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A systemic approach to the application

of marketing theory for charitable


organisations
Graeme Lindsay and Alan Murphy
Coventry Business School, Coventry University, Priory St, Coventry CV1 5FB, UK;
Tel: +44 1203 838422; Fax: +44 1203/ 838400; E-mail: bsx060@coventry.ac.uk
Received (in revised form): 7st April, 7996

Graeme Lindsay is a Senior Lecturer in INTRODUCTION


Business Policy at Coventry Business School, It is the duty of academics to develop new
Coventry University, He is currently researching areas of research and to incorporate new
the strategic orientations of funded and concepts, theories and constructs that
charitable organisations and this paper forms extend understanding and knowledge.
the basis of a Ph.D on which he is working. He However, the quality and quantity of
and Alan Murphy are also working on a book research that is being undertaken in areas
entitled ‘Marketing for Public Services’. not normally associated with marketing’s
Alan Murphy is Principal Lecturer in Interna- original remit, the facilitation of profit
tional Business at DeMonffort University. His making within private sector organisa-
interests are in the areas of economic transac- tions, is now being challenged.
tion in the charitable sector and economics of
process plant contract. He has wide experience ‘Decline in incremental value added
in undergraduate and post-graduate teaching in by current research . . . . the
the UK and other countries. trend towards increasing marketing’s
domain to the point when it will
Top:
subsume other fields whose prac-
ABSTRACT titioners might legitimately consider to
Graeme Lindsay
Below:
This paper will examine the contribution be quite distinct from marketing.”
Alan Murphy
which core marketing concepts and ideas can
make to an examination of the nonprojit- Baker supports his own view by citing
making sector, specifically charitable organisa- the authors of the ‘Call for Papers’ for the
tions. Using systemic theory as a framework it Winter Educators’ Conference 1994.*
will be argued that core marketing concepts and
ideas developed in, and specific to, the private ‘The on-going interplay of marketing
sector, cannot be easily transferred to an ex- theory and practice has led to several
amination of the charitable sector. A t the new research areas. As a field our
same time however it will be stressed that agenda now features topics such as
these core concepts and ideas can provide a relationship marketing, strategic al-
useful initial framework of reference against liances, managing brand equity, to-
whichfurther developments can be undertaken. tal quality management, amongst
The paper will propose a new dynamic ap- others.
proach to examining the charitable sector which The emergence of such topics raises
facilitates a more discriminating approach to at least two provocative issues for
the application of marketing constructs. marketing scholars. First, are we
reinventing the wheel? even though the augment marketing’s role within the
general topic headings may be new, NPM sector.
how new are the specific research
questions related to each area? . . .
Second, interest in many of these MARKETING THEORY AS AN
emerging topics extends beyond the ENVIRONMENTAL CONSTRUCT
traditional domain of marketing. Systemic theorists of corporate strategy
Unfortunately, interdisciplinary col- such as Granovetter, Marris and Whit-
laborations in the conduct of research tington, dismiss the development of
in marketing is rare.’2 corporate strategy as being rational, but
instead see it as being embedded in
If the position is taken that some areas what Whittington describes as ‘particular
of investigation cannot usefully be ex- sociological context’.
amined using key marketing concepts,
then the question is raised about the ‘Behaviour that may look irrational or
nature of the contribution which market- inefficient. . . may be perfectly rational
ing can make in these areas. Is it to take and efficient according to the local
part in interdisciplinary projects and to criteria and modus operandi of the par-
provide insights as appropriate, or should ticular social context.”
academics re-evaluate marketing’s basic
concepts? This paper puts forward the Therefore the decision making that oc-
view that marketing techniques have a curs within an organisation is not a
very wide range of applications in many rational cognitive exercise but a product
contexts but in contrast marketing con- of influence exerted by social groups,
cepts cannot be used in all contexts, and interests and resources within the exter-
new concepts may have to be developed nal environment. Any strategy that is
which are context specific. developed is only relevant to the par-
The area chosen for investigation is ticular cultural environment that it has
the nonprofit-making (NPM) sector, been created within, as it is merely a
specifically charitable organisations. The construct of that environment. This then
framework for examining whether or not raises questions about the wholesale
the concept of marketing is relevant to transference of theories and knowledge
this sector is provided by systemic from one culture to another.
