Any strategy starts with setting an objective. Typically there are two – short-term, which is profit, and long-term – market share gains. Even though in the case of non profit organizations the distinction between the two may be less clear than in the case of a for profit, the approach in analysis of the appropriate marketing strategy would be the same. Just like with for profit organizations, for non profit you will need to look and analyze its customers and the product or service the business offers to them.
Let’s use an example of a community college art theater.
Objective. Its main goal of the theater may be to provide maximum art exposure to the community. It has certain constraints, such as the number of performances it can produce, seating capacity, etc.
Customers. These could be families from the neighboring communities, students, faculty, performers, alumni, etc. as well as donors. The latter expect a return– a feeling of satisfaction, assurance of a good use of the money they contribute, or time and effort dedicated to supporting the theater’s operations.
Just like with the for profit business, it is imperative to segment the customers appropriately. Typically, the customer segmentation is done on the basis of the following:
- Students vs. nonstudents
- Age group
- Affiliation w/ the college (students, former students, alumni)
- Existing/current vs. new customers
- Interested in arts (familiar with it), and those not interested
- Products the customers are looking for – dance, song, opera, etc.
- How the purchase decision made – planned or impulse
- Willingness to pay/disposable income
- Educational level
- Price sensitivity
Remember that mass advertising is almost always ineffective. The more targeted you are the, the better it is.
Marketing Strategy. Here we need to determine what message to develop. For instance, think if your new customers can bring friends? If so, adjust your message to take advantage of that possibility. Messages have to be targeted to individual segments of your customers and cater to their needs.
Value/Benefit. The key benefits the theater provides is arts education, entertainment, feeling of happiness, opportunity to socialize, an ‘image of an art lover,’ an opportunity to support the school, particularly for alumni. Just like in the case of a for profit company, we determine the value proposition of a non profit by asking ourselves a question: “What do the customers really want?”
Competitors. These would include other similar theaters, as well as other entertainment/art organizations, such as museums, art galleries, live events, etc.
Strategic alignment. Long-term alignment of all the constituencies within the non profit is also important. In the case of a for profit organization, in the long run owners or investors, employees and managers are almost always aligned. There may be differences in opinion about the short-term vs. long-term strategy and how the need for profitability in the short-run should be balanced against gaining market share. However, longer-term it is all about contrition to the mission of the company and creation of wealth. Misalignment on this dimension is almost certain to lead to a dysfunctional organization destined to failure.
In the case of non profit business, such alignment sometimes difficult to reach. Sometimes it is because it is not always easy to determine who is the ‘real boss.’ Whoever pays the bills could be one. However, it’s more somebody whose opinion, preference and interests count the most. Nonetheless, the questions that is more frequently is being asked is “Is is okay for such organizations to continue to lose money?” The answer is increasingly becoming ‘no.’ More and more of the constituencies within non profits are saying “enough is enough.” They are increasingly asking to get to a break-even point as a minimum. Those that do not are failing because competition in the non profit world is increasing.
Just like a for profit, the non profit organization must think about its objective, customers, benefits it offers, market strategy and competition. It is also increasingly becoming important to reach alignment with the key constituencies within such organizations. This can be accomplished by going through the checklist we have just discussed.