNC works nationally to encourage MBA students to consider careers in the nonprofit sector, by distributing listings of MBA-appropriate positions in nonprofits to member business schools, which pay an annual fee for this service. In addition, MNC develops and promotes a limited number of summer internships, which must pay at least $400 per week and usually run for about ten weeks. Some nonprofits arrange for these summer salaries to be covered by local community foundations or other donors. MBA programs that subscribe to MNC's job listing services include Harvard, Stanford, University of California at Berkeley, Kellogg (Northwestern), Michigan, Columbia, and several others. You can reach Alison Davis, Executive Director of MNC, to list positions at alison@mnconnection.org. The address of MNC is P. O. Box 640, Palo Alto, CA 94302. Fax: (650)323-6621. You can also request a copy of the MNC newsletter--the first issue came out in December 1998 and features a description of last summer's internship program. 15) What is an effective way to do market research for a very small nonprofit with limited resources, limited staff time to do the research, and a board of directors anxious to begin programming ASAP? The purpose of marketing research is to enable you to make better decisions that you could make without marketing research. Many nonprofits--and lots of major corporations--carry out marketing research that is interesting but does not address key decisions, OR carry out useful research and then ignore the findings and make the decision that they favored from the beginning. Both of these are a waste of resources. To focus your research on the key issues, I recommend that you locate a copy of Alan Andreasen's book Cheap But Good Marketing Research (cited in the Bibliography on page 20 of your print packet). This 1991 book is out of print but you're likely to find it at the library--it's worth asking your library to request it via interlibrary loan if your own library doesn't have it. Andreasen's book will help you identify exactly what you need to know to make the decisions you need to make--what he calls backwards marketing research. This book also describes cost-effective research techniques and how to carry them out. I'd welcome hearing from those of you who do use this book. Many nonprofits approach a local college or university for help, perhaps from a class or student team seeking a project. This can be a useful approach IF the students have the time, skills, and faculty guidance to do a good job--and if your need for research results matches the timing of a particular course. The last issue you mention is a board of directors champing at the bit. You can start developing a marketing plan--or plans--for the program or programs you will be offering. The very process of developing a marketing plan will help you identify exactly what you don't know but need to know to make the plan right. By showing your board that the planning process is underway and that the research will be focused and help make the plan better, you may get the additional time you need to gather and use research-based evidence in your final plans. 16) How to attract and retain clients? My program offers free food and educative services? This question underscores an important point: Even though an organization offers useful goods and services at no charge, there is still a need for marketing. To begin to answer your question, you'd want to consider the following:
The answers to questions such as these will help you begin to understand why your food and services are not more actively sought after. 17) What makes public relations distinct from marketing? How do they relate to one another? Public relations is defined as the managing of public perceptions of the organization and its offerings by making available news about the organization to the media, or by interacting directly with opinion leaders. Marketing is much more inclusive and extensive than public relations, as you'll see from the description of marketing in your participant packet (the content outline on pages 3-6 and the definition of marketing on page 17). Public relations is but one of the marketing tools used to promote the organization and its activities and needs. 18) What percent of the total yearly budget can and could be used for marketing? Since marketing is a very broad set of activities, it is impossible to set a budget exclusively for marketing. Now some/many organizations set a budget for communications or, more broadly, for promotion. (Promotion includes advertising, public relations/publicity, personal contact, and similar activities.) The question was, how should that budget be set? For decades commercial firms tried to determine a formula for setting their promotion budgets, but the formulas--such as percentage-of-sales or how-much-can-we-afford?