Arab Academy For Science and Technology Graduate School of Business

DBA Program

NPOs Marketing
Theories & Models
Presented by:

Abir El Anwar

Contents
Purpose of the paper NPOs History, Definition & Role Marketing Theories for NPOs NPOs Models Next Steps

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NPOs Marketing

Contents
Purpose of the paper
NPOs Definition, Role & Marketing Marketing Theories for NPOs NPOs Models Next Steps

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NPOs Marketing

Purpose of the Paper

The current research paper aims at investigating NPOs marketing activities and theories to test one of the models developed in this arena. arena.
Definition

Model
Theories

Data collection

& Test

Conclusion

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Contents
Purpose of the paper
NPOs Definition, Role & Marketing

Marketing Theories for NPOs NPOs Models Next Steps

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NPOs Definition
According to Hall (1987), a non-profit 1987), nonorganization is defined as a body of individuals who associate for any of three purposes:
2- to perform public tasks 1- To perform public for which there is a tasks that have been demand that neither the delegated to them state nor for-profit forby the state. organizations are willing Purpose to fulfill

Characteristics: Characteristics: Salamon 1999
-

Formal Private Nonprofit Distributing Self-governing SelfVoluntary Serve “Public Benefit”
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3- to influence the direction of policy in the state, the for-profit sector, or other forNPOs
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NPOs’ Role
Attract resources (funds, volunteers), Establish priorities for social action program, Allocate resources to beneficiaries. beneficiaries.

Donors & Funders
Marketing’s role is to create and maintain “satisfying exchanges”
Kotler and Andreasen (1991) - exchange theory

Beneficiaries

Funds, time and/or energy
FOR

Psychological, social, involve, “relief of guilt”, “the need of selfselfesteem”, “concern for humanity”
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NPOs Marketing
1960s 1960s The use of marketing in NPOs began, and is traced began, back to Kotler and Levy’s Classic Article. Article.
Voluntary labor, different legal status, distinctive social labor, status, character (Billis 1993) and multiple constituents make 1993) NPOs more complex environment for Market Orientation. Orientation. Some NPOs have successfully adopted “marketing activities”, activities”, such as raising funds using direct mail & personnel selling, creating public service announcements and advertising – (Kotler 1996) 1996) Salamon (1999) used the term “Associational Revolution” 1999) to indicate how marketing activities in NPOs evolve rapidly and affect its organizational performance. performance. Six empirical studies found a significant positive relationship between Market Orientation and Performance of NPOs towards both donors and beneficiaries markets. markets.
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1980s 1980s

1990s 1990s

End of 1990s 1990s

2000s 2000s

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Social Marketing
Since first proposed by Kotler & Zaltman in 1971, the objective 1971, of Social Marketing is “Change Behavior” to influence the acceptability of social ideas. ideas. Economics, Economics, sociology and psychology contributed to initial social marketing theories where behavioral features dominated their assumptions. assumptions. Recently, marketers argued to distinguish between theory and practice. practice. Social Marketing is a discipline and a practice; theories practice; help understand behavior and practice helps using marketing tools for this objective. objective. Andreasen (1994) defined SM as “the application of 1994) commercial marketing technologies to the analysis, planning, execution and evaluation of programs designed to influence the voluntary behavior of target audiences in order to improve their personal welfare and that of society of which they are a part “
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Contents
Purpose of the paper NPOs Definition, Role & Marketing Marketing Theories for NPOs NPOs Models Next Steps
Social Marketing Theory Social Cognitive Theory Social Norms Theory

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NPOs Marketing Theories
Social Exchange Theory

Social Cognitive Theory

Social Norms Theory

Homans (1950, 1950, 1961), 1961), Blau (1964), and 1964), Emerson (١٩٧٢)

Bandura, Bandura, 1977 1986

Coleman 1990

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Social Exchange Theory

The Social Exchange Theory was formally advanced in the late 1950s and early 1960s in the work of the 1950s 1960s sociologists George Homans (1961) and Peter Blau 1961) (1964) and social psychologists John Thibaut and 1964) Harold Kelley (1959) 1959) Exchange theory is based on the premise that human behavior or social interaction is an exchange of activity, tangible and intangible, particularly of rewards and costs (Homans, 1961). Homans, 1961) The basic assumption of exchange theory is that individuals establish and continue social relations on the basis of their expectations that such relations will be mutually advantageous. (Blau, 1964) advantageous. Blau, 1964)
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Social Exchange Theory
(Cont’d)

The model that emerges to explain social exchange theory is comprised of five central assumptions: assumptions:

1. Behavior is predicated upon the notion of rationality. rationality. 2. The relationship is based on reciprocation. reciprocation. 3. Social exchange is based on a justice principle. principle. 4. Individuals will seek to maximize their gains and
minimize their costs in the exchange relation. relation.