theorists, who believe that theories and If it can be shown that nonprofit-
models cannot be transposed from one making organisations operate within a
cultural environment to another. If it can unique external environment and base
be demonstrated that the relationship their actions upon different internal
which NPM organisations enjoy with premises to those in the private sector,
their particular environment is unique then the systemic view that theories and
and distinct from the relationships that models cannot be transposed from one
private sector firms enjoy, then the cultural environment to another, must be
relevance of the concept of marketing, sustainable for the transference of
which derives from a very special set of theoretical constructs developed in the
relationships between private sector firms private sector and transposed onto the
and others, to the NPM sector must be nonprofit-making sector. Consequently,
questioned. Hence the paper will present any theory or model that is used by
a new framework which will clarify and marketers to express relationships within
sectors other than the private sector must being the key element to this difficulty.
be open to question. Graham questions whether this precludes
The nonprofit sector, with its myriad any organisation that is not involved in an
organisational types, raises particular economic transactional relationship, as in
difficulties for marketing. Even the term the public sector, ever truly embracing
‘Nonprofit’ is merely a homogeneous marketing in all its aspects. However,
term that covers a wide variety of those organisations that are not involved
heterogeneous organisations including in an economic transactional relationship,
charities, voluntary organisations and the are involved in a relationship with the
public sector. Such luminaries as Kotler4 providers of their financial resources that
and Drucker’ have written extensively Shapiro’ identifies as ‘Mutually satisfying
on the nonprofit-making sector with- exchanges’. Birks and Southan’ and
out accepting its heterogeneous nature. Lindsay and Murphy’ have expanded
Glancing at standard text on marketing upon this to show that marketing does
(Kotler and Armstrong; Dibb Simkin et not need direct financial transaction
al; Baker, etc.) the limited attention given between providers and consumer to
to the NPM sector and the unsophisti- have a wide ranging and inclusive role
cated approach is evidence of the reluc- within organisations. Much of this role
tance of academics to deal with each being developed from the philosophical
unique organisational type in a similarly perspective of marketing is described by
unique way. This has increased the Roberto” as providing a ‘relentless and
perception that marketing theory has a synergistic’ influence upon corporate be-
simplistic view of NPM organisations haviour in the nonprofit-making sector.
that consequently diminishes its ability to
produce purposive and relevant contribu-
tions to the development of both market- MARKETING AS A STRATEGIC
ing strategy and corporate strategy in this RESPONSE
sector. The variety of corporate strategies that
That is not to say that valid contribu- develops within a particular sector is a
tions have not been made by marketing function of the individualistic response
to the NPM sector. The use of tools that an organisation produces to its
and techniques such as segmentation external environment. These individual
and promotion have been invaluable to responses are the manifestation of the
charities involved in fundraising ac- corporate vision, with marketing theories
tivities. The concerns raised are relevant and models forming the basis and
to the wider, issue of the wholesale parameters for its expression. In simplis-
transference of marketing theory to tic terms this strategic response is
organisations outside the private sector. expressed through the co-ordination
Graham6investigating the appropriate- and achievement of resource attraction
ness of marketing theory to the public and resource allocation. Irrespective of
sector finds that the unsophisticated the environmental influences or intra-
analysis of the sector by marketing organisational strategic considerations,
academics makes the transposition of these two elements have to be satisfied for
marketing and theory difficult. He em- corporate objectives to be achieved.
phasises the lack of economic exchange However the external dynamics and the
that characterises the private sector, and internal volition that drive the decision-
stresses the concept of marketing, as making process create the individualis-

L
tic approaches that characterise the Exchange between Figure 1
customer and
development of appropriate corporate marketers
Need
Exchange between
strategies.
The concept of marketing allows an Markets
n Wants
customer and
marketers
understanding of the co-ordination of
resource attraction and resource alloca-
tion in the private sector through Transictions Demands
‘creating and exchanging products and
value with other^'.^ The simple model
\ /
J
Products
presented in figure 1 illustrates the broad
nature of the exchange.
