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Journal of Marketing and Management, 4 (2), November 2013, 78-95 78
An Overview of Marketing Means Used by Non-Profit Organizations: A Detailed Overview
of NPOs Operating in the District of Elbasan
Elvira Tabaku
Aleksander Xhuvani University, Albania
[email protected]
Mirela Mersini (Zerellari)
University of Tirana, Albania
[email protected]
Abstract
The purpose of this paper is to investigate the marketing means used by non-profit organizations
in Albania, specifically in the district of Elbasan. It aims to analyze the actual situation of
marketing application in the non-profit organizations, to explore the existing marketing strategies
adopted by various NGOs. Given the specificity of non-profit organizations and the increasingly
demanding resource environments in which these organizations operate, the adoption of the
concept of marketing is viewed as an adaptive strategy for ensuring that organizations receive the
necessary resources for accomplishing their missions and carrying out their activities. The data
were collected from questionnaires and interviews with non-profit organizations representatives.
The main intention was to comprehend if these organizations used marketing means and at what
level they use them. The findings demonstrate a relative awareness of the non-profit organizations
about the importance of marketing. They show lack of good appliance of marketing means of the
non-profit organizations and how marketing affect them. As the sample used for analysis was
drawn from a part of NPOs operating in Albania, the generality of the results to all NPOs and to
other countries remain to be tested.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 79
Keywords: marketing, non-profit organization, marketing means, Albania
Introduction
As the society changes, more attention is being focused on institutions that are making important
contributions to the alleviation of human problems throughout the world; the nonprofit or
voluntary sector (Salamon and Anheier, 1992). Studies in different developed countries like the
United States, Australia and United Kingdom (Balabanis et al., 1997) indicate that the nonprofit
sector is increasingly being substituting for state social welfare service delivery.
The nonprofit sector is often referred to as the third sector, independent sector, voluntary sector,
philanthropic sector, social sector, tax-exempt sector or the charitable sector. So many definitions
confirm the fact that the third sector is a constantly evolving sector and that is relatively new.
Nonprofit organizations are becoming an important part of our society. The work of non-profit
organizations is important in offering important services typically not provided by the for-profit
sector or the government and considered important for the society such as health, social welfare,
and education (Duque-Zuluaga and Schneider, 2006). They differ from for profit organizations
and as such have different environment elements. The most important are: beneficiaries, the
persons who receive the service, donors, which provide funding for the NPO, the staff, other NPOs
or government directories with which have agreements etc. When NPOs rely heavily on unpaid
labor, current and potential volunteers form another key constituency (Duque-Zuluaga and
Schneider, 2006).
Some definitions
There is not an acceptable definition for describing the non-profit sector. Although, there are some
characteristics that distinguish this sector from others.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 80
-
The mission of a non-profit organization is built around service (Kanter and Summers
(1987).
-
NPOs do not distribute their “profit” to anyone with a beneficial interest in the organization
(Courtney, 2002).
Macedo and Pinho (2006) rely to Hall’s (1987) definition stating that a non-profit organization is
defined as a body of individuals who associate for any of three purposes:
- to perform public tasks that have been delegated to them by the state
- to perform public tasks for which there is a demand that neither the state nor for-profit
organizations are willing to fulfill
- to influence the direction of policy in the state, the for-profit sector, or other NPOs.
Mokwa (1990) defines NPOs as organizations which main purpose is to organize and oversee
voluntary social action directed at humanitarian problem solving. As a result they embrace
significant social ideas and perform critical social functions. The main role of NPOs according to
him is:
- to attract resources (e.g. funds and volunteers)
- to establish priorities for social action program
- to allocate resources to beneficiaries.
Gonzalez et al. (2002) define private non-profit organizations as an organization without a
financial objective, under private control, which aims to generate a social benefit for a specific
sector of society.
According to Salamon (1999), the nonprofit sector exists to serve four critical functions:
Journal of Marketing and Management, 4 (2), November 2013, 78-95 81
Service Provision: Nonprofit organizations provide programs and services to the community.
Value Guardian: Nonprofit organizations provide a mechanism for promoting individual
initiatives for the public good.
Advocacy and Problem Identification: Nonprofit organizations provide means for drawing public
attention to social issues.