5. Individuals participate in a relationship out of a
sense of mutual benefit rather than coercion. coercion.
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Social Cognitive Theory

Bandura’s Bandura’s social cognitive (learning) theory (1977, 1986) states that individuals learn by 1977, 1986) watching and copying the behavior of others in real life or in mass media. media. Behavior is not determined by just intrinsic factors, factors, or that an individual is a product of their environment, but that individuals have influence on what they do. do.

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Social Cognitive Theory
(Cont’d)

“Reciprocal Determinism”: Determinism”: three factors operate as interacting determinants of each other Personal: Personal: cognitive, affective and biological Behavioral : control own patterns of behavior Environmental: Environmental: economic conditions and socio-economic sociostatus Four main processes are among those that govern observational learning: learning: Attention: Attention: gaining and maintaining attention Retention: Retention: being remembered Production: Production: reproducing the observed behavior Motivation: Motivation: being stimulated to produce the behavior
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Social Norms Theory

Informal social norms with sanctions can be explained, in principle, by a rational choice approach. approach. Coleman (1990) and others have argued that norms 1990) serve to improve the efficiency or the aggregate welfare of the norm beneficiaries. beneficiaries. Repeated interactions among norm beneficiaries help to enforce norms of cooperation. cooperation. Coleman has argued that the existence of a closed network of social relations is important for the realization of norms. norms.

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Contents
Purpose of the paper NPOs Definition, Role & Marketing Marketing Theories for NPOs NPOs Models
1. Market Orientation & Performance

Next Steps

2. Customer Citizenship Behavior 3. Impact of IMC on Performance & Brand Equity

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First Model
“Market Orientation in the Nonprofit Sector” Padanyi & Gainer 2004 Model 1 – The Relationship Between Government Funder Orientation
and Organizational Performance in the Nonprofit Sector

Market Orientation Scales
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Performance Variables
NPOs Marketing

First Model –
“Market Orientation in the Nonprofit Sector” Padanyi & Gainer 2004

cont’d

Model 2 – The Relationship Between Client Market Orientation and
Organizational Performance in the Nonprofit Sector

Market Orientation Scales
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Performance Variables
NPOs Marketing

First Model –
Model 1:

cont’d

Market Orientation & Organizational Performance

The model focuses on two constituent groups of NPOs: NPOs: Client/Customers (resource allocation) and Government Funders (resource provision) Market Orientation is involving Market-oriented culture & MarketMarketMarket-oriented behavior that are independent, causallycausallyrelated and affect NPOs performance. performance. Organizational Performance has three dimensions: “Client dimensions: satisfaction”, satisfaction”, “Resource Acquisition” and “Reputation Acquisition” among peers” (Herman 1990) peers” 1990) Results affirmed the model relationships. It shows MO relationships. applies differently in NPOs than in For-profits, mission & Forsustainability have greater impact than resources (ROI). (ROI).
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First Model –
Model Evaluation Checklist: [ [ [ [ [ [ [ [ [ [ [ [ [

cont’d

√] Are concepts and propositions specified in the model? √] Are the concepts relevant to solving the problem at hand? √] Are the principle components of the concept clearly defined?
x] Is there consensus as to which concepts are relevant in explaining the problem? √] Are the concepts properly defined and labeled? √] Is the concept specific enough to be operationalized reliably and with validity? √] Are assumptions made in the model clear? √] Are the limitations of the model stated? x] Does the model predict? √] Does the model explain? x] Are normative guidelines given for model use? √] Can the model be readily quantified? √] Are the outcomes of the model supported by common sense?
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Second Model
“Customer Citizenship Behavior in Services Organizations: Organizations: A social Exchange Model” – Patterson, Razzaque & Chong Shee Model 2 – Research Model of CCB for Medium-High Contact Services Medium-

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Second Model –
Model 2:

cont’d

“Customer Citizenship Behavior in Services Organizations: Organizations: A social Exchange Model”