--proved useless. Here's why. When a firm is new and trying to create awareness, it may have little or no sales--so percentage-of-sales (or, for a nonprofit, percentage-of-budget) doesn't make sense. (It is, however, useful to monitor that number, because a nonprofit needs to employ and demonstrate good stewardship of its funds. You should be able to explain why you spent that amount for marketing and/or promotion expenses.) The "what-can-we-afford?" method doesn't work, because there are circumstances when it is important to spend despite a promotion budget--for example, a blood bank making people aware of an urgent need for blood What is the answer? Most companies now use the objectives-and-tasks method. They ask, what do we want/need to accomplish with our communications/promotional activities this year, and how much will it cost to achieve our objectives? This is a useful approach for nonprofit organizations as well. A footnote: In practice you'll want to begin with the objectives-and-tasks method to determine your promotion budget. But then you'll also want to track what percentage of your budget this amount represents AND you need to look at your overall budget to see whether the organization can "afford it." IF your objectives-and-tasks needs are high, you can then start to identify sources of donated services to help you keep down those costs. You'll be able to make a stronger case to such donors when you can show them that you have specific communications objectives and that you know what needs to be done to achieve them. 19) Should a nonprofit join a chamber of commerce - if so - for what purpose. As for whether or not a nonprofit should join a chamber of commerce, I'm not an expert on this one. I do notice, from looking at a variety of local chamber web sites, that most do include some nonprofit organizations as members, including human service agencies (scouting, Catholic Charities, schools, assisted living, etc.). I suspect that the value to be derived for joining and then participating in Chamber activities may well vary from city to city. Membership and participation in community organizations such as Rotary, Lions, Kiwanis, and the Chamber of Commerce offer a number of benefits for the organization. The organization's leader(s) become better networked with others in the community and have the opportunity to build high-level awareness of and support for their organizations. And the organization's leaders develop a sharper sense of how the community works, what its emerging needs might be, and what other entities could play a part in addressing those needs. Note that active participation is essential to reap these benefits. Years ago a middle school teacher-friend of mine said she wanted to meet, date, and eventually marry a suitable male. She spent her days teaching 12 and 13-year-old children. I asked her what steps she was taking to meet men, and she replied that she had joined the Sierra Club several months ago. I thought this was a fine idea, but then I asked, "Have you gone on any of the club outings?"--to which she replied, No. 20) How often should a client survey be completed? There are basically two types of client surveys, the relationship survey and the trailer survey. The relationship survey is done periodically and tries to find out how well the organization has been serving the respondent's needs, what unmet needs they have, and recommendations for improvements. A relationship survey of this type could be sent out once a year if the service is on-going (such as a daycare center) or is used several times a year--for example, a library, health services, children's services, and so on. The trailer survey is sent to follow up a specific service encounter or appointment and learn how the client would evaluate that specific service encounter. Hotels and restaurants often have "comment cards" for guests to complete. The telephone company may phone a customer after a repairperson has worked on a line repair, to ask if the customer is satisfied. Depending on the services you offer, your organization may want to do trailer surveys of each client each time the client is served, or to send trailer surveys every other time, or send out trailer surveys to everyone who comes for service during certain weeks or months, or on some other basis. 21) People like to feel good. How do you know which side of the fence to be on? Do you market the "tragic circumstances of your constituents/consumers" or focus on positive outcomes? As I mentioned on-air, there are times and places for both approaches. I know of one systematic attempt to understand which approach works better and under what circumstances: Bendapudi, Singh, and Bendapudi, "Enhancing Helping Behavior: An Integrative Framework for Promotion Planning," Journal of Marketing, vol. 60 (July 1996), pp. 33-49. This important article summarizes dozens of research studies and presents generalizations that can be very helpful in deciding which approach to use. Unfortunately the very comprehensiveness of this article and its reliance on academic terminology can make it difficult to wade through. Therefore I prepared an outline of the main points and lessons, which I use in my university courses as a "roadmap" to the article. Click here for a copy of this outline. I would welcome hearing from you about the usefulness of this information to your work. 22) How do you balance image vs. need when raising funds, soliciting donations, etc. for your agency? For example, you have an excellent volunteer at obtaining resources, but concern for how this volunteer portrays your agency in the process. If you have someone raising funds for your organization who misrepresents your organization, you have every reason to be concerned. Attracting support is more than attracting money: It's about creating supportive relationships that will endure. You don't specify what the volunteer does that makes you uncomfortable, but if you're concerned, you should find out what's going on and assess whether this person is constructive or not in terms of your organization's reputation and long-term best interests. If the volunteer lacks training, then that might help redirect and properly focus that volunteer's efforts. If the volunteer is a "loose cannon" who resists direction, you may need to thank them and get them involved with your organization in a less sensitive function. 