Social Capital: Nonprofit organizations develop a sense of community among the citizens by
providing means of engaging in social welfare.
There are some classifications of NPOs but according to the International Classification of Non
Profit Organizations (ICNPO) the 12 major categories of not for profit organizations in this system
are as follows:
-
Culture and Recreation
- Law Advocacy and Politics
-
Education and Research
-
Health
- International Activities
-
Social Services
- Religion
-
Environment
- Business, Professional Associations and Unions
-
Development and Housing
- Not elsewhere classified
- Philanthropic Intermediaries and Volunteerism Promotion
Literature review
The number of nonprofit organizations has increased in the last decades (Pope et al, 2009). This
has led to a more competitive environment for NPOs and their continuity. Many NPOs are facing
resource scarcity in varying degrees and proportions (Balabanis et al., 1997). Competition for the
donors’ market seems to have heightened in recent years because of some factors: the decrease in
funding from the public sector, an increase in the number of not-for-profit organizations and the
Journal of Marketing and Management, 4 (2), November 2013, 78-95 82
rise in funder pressure for not-for-profits to operate in a businesslike manner. This fact has become
difficult for NPOs to secure their continuity.
According to Ritchie and Weinberg (2000), the NPO sector is characterized by several important
features that, together, make competition in this sector a very different experience from that
encountered by most businesses. The organization is motivated primarily by the social goals
contained in its mission, rather than by profit maximization. It must consider the needs of
beneficiaries, donors and volunteers/staff, when choosing a course of action. Costs and benefits of
social marketing services are different from those of products offered by business. So does the
nature of competition as well.
The lack of growth or even decline in the disposable incomes of families as consequences of
financial crisis has pressed the spending. So does the governments. Projects related to world-wide
disasters also take away revenue from more routine needs. Thus, nonprofit organizations have
increasingly recognized the importance of marketing for their survival and have imported
techniques that had been used by for profit sector.
NPOs rely on a wide range of funding sources, including grants and contracts from local, state,
and federal governments; donations in the form of foundation grants; corporate support; direct
individual giving; church contributions; art unions; bequests; income earned from dues, fees,
service charges, rent, and product sales; and income from endowments, investments, and special
events. So, an NPO has to engage in relationships with all source of funding. They are struggling
to keep alive in the face of rapidly changing societal needs, increasing public and private
competition, changing client attitudes and diminishing financial resources (Kotler, 1979).
Journal of Marketing and Management, 4 (2), November 2013, 78-95 83
In front of these difficulties, marketing strategies can offer a sustainable competitive advantage
through the creation of superior customer value, which in turn leads to superior performance
(Andreasen and Kotler, 2003; Balabanis et al., 1997).
Although many non-profits may view marketing as a business activity, Kotler and Levy (1969)
believe that marketing plays a very important role in the lives of non-profit organizations. In their
article they argued that all organizations undertake marketing whether they know it or not,
therefore they must possess a satisfactory understanding of it. Mokwa (1990) states that marketing
can provide management orientation and policy frameworks that is compatible with NPO
perspectives.
Literature has emphasized that the adoption of a market orientation can be considered an important
tool to achieve competitive advantages and to improve organizational performance (Jaworski and
Kohli, 1993; Hurley and Hult, 1998).
Marketing for nonprofits is well known in developed countries. This concept is applied at colleges,
social service agencies, hospitals and cultural organizations which are using marketing concept
and techniques to improve the marketing of their services (Fox and Kotler, 1980).
Many NPOs that operate in developing countries may find marketing perspective not important or
may not have information about the importance of marketing in the NPO sector. This is the case
of Albania where the NPO sector could develop only the last two decades.
But, it is not easy adopting such a strategy for NPOs. Their chairs may believe that their
product/service is needed by the market (Andreasen and Kotler, 2003) and there is no need for
marketing, so investigating what the market needs. This also because the mission of an
organization is defined at its creation and it takes several acts to change it according to the needs
of the market.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 84
Researchers agree that the adoption of a market orientation and marketing tools are important for
non-profit organizations (Gonzalez et al., 2002; Macedo and Pinho, 2006; Gainer and Padanyi,
2005).