CCB defined as representing individual discretionary behavior that is not directly or explicitly recognized by the formal reward system but promotes organization’s functioning. functioning. A theoretical support for a link between Customer satisfaction and CCB is provided by Social Exchange Theory . The model suggests 4 propositions: Positive relationship of propositions: AC, Personality and Perceived Organizational Justice with CCB with a mediating variable “Customer Loyalty” and “time pressure as moderating variable. variable. The model fulfills a gap in Marketing Literature and calls for empirical tests in various NPOs services organizations. organizations.
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Second Model –
Model Evaluation Checklist: [ [ [ [ [ [ [ [ [ [ [ [ [

cont’d

√] Are concepts and propositions specified in the model? √] Are the concepts relevant to solving the problem at hand? √] Are the principle components of the concept clearly defined?
x] Is there consensus as to which concepts are relevant in explaining the problem? √] Are the concepts properly defined and labeled? x] Is the concept specific enough to be operationalized reliably and with validity? √] Are assumptions made in the model clear? √] Are the limitations of the model stated? x] Does the model predict? √] Does the model explain? x] Are normative guidelines given for model use? ] Can the model be readily quantified? ] Are the outcomes of the model supported by common sense?
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Third Model
“Model of relationship between IMC, Performance and Brand equity in NPOs” – Duncan & Moriarty (1998), Aaker (1996) 1998), 1996)

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Third Model –

cont’d

“Model of relationship between IMC, Performance and Brand equity in NPOs” – Duncan & Moriarty (1998), Aaker (1996) 1998), 1996)

Integrated Marketing Communication -IMC is: is: “attempting to influence the subjective cognition of consumers; consumers; through strategic management marketing communication, conveying consistent information from the outside to the inside, enhancing brand imaging and improving customer relations.” Schultz (1997) relations. 1997)

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Third Model –

cont’d

Brand value Is a result variable, referring to the four elements of Aaker (1996), including brand loyalty, brand popularity, 1996) consciousness quality and brand association Internal processing performance Process control: media variable, referring to the five control: elements of Duncan and Moriarty (1997), including 1997) consistency, interaction, mission, basic organization and plan evaluation, External communication instrument Technical level: The five elements of Duncan and Moriarty level: (1998) including advertisement, sales promotion, direct 1998) sale and public relations,
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Third Model –

cont’d

Findings of using IMC model to evaluate the impacts of brand operation on the performance NPOs
IMC poses a significant positive impact to both “technical level” and performance of “process control” Better effects inside the NPO can be obtained if the communication instruments of IMC are integrated more effectively. effectively. There is a significant positive impact of IMC “technical level” on the “brand equity” Communication instruments create brand values for NPO only via internal integration of the organization. organization. “Process control” has a significant impact on “brand equity”, internal IMC integration conduces to the brand construction
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Third Model– Model–
Model Evaluation Checklist: [ [ [ [ [ [ [ [ [ [ [ [ [

cont’d

√] Are concepts and propositions specified in the model? √] Are the concepts relevant to solving the problem at hand? √] Are the principle components of the concept clearly defined?
x] Is there consensus as to which concepts are relevant in explaining the problem? √] Are the concepts properly defined and labeled? √] Is the concept specific enough to be operationalized reliably and with validity? ] Are assumptions made in the model clear? √] Are the limitations of the model stated? x] Does the model predict? √] Does the model explain? x] Are normative guidelines given for model use? √] Can the model be readily quantified? √] Are the outcomes of the model supported by common sense?
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References
Aaker, Aaker, D. A. “Measuring Brand Equity Across Products and Markets”, California Management Review, (1996). 1996) Bernd Helmig, Marc Jegers, and Irvine Lapsley, "Challenges in Managing Nonprofit Organizations: Organizations: A Research Overview Voluntas", International Journal of Voluntary and Nonprofit Organizations, (June 2004) 2004) Duncan, T. & Moriarty. S, “A Communication-Based Marketing Model for Managing Moriarty. CommunicationRelationships”, Relationships”, Journal of Marketing, (1998). 1998) Hall, P.D, “A historical overview of the private non-profit sector”, in Powell, W.W. (Ed.), The Nonnon(Ed. Nonprofit Sector: A Research Handbook, Yale University Press, London (1987). Sector: 1987) J Richard Jones and Philip D Cooper, "The integration of a logistical decision-making framework decisioninto nonprofit marketing", Academy of Marketing Science Journal (1981) marketing", 1981) Lefebvre, RC, In PN Bloom & GT Gundlach (Eds.), Handbook of Marketing and Society, Newbury (Eds. Society, Park, CA: Sage Publications (2000). CA: 2000) Paulette Padanyi & Brenda Gainer, "Market Orientation in the Nonprofit Sector: Taking Multiple Sector: Constituencies into Consideration", Journal of Marketing Theory and Practice, (2004). Consideration", 2004) Decision, York: 1960) Simon, H. A, The New Science of Management Decision, New York: Harper and Row (1960).