Marketing in humanitarian organizations

Marketing for Humanitarian Organizations

Marketing and Humanitarian

Marketing is often described as the activities which a company or organization undertakes in selling and buying products and services. It involves promoting their products and services through advertising, sales, and delivery to clientele. Marketing is often embedded in the marketing mix which states the four 'Ps' of marketing which are product, place, promotion, and price. Marketing involves concept such as customer relationship management, business marketing, societal marketing, and branding. Customer relationship management refers to the activities conducted to provide the best possible interaction between the organization and its clients to ensure they build loyalty (Piercy and Evans, 1983: 19). Business marketing refers to the activities that organizations or companies take to market themselves to other organizations through providing quality goods and services that make other organizations want to be associated with them. Societal marketing refers to curtailing harmful activities that may occur in the society and ensuring the society in which the organization is working benefits more in the long run. Lastly, branding is the philosophy of the company to create a proper image that clients are proud to be associated with (Ferrell and Hartline, 2010: 88-90).

Marketing for humanitarian organizations

For humanitarian organizations, marketing refers to all activities that the organization undertakes in ensuring that they market their activities to donors and funding organizations (Rose-Ackerman, 1982: 195-196). It also involves customer relationship management through ensuring that the donors are satisfied with the activities the organization is undertaking while ensuring that the number and volume of grants continues to increase over the years (Leonard, 1977: 16).

For these humanitarian organizations, they use a holistic marketing concept, which is involved with production, product, selling, marketing and societal marketing. The production concept regards the organization's activities in terms of delivering the activities they have been funded to conduct. The product concept suggests that these organizations should focus as much as possible on delivering these activities to the highest possible standards to ensure the success of their activities (Kahn, 1978: 57). The selling concept suggests that the organization should create proper strategies to present their previous activities to current and future donors to attract more funding. The marketing concept for humanitarian organizations is basically organized around trying to tailor their activities towards the needs of the community they are working as well as to suit donor needs and requirements (Steinberg, 1986: 514). Lastly, the holistic marketing concept means that the humanitarian organizations use a complex set of activities to integrate their marketing activities towards meeting the needs of funders and communities they serve.

The marketing continuum defines the patterns or trends within a market, which allow some organizations or companies to perform better than others do (Keating et al., 2008: 425). Often, they also include trends within an industry that occur as a result of the external environment such as changes in regulations that help some companies grow while others may exhibit slower growth (Klein and Dawar, 2004: 209-210).

The marketing cycle for business organizations starts with building client knowledge through creating consumer product knowledge and conducting research. This is followed by product development and pricing strategies. Labels and packaging of the product is the next step after which the products are distributed to clients (Gerstner and Holthausen, 1986: 61). The company then conducts advertising, public relations, and promotion activities to improve their sales and ensures customers are satisfied through customer service activities. These customer service activities feed into the organization's customer knowledge phase and research, which begins the next marketing cycle (Ferrell and Hartline, 2010: 112).

Ferrell and Hartline (2010): 128-129 posit that the marketing cycle begins with customer knowledge, which means that these organizations need to conduct research to gain knowledge about their customers, market, or industry, needs of the consumers, and competitors available. This is followed by the product development phase where the company tailors their product to the consumer's needs, package the product appropriately and use appropriate distribution strategies to ensure the customer's needs and expectations are met. MacInnis et al. (1991): 38 adds that at this stage, the company should also understand the competitors and the realities present in the community to help them build their competitive advantage. After doing these, the company should focus its activities on reaching as many prospective customers as possible. They should inspire the interest of the customers in the products and services being provided by the company or organization. This is often done through advertising, promotion, and public relations activities. The company then focuses on making the sales but proceeds to the customer service phase where they work towards developing relationships with their clients and ensuring that they are satisfied so that in the end they are able to give the company or organizations repeat business. This is also supported by Madhavaram et al. (2005): 74 who argues that the company should also aim at word-of-mouth advertising so as to improve their sales. Hoeffler and Keller (2002): 76 lays support for the last step. The authors argue that this step feeds into the next cycle is to create an interaction between the company or organization and its consumers to combine consumer knowledge with research that is ongoing about competitors, the industry in general and market needs to refine the product.

