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1March 26, 2008

KNOW/GO NPD LLC smarter product development℠

Building Your Organization’s Share of Mind & Heart: The Essence of Strategic Marketing SUNY Orange Institute for Nonprofit

Leadership and Management 4th Annual Nonprofit Leadership Conference

John Bassler, PhD - President, Know/Go NPD LLC

Karen VanHouten - Executive Director, Community Foundation of Orange and Sullivan (CFOS)

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Elements of strategic marketing• Organizational mission statement

• Strategic objectives•Time-specific•Measurable•Plan for accomplishing objectives

• Offering (product or service)• Clients and needs (target market)

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Elements of strategic marketing

• Who pays for the service?• Other stakeholders• Market segments• Competition• Differentiation and positioning• Volunteers

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Elements of strategic marketing

• Promotion (marketing communication)

• Delivery location(s)• Pricing• Offering(s): opportunities for innovation

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Example: Community Foundation of Orange and Sullivan (CFOS)We connect people who care with causes that matter and we

serve people of all means.To donors, CFOS represents an effective and innovative giving

vehicle, one that combines maximum tax savings with maximum flexibility and the opportunity to make a difference right here at home in and around Orange County… and beyond.

To other charitable organizations, CFOS represent the source of grants whose sole purpose is to improve the quality of life in our region.

Perhaps most important of all, CFOS is the link between donors and other charitable organizations, and between donors and those students who receive grants from scholarship funds which are established through the Foundation.

CFOS currently manages more 75 permanent charitable funds than for individuals, families, businesses, and organizations that turn to us to help fulfill their charitable dreams. And this number of funds continues to grow as more people like you feel compelled to step forward as generous participants in the vision of a stronger community.

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CFOS current marketing strategy• Mission statement

To assist donors in achieving their charitable intentions through the establishment of funds that collectively create permanent endowments, and thereby enhance the quality of life in the region.

• Objectives•Grow pool of endowed funds under management to $7 million by December 31, 2008

•$4.6 million at end of 2007

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CFOS current marketing strategy• OfferingWe offer individuals, businesses, and

organizations the opportunity to leave a legacy. Our dedication and commitment is to focus on donor services - thus our tagline of connecting people who care with causes that matter. In doing so we support in perpetuity the many charitable organizations and initiatives that help make our region one of the finest places in the world to call home. (Emphasis added.)

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CFOS current marketing strategy• Clients and needs (target market)

•All sorts of individuals, businesses, and organizations may have the desire to leave a legacy

•Individuals who want to establish a memorial•Businesses that want a vehicle for charitable

contributions•Nonprofits that want to establish an endowment

•And who want to avoid the administrative burden of operating an endowment or foundation

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CFOS current marketing strategy• Who pays?

Each endowment fund is assessed an asset management fee.

• Other stakeholders•Those whom we ask to support us so that we can provide the services we offer to donors.

• Market segments•(See “Clients,” slide 8.)•Also: professional advisors

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CFOS current marketing strategy• Competition

•Private foundations or endowments•Neighboring community foundations•Fidelity Donor Advised Funds•Vanguard Donor Advised Funds

• Differentiation and positioning•Simplified process for setting up charitable entity

•Donor involvement in grant making•Wide variety of assets accepted

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CFOS current marketing strategy• Volunteers

•Part-time administrative help•Board members

•Set strategy•Raise operating funds (and in-kind support)

•Committee members•Events•Financial oversight•Awards of grants and scholarships

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CFOS current marketing strategy• Marketing communication

•Web site•Newsletter•Newspaper insert•Leave-behind encouragement cards•Tri-folds•Pamphlet•Seed packets•Bookmarks

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CFOS current marketing strategy• Delivery locations

Not relevant for CFOS

• Pricing1% of assets under management per year, payable quarterly

• Innovation opportunities

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Developing or modifying marketing strategy• Analyze current situation• Understand markets, customers, and stakeholders

• SWOT analysis• Segmentation and positioning• Marketing mix• Implementation plan

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Analyze the current situation• Internal environment

• Resources• Climate• Relationships• Keys to success• Warning signs

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Analyze the current situation• External environment

• Customers/clients/stakeholders—re-examine•Who are they--current and potential?•How do they use our products (services)?•How do non-client stakeholders relate to us?•Where do they purchase our products or use our

services?•What is the context of their purchase or use?•On what basis do they choose our brand v. others?•Why do some potential customers NOT purchase

from us?•Why have former customers defected?

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Analyze the current situation• External environment (continued)

• Competitors• Economic change• Political trends• Legal/regulatory issues• Technological change• Socio-cultural trends

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Two types of nonprofitcompetition•Organization-level competition:

•Competition for clients, volunteers, and resources

• Behavior-level competition:•Need/desire competition•Generic competition•Format competition•Offering competition

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Understand markets, customers, and stakeholders• Analyze markets

• Broad definition of market and needs• CFOS: Who might be interested in

outsourcing endowment management?• Customer needs and behavior

• Market-research tools• Stakeholder needs and interests

• Market-research tools

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Getting information about customers and stakeholders

• Observation• Self-reports, diaries• Interviews• Focus groups• Surveys• Media coverage• Organization Web sites

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SWOT Analysis• Internal Strengths• Internal Weaknesses• External Opportunities• External Threats

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Strengths--internal• Financial resources• Brand recognition• Cost efficiencies• Management talent• Operational excellence• Superior quality• Alliances• Engaged, loyal employees• Talented, committed volunteers

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Weaknesses--internal• Financial limitations

• Lack of market awareness• High costs• Inexperienced management• Operational deficiencies• Quality problems• Lack of partners• Uncommitted employees• Insufficient number of volunteers; wrong skills

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Opportunities--external• Growth in need for services• Strategic weaknesses among competitors• Access to new technology• New distribution channels (e.g., Internet)• Interested potential partners• New sources of capital

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Threats--external• Market decline• Emergence of a new competitor• Changing client needs• New technology threatens obsolescence• New distribution channels (e.g., Internet)• Loss of a key supplier• Demographic shifts• Economic disruption• Political turbulence

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SWOT matrix

STRENGTHS(match to

opportunities)

OPPORTUNITIES(capitalize on

them!)