Kotler and Zaltman (1971) recognize the importance of social marketing. They argue that social
marketing is a much larger idea than social advertising and social communication. Social
marketing is the adaptation of commercial marketing technologies to programs designed to
influence the voluntary behavior of target audiences to improve their personal welfare and that of
the society of which they are a part. According to Andreasen (2002), social marketing is unique
because it holds behavior change, is customer-driven and creates attracting exchanging that
encourages behavior. Social marketing programs benefit either individuals or society. In some
programs, the primary beneficiary is the target consumer or his or her family. Bennett and Sargeant
(2005), agree that social marketing techniques and tools can be applied in a wide range of human
situations and contexts.
There are other marketing strategies and instruments available to non-profits that can be
implemented without changing their true mission. Such strategies include the identification of
customers who are most interested in supporting their mission (market segmentation), ensuring an
image is built that is attractive to those people (product positioning), the development of
communication messages most attractive to these people (advertising), communicating with them
through channels these people use (place) and ensuring trust on them (MacMillan et al., 2005).
Firstenberg (1986) states that marketing is essential in obtaining resources and producing products.
He agrees that marketing can help an organization to achieve some objectives:
1. to generate resources
2. to contribute to influencing behavior, by persuasion and by adaptation
Journal of Marketing and Management, 4 (2), November 2013, 78-95 85
3. to contribute to the satisfaction of clients needs
Shapiro (1973) classified non-profits customers into two main groups: the donors and
beneficiaries. What is generated from the donor market is allocated to the beneficiary market. The
values on offer to donors in exchange for their funds, time and/or energy, are mainly psychological
and social and involve “relief of guilt”, “the need of self esteem” or “concern for humanity”.
Marketing’s role in this context is to create and maintain these as “satisfying exchanges”
(Balabanis et al., 1997). “Exchange” is a core concept in marketing and NPOs engage in
transactions with a large variety of stakeholders (Macedo and Pinho, 2006).
Nonprofits tend to use the terms marketing and communications interchangeably — another
indication of the overall lack of sophistication about these issues inside the sector. But there are
substantive differences between the two, none more significant than their very different points of
departure. Effective marketing generally starts from the point of the view of the audience, or
customer, and seeks to anticipate and address their needs (Williamson, 2009).
Fundraising
An important role for marketing in NPOs is the generation of funds from donors and donor
organizations. Whereas commercial organizations are typically funded by their customers (and
invested in by shareholders), nonprofit organizations may generate funds from a variety of sources
including public funding (government departments through grants and contracts) and private
funding; other non-governmental organizations, foundations, international agencies, private forprofit organizations, self-generated resources (income from fees and charges), commercial activity
and investment income and individual donors. Marketing’s role in fundraising is important
Journal of Marketing and Management, 4 (2), November 2013, 78-95 86
although the fact that donors see the marketing expenses as a waste of money (Bennett and Savani,
2004) and this makes more difficult NPO’s marketing.
Resource strategies in the non-profit sector
NPOs are currently required to adopt a much different attitude in relation to their funding sources
and their organizational strategies. In other words, they have to find ways of managing their
resources more efficiently in order to accomplish their goals.
The ability to raise and gain funds is of vital importance of NPOs as these are the only way they
could carry on their activities. The good functioning of a NPO depends on the number and sum of
each contributor on its services. The more and diversified contributors it has, better is. So they
should focus on different contributors at the same time.
Cause-related marketing (CRM)
CRM is an appropriate source of revenue for not-for-profit organizations. CRM links the causes
of a not-for-profit to the marketing of a corporation. So, the corporation chooses an NPO based on
the kind of the NPO, its image and size. Generally the NPOs receive contributions based on units
of a product sold for the privilege of using the organization's name. Both the NPO and the
corporation get benefits. The NPO gets some revenue and visibility and the corporation a good
image.
Social Enterprises
Another way of gaining funds is the social enterprise. It is a mix of social objectives and business.
The profit made by the social enterprise is not distributed as a reward but is reinvested in the
enterprise or part of these go to the community through the social services offered. This kind of
enterprise is associated with adequate laws on taxation. Usually, the social enterprise is included
Journal of Marketing and Management, 4 (2), November 2013, 78-95 87
in the statute of the NPO and function as part of the NPO. Its aim is to gain profits that will serve
as funds for the services offered by the NPO.