Exchange -
This model clearly identifies the
relationship between resource attraction
and resource allocation based on the
economic transactional relationship be- identify as being social constructs and
tween customer and marketers. It shows culturally specific, theoretical constructs
how economic transaction creates a based on this transactional model, such as
system that is able to communicate the the concept of marketing, must be
success of marketing strategies and recognised as being similarly environ-
implementation. The self regulatory mentally specific. Inevitably preclusion of
nature of this system allows an under- the transference of corporate strategy
standing of the benefits obtained from the between different cultures must also
successful implementation of the concept apply to the transposition of marketing
of marketing. concepts between different economic
However this model is unrepresenta- sub-s ystems.
tive of the relationships within which a Although the concept of marketing
charity develops its corporate strategy. as a’ purposive and indicative construct
As a funded organisation a charity, such does not assist the development of cor-
as the NSPCC, is unable to attract porate strategy within other sectors it
resources via direct economic transaction does provide a framework for examin-
with its customers. The model, presented ing and explaining the development of
in figure 2 by Lindsay and Murphy’ organisational responses to their exter-
of the NSPCC, is a more accurate nal environment and the theoretical basis
representation of the relationships that for the importance of satisfying con-
facilitate resource attraction and resource
allocation.
This example is typical of charities Figure 2
whose beneficiaries are inactive economi- Resource
cally and who rely upon funding from relationships
’donors. It shows that the economic orientation orientation
context within which these charities
operate, bears no resemblance to that
in which a private sector organisa-
tion operates. Even the identification of
a charity’s ‘customer’ is not obtained
through a transactional relationship. As
Resource
attraction
I 1 Resource
allocation
with corporate strategies that systemics
sumer wants. The concept of market- willingness of those charities to make
ing shows the dynamic nature of private strategic responses to a changing external
sector organisations and recognises that environment. In this way their actions
they will proceed through various prior closely mirror those of private sector
stages before arriving at the situation firms that continually make strategic
where the concept of marketing is firmly adjustments. However, a charity has a
embedded. Three stages in which the more difficult time of it. This is
firms are product orientated, production because a charity provides a service to
orientated and selling orientated mark a beneficiaries that may have to change
progression in the firms’ learning about over time but also has to manage
their customers. As they learn about their its fundraising activities by establish-
customers, so they are able to raise more ing relationships with various donor
income and move towards achieving their groups.
desired objectives. These two related, though functionally
In the private sector fundraising is in- separate, activities undertaken by many
trinsically tied to the satisfaction of con- charities make it necessary to move out
sumer wants. The strategy of the private from under the burden of the ‘marketing
sector firms can thus be encapsulated by concept’. A new framework is clearly
the term ‘market responsiveness’. Market necessary to explain the long-term na-
responsiveness is at the root of the con- ture of the relationship between these
cept of marketing. In the charitable sector two elements and how it may evolve.
there is a beneficiary of the charity’s In traditional private sector marketing
services and someone who pays for the it has been recognised that historically
service; but they are very often not one many companies passed through stages
and the same person. of development in the relationship with
Thus the charity has multiple consumer their customers, which are universally
groups that it must identify before it can described as production orientated, sell-
begin to be market or consumer respon- ing orientated and marketing orientated
sive. stages. In the same way the authors are
While the concept of marketing as proposing a development framework for
a construct is inappropriate for all charities, which are presumed to pass
charitable organisations, as an analytic through similar stages of development
tool it is invaluable.” It identifies that described as cause orientated, funding
within a sector, organisations through orientated and need orientated.
their ‘market responsiveness’ can develop
and articulate’ more appropriate orienta-
tions that are progressive steps towards
achieving their desired objectives. It NEW ORIENTATIONS
shows that the corporate objectives and The new orientations that this paper
strategies are dynamic and evolve as proposes are linked by stages in their
expressions of the corporate vision within progression. They can be viewed as a
its environmental context. historical process and as an evolutionary
The recent re-launch of well-known process through which the charity passes,
charities such as the Anti-Apartheid developing the quality of both its service
Movement and the Spastics Society, as provision and fundraising activity as it
Action for Southern Africa and SCOPE does so. This developmental process not
respectively, indicates a fundamental only has implications for strategic im-
plementation but also for the nature of as time passes and the external environ-
corporate objectives. ment changes, so the organisation’s
specific and agreed mission becomes less
Cause orientation clear and is open to reinterpretation by
Historically charities are formed to managers and a few key stakeholders in
achieve a specific purpose, whether it is the charity. At this point the organisation
to send an individual child for surgery in is opened up to those influences to which
the United States, or to alleviate famine. corporate strategy must respond, among
That is to say, they have a specific cause which are likely to be the funders.