WEAKNESSES(apply resources

to convert to strengths)

THREATS(neutralize or

protect against them)

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Market Segmentation• Goal of segmentation: create identifiable

groups of customers such that within each group, customers’ likes, needs, tastes, and market behavior are similar, but are different from those in other groups

• External criteria for successful segmentation:• Segments are identifiable, distinguishable, and

measurable• Segments are substantial• Segments are accessible for marketing

communications• Segments are responsive

• Internal criterion for successful segmentation:• Firm can tailor marketing strategy to each target

segment (What does this mean?)

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Bases for segmentation• Behavioral

• Benefits sought• Product usage intensity• Product use occasions• Buying process (very important for B2B)• Price sensitivity

• Demographic• Geographic: region, urban-rural spectrum• Psychographic

• Personality• Lifestyle• Motives

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Differentiation and Positioning• Differentiation: create

recognizable feature and benefit differences v. competing offerings (branding)• Give customers a compelling reason to

choose you

• Positioning: manage customers’ perceptions of the product or service• Uniqueness• Desirability• Believability

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Differentiation and Positioning:A Fort Worth museum example• Kimbell Art Museum• Modern Art Museum of Fort Worth• Amon Carter Museum

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Marketing mix, take 1:The four P’s of marketing strategy• Product• Price• Place (distribution/delivery)• Promotion

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Product strategy• Features, benefits, related services• Quality and design• Packaging and labeling• Product development and management

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Pricing strategy• Price elasticity (= customer price sensitivity)

• Value perceptions• Margin objectives• Competitors’ pricing strategies• Channel partners• Transient elements (discounts)

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Distribution strategy• Channel partners’ responsibilities• Channel hierarchy (e.g., Dell v. Compaq)

• Selection of channel partners• Competitors’ strategies• Customers’ preferences• Logistics

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Promotion strategy (IMC)• Advertising

• Public relations• Events• Sponsorships• Personal selling

• Especially important in organizational sales

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Marketing mix, take 2:Tailor the mix to each segment• Product• Price• Place (distribution/delivery)• Promotion

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Optimize your marketing strategy• Get the information you need• “Testosterone-driven” decision making is a recipe for disaster

• How many of you know—really know—what your customers want and how well you’re doing?

• Or are you making assumptions based on your own beliefs and preferences?

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Marketing mix, take 3:The seven C’s of marketing strategy• Customer—you can solve his or her problem

• Central user—may be different from the customer

• Competition—what are they up to?• Company—do you have the needed

capabilities?• Context—you need to know the environment• Collaborators—you always need help• Commitment—are you willing to support the

offering?

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The “Anna Karenina” Principle• Tolstoy’s novel begins: “Happy families are all

alike; every unhappy family is unhappy in its own way.”

• Translation: in order to be happy, a marriage must succeed in many different respects.

• For most important things, success requires avoiding all of many separate causes of failure (Jared Diamond, Guns, Germs, and Steel).

• For all organizations, strength in all seven factors is required for competitive success.• This is an empirically demonstrable claim• You can’t compensate for weakness in one area with

strength in another

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Strategy Implementation• The best strategy, if not well executed, is

worthless • (Conversely, good execution cannot rescue a

bad strategy!)• There are three key elements:

• 1. Test the strategy for internal consistency• Every component must support the chosen targeting and

positioning strategy• 2. Monitor execution to be sure the plan is

implemented as designed• 3. Establish performance targets and measure results

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What if you’re a small organization?• Get volunteers to help develop and

execute a marketing program• Use board members to help:

• Get client/stakeholder information• Promote the organization• Recruit business marketers to the board

• Market research doesn’t have to be expensive

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What if you’re a small organization?• HOWEVER...• In many cases it takes the nagging of

someone like a consultant to get the organization’s top management to give the time required to develop a good marketing plan.

• It’s very easy to respond to daily urgencies at the expense of strategic thinking.

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Resources--books

• Andreasen, Alan R., and Philip Kotler. Strategic Marketing for Nonprofit Organizations, 6th Ed. Prentice Hall, 2003.

• Wood, Marian Burk. The Marketing Plan Handbook, 2nd Ed. Pearson, 2005.

• Clancy, Kevin J., and Peter C. Krieg. Counterintuitive Marketing. Free Press, 2000.

• Andreasen, Alan R. Marketing Research that Won’t break the Bank. Jossey-Bass, 2002.

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Resources--people• Jane Daniels, volunteer-management

consultant• Zebra Advisors, LLC• Mohegan Lake, NY 10547 • [email protected]• 914-471-5545

• Paola Gentry: project director, Families First NY• Expert on funding for management development• Poughkeepsie, NY 12601• [email protected]• 845-452-1114 x3101

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