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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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Contents

Purpose of the paper

NPOs Definition, Role & Marketing

Marketing Theories for NPOs

NPOs Models

Next Steps

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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
Data collection
Model Conclusion
& Test
Theories

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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
1987),
), a non
non--profit
organization 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-
for-profit by the state.
organizations are willing
Characteristics:
Characteristics: Purpose
to fulfill
Salamon 1999
- Formal
- Private
- Nonprofit Distributing
- Self
Self--governing 3- to influence the direction
- Voluntary of policy in the state, the
- Serve “Public Benefit” for
for--profit sector, or other
NPOs
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NPOs’ Role
 Attract resources (funds, volunteers),
 Establish priorities for social action program,
 Allocate resources to beneficiaries.
beneficiaries.

Donors & Funders Beneficiaries


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

Funds, time and/or energy


FOR

Psychological, social, involve, “relief of guilt”, “the need of self-


self-
esteem”, “concern for humanity”
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NPOs Marketing
1960s
1960s The use of marketing in NPOs began
began,, and is traced
back to Kotler and Levy’s Classic Article
Article..

Voluntary labor,
labor, different legal status
status,, distinctive social
1980s
1980s character (Billis 1993
1993)) and multiple constituents make
NPOs more complex environment for Market Orientation.
Orientation.

Some NPOs have successfully adopted “marketing


1990s
1990s activities”,, such as raising funds using direct mail &
activities”
personnel selling, creating public service announcements
and advertising – (Kotler 1996)
1996)

Salamon (1999)
1999) used the term “Associational Revolution”
End of 1990s
1990s to indicate how marketing activities in NPOs evolve
rapidly and affect its organizational performance.
performance.

Six empirical studies found a significant positive


2000s
2000s relationship between Market Orientation and Performance
of NPOs towards both donors and beneficiaries markets.
markets.
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Social Marketing
 Since first proposed by Kotler & Zaltman in 1971,
1971, the objective
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. Social Marketing is a discipline and a practice;
practice. practice; theories
help understand behavior and practice helps using marketing
tools for this objective
objective..
 Andreasen (1994)
1994) defined SM as “the application of
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  Social Marketing Theory


Social Cognitive Theory
 Social Norms Theory
Next Steps

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NPOs Marketing Theories

Social
Exchange Social
Theory Cognitive Social Norms
Theory Theory

Homans (1950,
1950,
1961),
1961 ), Blau Bandura,
Bandura,
(1964
1964),
), and 1977 Coleman
Emerson 1986 1990
(١٩٧٢)

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Social Exchange Theory

 The Social Exchange Theory was formally advanced in


the late 1950s
1950s and early 1960s
1960s in the work of the
sociologists George Homans (1961)
1961) and Peter Blau
(1964
1964)) and social psychologists John Thibaut and
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
Homans,, 1961)
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.
advantageous. (Blau,
Blau, 1964)
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
Bandura’s
’s social cognitive (learning) theory
(1977
1977,, 1986)
1986) states that individuals learn by
watching and copying the behavior of others
in real life or in mass media
media..

 Behavior is not determined by just intrinsic


factors, or that an individual is a product of
factors,
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-
socio-economic
status

 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)
1990) and others have argued that norms
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 Performance Variables


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First Model – cont’d

“Market Orientation in the Nonprofit Sector”


Padanyi & Gainer 2004

Model 2 – The Relationship Between Client Market Orientation and


Organizational Performance in the Nonprofit Sector

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First Model – cont’d
Model 1:
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
Market--oriented culture &
Market-oriented behavior that are independent, causally-
Market- causally-
related and affect NPOs performance
performance..
 Organizational Performance has three dimensions:
dimensions: “Client
satisfaction”, “Resource Acquisition”
satisfaction”, Acquisition” and “Reputation
among peers”
peers” (Herman 1990)
1990)
 Results affirmed the model relationships.
relationships. It shows MO
applies differently in NPOs than in For-
For-profits, mission &
sustainability have greater impact than resources (ROI).
(ROI).
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First Model – cont’d
Model Evaluation Checklist:

[ √] 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-
Medium-High Contact Services

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Second Model – cont’d
Model 2:
“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:
propositions: Positive relationship of
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 – cont’d
Model Evaluation Checklist:

[ √] 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),
1998), Aaker (1996
1996))

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Third Model – cont’d

“Model of relationship between IMC, Performance and Brand


equity in NPOs” – Duncan & Moriarty (1998),
1998), Aaker (1996
1996))

Integrated Marketing Communication -IMC is:


is:

“attempting to influence the subjective cognition of


consumers;; through strategic management
consumers
marketing communication, conveying consistent
information from the outside to the inside,
enhancing brand imaging and improving
customer relations.
relations.” Schultz (1997
1997))

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Third Model – cont’d

 Brand value
Is a result variable, referring to the four elements of Aaker
(1996
1996)), including brand loyalty, brand popularity,
consciousness quality and brand association

 Internal processing performance


Process control
control:: media variable, referring to the five
elements of Duncan and Moriarty (1997) 1997), including
consistency, interaction, mission, basic organization and
plan evaluation,

 External communication instrument


Technical level
level:: The five elements of Duncan and Moriarty
(1998
1998)) including advertisement, sales promotion, direct
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– cont’d
Model Evaluation Checklist:

[ √] 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?
6/18/2009 29 NPOs Marketing
References
Aaker,, D. A. “Measuring Brand Equity Across Products and Markets”, California Management
Aaker
Review, (1996)
1996).
Bernd Helmig, Marc Jegers, and Irvine Lapsley, "Challenges in Managing Nonprofit
Organizations:: A Research Overview Voluntas", International Journal of Voluntary and
Organizations
Nonprofit Organizations, (June 2004
2004))
Duncan, T. & Moriarty.
Moriarty. S, “A Communication
Communication--Based Marketing Model for Managing
Relationships”,, Journal of Marketing, (1998
Relationships” 1998)).

Hall, P.D, “A historical overview of the private non- (Ed.), The Non
non-profit sector”, in Powell, W.W. (Ed. Non--
profit Sector
Sector:: A Research Handbook, Yale University Press, London (1987
1987)).

J Richard Jones and Philip D Cooper, "The integration of a logistical decision-


decision-making framework
marketing", Academy of Marketing Science Journal (1981
into nonprofit marketing", 1981))

Lefebvre, RC, In PN Bloom & GT Gundlach (Eds. Society, Newbury


(Eds.), Handbook of Marketing and Society,
Park, CA
CA:: Sage Publications (2000
2000)).
Paulette Padanyi & Brenda Gainer, "Market Orientation in the Nonprofit Sector
Sector:: Taking Multiple
Consideration", Journal of Marketing Theory and Practice, (2004
Constituencies into Consideration", 2004)).
Decision, New York
Simon, H. A, The New Science of Management Decision, York:: Harper and Row (1960
1960)).