or remit at the outset. At this early stage
the specific aims of the charity are clearly Funding orientation
identifiable and can be shared by all those Over time the emergence of other com-
involved in its operation. Thus at this peting charities and a diminution in public
stage there is a widespread consensus and media interest are likely to reduce the
within the charity, which enables it to income flow of the charity. If the initial
function as a coherent whole and cause of the charity’s existence is removed
to develop appropriate objectives and then a shortage of income will result for
strategies. that charity. Thus serious attention has to
Organisations may stay at this stage for be given in the former case to identify-
a long time. This in itself is not a problem ing and securing long-term funding for
since the continuing consensus about cor- charitable activities, and in the latter to
porate objectives is likely to facilitate the identifying a new cause for the organisa-
internal implementation of strategy. At tion, and then identifying and securing
this stage fundraising activity is directly funding to support and maintain it.
related to the cause. The fundraising task Charities which continue to exist, out-
is to raise a sufficient level of funds living their original cause, because of the
to enable the charity’s objectives to be volition of their organisation members
achieved. Due to the novelty of the appeal are still to be found today. Thus the
or the interest aroused by the cause funds Southern Marketing charity in the United
may arrive spontaneously at this time. States was set up to find a cure for
Fundraising thus requires less time and polio, but then turned to raising money
effort. By contrast, and because of con- to investigate birth defects. Organisation
sensus among the charity’s principals, members in such cases, because of a
effort and resources can be allocated to the shared system of values, wish to pass on
resource allocation process, and to the their experience and to develop this or-
provision of solutions to the charity’s ganisational ethos.
specific cause. At this stage the charity is moving into
At this point the charity may be a funding orientation. Whatever the
dissolved, if the specific cause which circumstances, with a funding orientation
brought it into existence is removed. If, the charity moves away from coherent
however, the cause is more complex and and shared objectives and towards an
deeper rooted (such as the alleviation of orientation that emphasises the fundrais-
famine) then the need for a charitable ing element of the corporate strategy.
response is ongoing. Another possibility More sophisticated fundraising activities
is that the charity’s members decide to are developed out of necessity and
prolong the life of their organisation. through learning by the fundraising
Whichever of the two possibilities occurs manager of the charity.
This process of acquiring financial a charismatic leader. The important thing
resources may in turn have an effect on is not so much how the vision is arrived
the implementation of the corporate at, but that it is coherent and shared, and
strategy, to the extent that efficient most importantly directed at satisfy-
resource allocation may no longer be the ing the needs of the target market
primary concern of the organisation. In beneficiaries. This coherence allows the
this way the need to secure financial organisation to develop opinions and
resources may influence resource alloca- beliefs about how needs should be
tion strategies. Thus a charity may begin satisfied.
to agree to carry out a particular service A charity, such as Oxfam, has a
that may not have been in its original particular ideology and consequently a
remit, but a financial carrot dangled in particular strategic perspective on the
front of it encourages it to move into new problem with which it is dealing. This
areas. The Government’s approach to perspective underpins the strategic alloca-
contracting out services relies on charities tion of resources and service provision.
taking this approach to their corporate Once a charity has developed an ideologi-
strategy. cal position that is expressed through
What is clear is that the charity’s resource allocation it is better able to resist
primary purpose at this stage is to raise the temptation to be diverted into areas
funds and this has a great effect on or services that are not part of its vision.
other aspects of the corporate strategy, Similarly it is not drawn into areas that
either directly or indirectly. The charity it does not have the resources to serve,
develops more sophisticated fundraising simply to secure funds. As a consequence
activities or diverts more resources to there is greater coherence in respect
fundraising activities. This strategic ap- to the implementation of the charity’s
proach may be a transitional period for mission.
