Marketing for a Nonprofit Organization
Audience Segmentation and Strategic Alignment
Any marketing strategy starts with setting an objective. Typically there are two:
- Short-term, which is profit
- Long-term – market share gains
Even though in the case of nonprofit 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, nonprofits will need to look at and analyze the customers and the product or service offered to them.
Let’s look at an example of a community college art theater.
Objective: The main goal of the theater may be to provide maximum art exposure to the community. There are 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 such as 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.
As is true with a for-profit business, it is imperative to segment the customers appropriately. In this case, the customer segmentation can done on the following basis:
- 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 better the results.
Marketing Strategy. Here there is a need to determine what message to develop. For instance, can your new customers 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, a feeling of happiness, opportunity to socialize, an ‘image of an art lover,’ an opportunity to support the school, which would be particularly true for alumni. Just like in the case of a for-profit company, you determine the value proposition of a nonprofit by asking the question: “What do the customers really want?”
Competitors. This would include consideration of 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 nonprofit is also important.
In the case of a for-profit organization, 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 contribution 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 nonprofit business, such alignment is sometimes difficult to reach. It may not always be easy to determine who the ‘real boss’ is. Whoever pays the bills could be the person, however, it’s more likely to be somebody whose opinion, preference and interests count the most.
Nonetheless, the question that is most frequently being asked today about nonprofits is this: “Is it okay for such organizations to continue to lose money?” The answer is increasingly becoming “no.” More and more of the constituencies within nonprofits 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 nonprofit world is increasing.
Just like a for-profit, the nonprofit 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.