23) What is your experience using media (newspapers) for publicity/marketing? & Any tips on website marketing? Links? Advertising? There are now excellent resources on all aspects of communications programs and tools for nonprofit organizations. I've included references to a number of practical guides in the Bibliography on page 20 of your participant packet. In my experience, the specific challenges of using newspapers for publicity include: (1) getting someone at each newspaper interested in my organization, since there is lots of discretion in what organizations get attention; (2) determining what is truly newsworthy about the organization, that is, what will be interesting to the paper's readers, not just important to my organization; (3) conveying the message to the newspaper writer in a way that the message that's printed looks more or less like the story I gave; (4) tolerating the inevitable errors of fact or interpretation that creep in; and (5) knowing that I have little or no control over when the article will actually appear. I have spoken with reporters to get advance publicity of an event, and then seen the article appear the week AFTER the event. Many people, especially in nonprofits, think of publicity (in the newspaper, local radio, etc.) as "free advertising." But it's not really free. Someone in your organization must cultivate the relationships with the media, someone must write press releases, and someone must take the time to talk with media representatives. After all that investment of time and effort, you have no control over the content, location, and timing of your message. For this reason, it is said that publicity is advertising that you "pray for," rather than "pay for." One of the books in the Bibliography is a guide to using the Internet for nonprofits. The Internet and websites have become very important to nonprofits in the past few years. Even if your clients don't have access to or use the Internet, prospective donors and other publics are now quite likely to "look for you on the Web." Web sites are not difficult to create. People will not expect your website to look like that of a Fortune 500 corporation, and you won't necessarily have to hire a professional. Here you probably can find a volunteer--including some high school and college students--who can develop the website, using your content, of course. You can also learn from (imitate!) the websites of other organizations in terms of layout and type of information provided. 24) Many organizations with long names tend to use the acronym in a manner that may cause confusion with their service areas. For example, the organization I work for, The Christian Appalachian Project, shares the same acronym with the Civil Air Patrol and the Community Action Programs. Our management now has advised us to use the entire name of our organization to cut down the confusion. A change of name or organizational designation should be undertaken only after a lot of reflection, and then it should be done with a coordinated communication campaign. In the case of your organization, which has a long history and is well known, I concur with the advice to use the entire name when communicating about the organization with those outside the organization. But my reasons for this advice go beyond the importance of distinguishing yours from other organizations with the same acronym. An organization's name is its "brand name." Commercial companies build brand awareness through promotion, good products, and time; their brand names have commercial value, and reflect the reputation and value of the company and its current and future products. For these reasons, firms protect their legal right to these names and have attorneys who take action when the firm thinks their brand name is being misused or infringed upon. Your own organization's full name communicates a lot about the scope of the organization's mission--its religious inspiration and its service to the people of Appalachia. This would get lost in relying on the acronym. I notice on your organization's website (www.chrisapp.org) that the full name is used on the "front page" and the acronym CAP is used almost everywhere else "inside" the site. Comments in your website guestbook suggest many people have a long-term association with the Christian Appalachian Project. Some nonprofits should consider a name change or the use of an acronym. Some nonprofits have names that reflect past historical circumstances and long-superceded missions. For example, the XYZ Orphanage became the XYZ Children's Home and later XYZ of Jonesville, a short-term therapeutic residential treatment center. The name change was necessary to reflect what the organization did. (Note that in the latter instance the name no longer gave the specifics so that children living there would not feel stigmatized.) Such organizations need to rethink their names, which might involve a completely new name, shortening the existing name, using an acronym, or using