Different ways of fundraising are used in different countries. It depends most on culture and past
experiences. In developed countries and places where nonprofit sector has a long life is very
developed individual’s donation, too. Several studies have examined it, showing that trust,
emotional and familial utilities are significant in fostering donor commitment (Sargeant et al.,
2006).
Marketing means used by NPOs
Marketing in NPO usually means attracting human and capital resources. Not for profit
organizations offer important services to the community where they take their actions and to the
whole society. To make this happen they need visibility and funds; visibility from the institutions
and the community and funds to make possible the service offer.
Whether small or well-known global organizations, regardless of their size, nonprofit
organizations all over the world are essentially facing the same challenges, carrying out their
mission with limited resources, communicating the issues they advocate to their stakeholders and
to the media, and raising the funds that they require to do so (Boeder and Hohn, 2004).
Online marketing
A main focus of an NPO's marketing strategies is good build websites. They are designed to attract
new donors through engaging them emotionally, gain visibility of the NPO and its mission and
cause, educate through information giving and establish credibility. Mission-driven organizations
can gain new insights by drawing on current media and marketing research, and will benefit from
adapting the Internet strategies as they are practiced by for-profit organizations and by an
Journal of Marketing and Management, 4 (2), November 2013, 78-95 88
increasing number of their peers (Boeder and Hohn, 2004). Epner (2004) suggests that online
donations significantly reduce fundraising costs for nonprofit organizations. The Internet offers
new tools and promising opportunities for mastering these challenges. It plays a critical role as the
information infrastructure for creating and supporting positive changes in society. E-mail
communication builds relationships and loyalty. Social media is also an important mean of gaining
new donors and being in touch with them. It also helps on spreading the message of the NPO.
According to Hart (2002), NPOs are using internet to raise funds and improve public relationship.
Small nonprofits typically lack the time, money and expertise to develop sophisticated Web sites.
As an alternative, they could use freely available features provided by third parties such as site
statistics or forums, to enhance the functionality of their sites (Hooper and Stobart, 2003).
Social media is a good option for NPOs to market themselves. It doesn’t cost a lot so it is
increasingly used for marketing. Social media enable NPOs to create relationships and engage with
their constituents’ feedback. They provide a central place for nonprofits organizations to
collaborate and connect. Nonprofit marketing has benefited from social media marketing.
Public Relations
NPOs through benefiting a group of people are beneficial for the community. So, public relations
form a large part of their marketing. The local press should know the story of the non-profit and
be aware of new programs that reach out to the community. NPOs should utilize newspaper stories
to share statistics, provide pictures and advertise fundraising events and community services. The
NPO should include media outlets in events by inviting them directly. Local news outlets should
be on NPO’s mailing lists for newsletters and other informational mailings.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 89
Offline Practices
Typical marketing practices by a non-profit organization include large and small-scale events, print
materials, alliances and networking. Print materials are highly important for educational and
promotional purposes. Events offer fundraising opportunities in the non-profit world, whether it is
a small silent auction or a banquet offered to hundreds of potential donors. Creating alliances with
other local NPOs builds a larger mass of people who hear of the group’s goals. In addition,
networking is very effective marketing for non-profits as people spread the word about the goals
of the organization.
Methodology
Data are taken from non-profit organizations that operate in Albania especially those operating in
the district of Elbasan. Using a questioner of 40 non-profit organizations this research took some
initial steps to assess the marketing activities carried out from NPOs that operate in Albania. It
was used a 5-point Likert scale to answer the question, 1- not important to 5- very important. The
questioner asked about NPOs current marketing practices and what they believe are to be done
because considered important. After that, an interview is held with the managerial directors of
some NPOs. This method allowed gaining detailed data about the marketing adopted from the
NPOs. During the interviews important and broadened information is taken about the marketing
of NPOs.
The organizations questioned were randomly selected. The organization interviewed were selected
using purposive sampling; organizations that deliver social services as they hold a substantial part
of the total NPOs.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 90
Findings
Almost 90% of the NPO representatives questioned agree about the importance of marketing in
their success. However they don’t see it as an activity/process that affects directly the fundraising,
the NPO continuity and as a mean for gaining an advantage.
Only 2 of the NPOs have a marketing department. These are international organizations that
operate from many years in different parts of the world.