Yi (2010): 468 argues that humanitarian organizations face a similar nonstop cycle in their attempt to keep donors and communities satisfied. In order for them to build a strong organization that is respected by both funders and the community, they need to ensure that their marketing programs follow a similar marketing cycle as that of business organizations. As suggested by Steinberg (1986): 513, this refers to subdividing the target market into subsets of consumers based on their needs, priorities, and successful marketing or implementation strategies. It helps the business or organization to identify their target market, provide data to support their position in the marketing plan and develop strategies to differentiate their products for their customer subsets. Luo and Bhattacharya (2006): 13 continues to state that an ideal market segment should be measurable, large enough for the company to make a profit, stable enough that it is present for long enough, internally homogenous meaning potential customers who are in the same market segment should prefer similar quality products or services. At the same time, it should be externally heterogeneous meaning customers from different market segments should prefer items of different quality. Other criteria for a good market segment is that it should be useful in deciding the company's marketing mix, provide support data for position of the company or organization and should be easily reachable with a targeted market intervention in a way that is cost-effective.

Barber (2012): 747 posit that different companies use different methods to segment their customers. First is geographical segmentation whereby they group consumers based on their geographical location such as countries, cities, regions, and neighborhoods. This method of clustering customers by geographical location is often combined with demographic data to create a more accurate market segment or consumer profile. Demographic segmentation is the second method of segmenting the market. This argument is supported by Klein and Dawar (2004): 209 who posit that the market can be divided by the age, income, gender, occupation, or religion of the consumers. Behavioral segmentation is also an appropriate method of segmenting consumers. In this method, consumers are divided into groups based on their knowledge of the company's products or services, attitudes towards the company's products and services and rate of usage of different products and services. They are also grouped according to purchasing behavior.

Geert Bekaert et al. (2005) discuss lifestyle segmentation in detail and state that it is also a way of grouping consumers. Often this method looks at the psychographics of the consumers of the company's products and services. Their argument is supported by Ferrell and Hartline (2010): 143 who state that when using lifestyle to segment the market, the company looks at personal activities such as external influence to which the consumers respond such as mass media or word of mouth marketing, or other aspects such as purchase decisions and attitude towards tailored products and services.

Verhoef et al. (2010) also contributes to the issue of customer segmentation and states that customer or market segmentation is important in businesses for ensuring proper strategies to ensure customer retention. After segmenting customers or markets, the company can be able to evaluate the consumers based on three values. These are where the company should focus on the consumer as a priority since they are at high risk of cancelling products or services they receive from the company, whether the customer is worth retaining, and tactics the company should use to retain the customer.

Reid et al. (2005): 14 define the four Ps of marketing and states they are essential for any business or organization to succeed. These are product, price, promotion, and place. Product is the item, product or service that the company or organization provides for its clients. It is often an intangible service or a tangible product. Tangible products have to have an independent physical existence and often have a life cycle that includes a growth phase where the product is developed, maturity phase where the sales of the item are at peak and a sales fall period when the sales decline. It is, therefore, important for marketers to understand each product's lifecycle. They should understand how long the product's life cycle lasts to focus their attention on building a new product in the growth phase once it is in the decline phase. Urbany and Montgomery (1998): 288 go on to state that the marketers must consider the product mix whereby they consider the position of the product, how they can exploit the brand, and how to consider product development strategies.

Rotemberg and Woodford (1991) in their discussion of markup state that price is the amount that the client pays for the product. It is very important because the price determines what the company makes in terms of profit. Any adjustments made to the price affect the marketing strategy of the product. This is because of the product's price elasticity. Ingenbleek et al. (2003): 301 posit that changes in the price of a good or service has an effect on the demand for the product or service. When setting the price of a product or service, the marketer has to be aware of the perceived value of the product by the customer. Therefore, they should pick the appropriate marketing strategy as skimming, penetration, or neutral pricing.