a either of these plus a "tag line" that communicates what the organization does. For example, one typical slogan at OICW, the job-skills training program featured in one of the January video case studies, is this: "OICW Works!" If a nonprofit decides, after reflection, that a name change is important, the communications people need to plan a multistage process of introducing the name--through publicity, which would include the reasons for the name change in light of the organization's mission and new initiatives, and so forth; and of changing the organization's signage, letterhead, brochures, and other items with the old name. 25) How do you make your organization a "household name"? Our constituents know us but the general public does not. Who needs to know about your organization? Who do you want to know about your organization? Some nonprofits serve a clearly defined segment of the population and need to create awareness specifically among people in this segment. Beyond these clients, the organization needs to be well known to those in the referral channel, people who can direct others to the organization. For example, when I served on the Marketing Task Force for my local Private Industry Council, we wanted to inform priests, ministers, social workers, and others who could inform unemployed people about the no-cost job-training programs available to their parishioners and clients. Before you strive to create awareness among the general public, ask yourselves who do you want to inform and why? And what do you want them to know about your organization? What about your organization will attract their interest and engage their support? Knowing these things (which may require some research), you can then develop and implement a communications plan to reach the right people with the right message through the right channel(s) of communication. 26) What can be done to overcome the stigma of previously existing groups having failed at the same efforts as your organization? The best way to overcome the stigma is (1) to be different in ways that are likely to increase your effectiveness, in order (2) to be successful where others have failed, and (3) to communicate about your organization's successes. Do you know why the previous groups failed? Are there lessons to learn from their failures, that can assure that your organization will do better, or at least will not replicate the failures? Why would people stigmatize your group for the failures of other groups? What evidence do you have that this is so? Is this opinion widely held; or limited to certain groups or locations? Do people think of your organization as "one more group that tries to do X"? If so, have you adequately created a separate identity and reputation for your group? Serious consideration of these questions and their answers should help you clarify your issue and help you identify steps to change these perceptions. 27) How do you respond to potential donors that think a particular reserve fund is too high? Is there a general rule of thumb that is an acceptable level for reserve funds? Peter Brinckerhoff will be covering finance issues, including reserve funds, in the February 1999 program. My understanding is that Peter recommends that at a minimum an operating reserve should equal at least 90 days of operating disbursements. But your question asks about responding to potential donors' concerns about a particular reserve fund and whether it is too high. This suggests that donors may think that (a) your nonprofit doesn't really need their financial support, since you have so much in your operating reserve; or that (b) your organization is not demonstrating good stewardship of donations, because the funds are "just sitting there," rather than going to programs and services. Increasingly people think of their donations as investments. If a person invests in a stock fund, they don't want to see their money sitting in a money market fund. The question to consider is, are these donors right? Do you have money in a particular reserve fund because you don't know how these funds will be used? Then your donors are right to be reluctant to give more. Do you in fact have more funds in that particular reserve fund than you can productively use for the earmarked purpose? (One Catholic retreat house had an endowment fund given to maintain the crucifix on the grounds. The invested funds grew so fast that the retreat house couldn't spend them fast enough. How many times a year can you paint a crucifix, plant more flowers around it, etc.?) Then there may be other needs to which donors should be directing their gifts, and you may need to reallocate reserves. Are you building up reserves for a particular program that will begin at a future date? If so, you need to communicate the rationale for the level of the reserve fund. Several requests came in for the opportunity to listen again to Patti Crane's segment on creating a positive image for your organization. We're pleased to present this segment here in RealAudio. Karen also forwarded us a copy of an outline of an article she referenced during the program titled, "Enhancing Helping Behavior: An Integrative Framework for Promotion Planning" *Responses were transcribed by Prof. Andrew Lewis from the live broadcasts produced by the Learning Institute for Nonprofit Organizations collaboration. |
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