Most NPOs reported that they don’t have a marketing plan nor do they work from a marketing and
communications strategy. Even those who do have a plan had one of the following problems:
-
the plan isn’t followed
-
there’s no budget
-
the environment (in which the nonprofit works, or within the organization) has changed,
making the plan irrelevant.
Some NPOs who don’t have a plan, report that they do a lot of talking about creating one.
A small number of the NPOs are not directly related to donors. Most of them are Albanian branches
of international NPOs and they are responsible just for the beneficiaries finding, managing funds
and service delivery without being concerned for fundraising. Those NPOs that are self responded
and engaged in fundraising are always ready to present project proposals to donors any time there
are call for proposals but not only.
Only 55% of the questioned NPOs declare to have a marketing plan but only 45% have a budget
on marketing. They declare the budget is very limited. That’s why, the marketing elements often
are combined with the activities they hold (e.g. within the poster against smoking there are symbols
and contact information about the NPO).
Journal of Marketing and Management, 4 (2), November 2013, 78-95 91
More than half of the NPOs have a website. They try to find someone within the organization who
is capable of setting up and maintain the website. If they don’t have internal recourses they look
for qualified people outside the NPO for creating the website but do not pay attention to the website
maintenance.
Brochures and business cards are the marketing tools most used from the NPOs.
They publish magazines and newspapers but on occasion of different project activities, so they are
financed by the project not as part of the marketing budget. They contain always informative
material about the NPO.
NPOs declare to be part of different alliances. In some cases they are mandatory due to the activity
of the organization and the norms and regulations of the state. Most NPOs see these alliances as a
good opportunity to be introduced and recognized from donors and institutions. Other activities
like participation at fairs, activities that promote the organization, TV or radio interviews happen
very rarely.
The importance of market research and strategic marketing was acknowledged only by a very
small proportion of non-profits. None of the domestic staff is trained in marketing. Almost all of
the staff engaged in marketing activities has educational formation and educational background.
Based on these empirical findings, it appears that the marketing operations and strategy of the
sampled organizations are still heavily dominated by an organization-centered mindset. Marketing
appears to be primarily defined by these organizations as promotion, including activities such as
advertising, fundraising and public relations. According to Andreasen and Kotler (2003), this is
one indicator of an organization-centered mindset. The minor role given to consumer research is
another indicator of an organization-centered mindset.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 92
The results of the present study indicate that nonprofit organizations still focus on fundraising,
advertising and public relations despite the calls for non-profits to adopt a more market-oriented
approach.
Conclusions
Most of the NPOs included in the study are small organizations which have many difficulties in
carrying on their activities. The staff employed by them works on the field and there are few
persons if any working in the administrative part. Usually is the executive director who does
marketing activities. Other staff rarely engages in word of mouth marketing. They lack information
about marketing and its importance on NPOs. NPOs, also, lack time and money on engaging in
marketing activities.
Many non-profit organizations still demonstrate a distinct lack of understanding of what the
principles of marketing are. Only a small proportion in this sample engaged in any kind of
marketing. Almost all of staff members of the sampled non-profit organizations who are engaged
in some marketing activities are formed in education and only a small part are actually trained (by
including training on the job) on management and marketing. This may in fact be the explanation
for the way in which marketing is implemented.
The results of this study are practically significant as they indicate that many NPOs are far from
having reached the full potential through marketing. It is possible that non-profits have been
reluctant to adopt marketing strategies and instruments because some of them may perceive
marketing is a bad thing which aims at manipulating people and that it therefore is not compatible
with the honorable work they are doing.
Journal of Marketing and Management, 4 (2), November 2013, 78-95 93
As a consequence, non-profit organizations are slower in accepting the benefits of marketing to
achieve their mission and adopting marketing strategies and techniques.
Most of the NPOs have monitoring and evaluation studies of their projects. Instead of regarding
this as data, they must transform it into case studies, stories, photo-essays and information that can
be fed back into the donor market and build credibility for the NPO.
The findings of the research project show that most of the NGOs depend on the traditional
methods to market themselves. Most of them depend on donations. NGOs must learn to devise
newer and better ways to market themselves.
The present study is limited by the fact that the sample of non-profit organizations studied is a
small part of the NPOs operating in Albania. Future studies must include larger samples and make
distinctions between Albanian and non NPOs.
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