Keating et al. (2008) define about price skimming as a strategy where the company or organization deliberately sets a high price for their product or service at the first instance then lowers the price of the product of service over time. Parker (1992) defines penetration pricing and states that it is used by a company or organization when it sets a lower price than its competitors and the product's final price in order to attract customers. Neutral pricing is defined by Gerstner and Holthausen (1986) as where the company sets the price of the product at the actual eventual price. An example is when an organization sets its price

Boulding et al. (1994): 418 discuss the third P. Of the marketing mix, promotion. They state that it refers to all marketing activities undertaken by the company or organization to increase consumer knowledge about their products or services. Ferrell and Hartline (2010) continue to say that it includes advertising, sales, and public relations. Advertising activities often cover all communication which the company or organization pays for to get information to their consumers. This includes commercials, radio, TV, and Internet commercials, billboards and print media.

Piercy and Evans (1983): 99 define the last P, place. The authors state that it refers to the distribution strategies the company uses to get clients to access their goods and services. Dent (2011) argues that these distribution strategies include selective, intensive, exclusive, and franchising distribution. An example of selective distribution is a company that stocks a product in one location only in order to draw customers to that location.

Neslin et al. (1985) in their discussion point at the communication mix and argue that companies or organizations use seven major ways to communicate their message to their clients. These are advertising, promotion, direct marketing, publicity, sponsorship, exhibitions, and personal selling. Advertising refers to any form of non-personal messages that the company or organization pays for to present or promote their products and services. Barksdale et al. (1995): 73 refer to promotion as short-term incentives that the company or organization uses to encourage purchase of their products or services. Direct marketing refers to email, telephone, fax, or email communication, which the company or organization uses to solicit responses from their clients. Publicity refers to a variety of programs, which the company undertakes to promote their image or the brand of their individual products. Sponsorship and exhibition refers to all activities and programs sponsored by the company to create brand-related interactions between the company products and services and their clients. Evans and McKee (2010): 52 add that personal selling is also an effective strategy where a company relies on word of mouth advertising or other strategies that use face-to-face interaction to promote their products or services.

The donor pyramid is the humanitarian organization's most important tool in marketing. It has the first time donors at the lower level. As suggested by Yi (2010): 471, this is usually the largest pool of donors and presents the greatest prospects for the organization. When the donors give their finances to the organization for the first time, often this spontaneous gift is given once the donors interact with the organization and enjoy their interaction with the organization. Normally they are one-off donations provided after an appeal that for a humanitarian organization is their marketing activity. An appeal can take different forms such as a direct mail appeal, special event where donors are invited to learn about the organization, or online appeal.

Rose-Ackerman (1982): 197 defines the second level of annual or regular giving as the donors who give funds to the organization on annual or other regular basis such as monthly, biannually, etc. This is the second largest pool of donors in the organization. They usually give after giving their first-time donation and becoming satisfied in the organization's activities. For a humanitarian organization to turn their first-time donors into regular donors, it is essential for them to use customer relationship skills to maintain relations between the company and their donors. This is often maintained though providing donors with regular communication to provide the donors with project updates and when the donors are satisfied with the impact of their donation, they are more likely to contribute more to the organization. Often, these donors increase the value of their donations over time since as they continue to become satisfied with the organization's prospects, they are drawn into giving larger donations.

The final level of the donor pyramid, the major gift donors, is discussed by Gompers et al. (1998): 153-155. These are donors who give substantial amounts of money to the humanitarian organization. These are often geared towards capital-intensive projects such as acquiring land, building, or setting up endowment funds. These large donations often require several donors to pool together to reach the required amount for the project. Raising funds for these projects is often done in phases whereby the organization aims to raise a particular amount in the first phase then uses that to start the project after which the next phase is initiated and so on. For these organizations to build major gift donors, they need to establish a strong track record of impact in the communities or areas they work. They build this through building a strong brand that donors can strongly identify with as well as prioritizing their projects for donors to see the value of the project (Barber, 2012).