some charities, for others it may become The management role of fundraising
a way of life, whereby their primary within the corporate strategy of a charity
consideration is fundraising, their secon- is to provide resources for the implemen-
dary consideration how to spend the tation of its vision, not to influence or
funds raised. For those charities in deflect it. By developing a need orienta-
transition however the funding orienta- tion, a charity will not be concerned
tion will change towards an orientation primarily with the attraction of funds,
wherein the charity will be focused upon but rather will see successful fundraising
its purpose in terms of service provision, as a consequence of the implementation
and yet at the same time be aware of the of the corporate objectives, which are
need to incorporate various stakeholders’ based on the identification of needs
views in fundraising strategies. alongside the successful incorporation of
all stakeholders within a relationship
Need Orientation fundraising strategy. Thus fundraising is
This stage of development is where the not a separate activity but part of the
organisation as a whole has developed a wider corporate strategy.
particular vision. This may be due to The framework thus identifies a need
strong leadership or to the development orientation as the most appropriate. It
of a common consciousness shared by all should not be forgotten however that the
stakeholders, which may have developed particular development of any charity
over a period of time or have come from from cause orientation to need orientation
very much depends upon the particular porate strategy. An understanding of a
situation that each charity finds itselfin. It charity’s own fundraising strategies and
is the authors’ contention however that the relationship of these strategies to their
passing through the funding orientation corporate orientation is essential for
stage is an important part of the charity’s the successful co-ordination between
development, much as it was important resource attraction and resource alloca-
for the private sector firm to pass through tion. See figure 3.
the production and selling orientations
stages. Although funding orientation is Cause orientation
not appropriate for a charity in the long As the creation of a charity is a response
term, the desire to develop a strategic by individuals to an event, the volition
approach that secures financial resources that produces this response (whether
in the short term will provide a basis to limited to a small number of people or as
move towards a need orientation as the a national response, such as Band Aid),
basis of a long-term strategy. will produce financial resources. It may
The appropriateness of any organisa- be that the charity a t this embryonic stage
tion’s strategic response within the con- is merely a receptacle for donations.
fines of its corporate vision and external (Oxfam was originally created as a
environment can be identified by its response to the Biafra Crisis.) The
approaches to resource attraction and primary objective at this stage is resource
resource allocation. Due to the disloca- attraction, which will fuel the resource
tion between resource attraction and allocation strategies to be developed. This
resource allocation the co-ordination of narrow remit facilitates consensus among
the two cannot be obtained through the the stakeholders. Fundraising strategies
‘market mechanism’ but only through the do not need to be highly co-ordinated
proactive efforts of management. AS or part of a sophisticated promotional
the different orientation stages require strategy because of the wide-ranging
different strategic responses, then any awareness of the problem and a shared
charity moving towards need orientation consensus about the need to provide
must ensure its response is appropriate funds for the cause. Whether this is
both in the way resources are attracted localised in terms of fundraising for a new
and are allocated. The final section of this church roof or national such as recent
paper will focus on resource attraction AIDS events, the mission and immediate
strategies by identifying and prescribing need is clear. There is little procrastina-
fundraising strategies that are most ap- tion as the moment must be seized, and
propriate for each orientation. resource allocation decisions can be left
until later. At this early stage there is
no division between those involved in
IMPLICATIONS FOR FUNDRAISING resource attraction and resource alloca-
STRATEGIES tion activities. As the identification ofthe
Each orientation of a charity identifies fundraising need is so widely accepted
different approaches to the problems of there is shared responsibility, and every
resource attraction through fundrais- individual is involved in this activity. The
ing activities. The identification of the fundraising activities that are used clearly
fundraising strategies that the charity is identify the simplicity of the corporate
implementing provides a clear indication aims, for instance jumble sales or spon-
of the orientation of the charity’s cor- sored events.
Funding orientation efficiency rather than its success in
After the initial rush of voluntary achieving and managing its ‘market
contributions and enthusiasm dies away responsiveness’.
resource allocation decisions become This emphasis upon the needs of
more important as the charity will be resource attraction activities indicates the
seeking to balance and integrate its susceptibility that the charity will have to
resource attraction and resource alloca- the demands of funders (particularly the
tion strategies. As a consequence the Government). The market responsive-
corporate objectives will become wider, ness of the charity can become not only
since the simplistic corporate objectives dependent on funders, but also subser-
based upon the ease of resource vient to them. This can be exacer-
attraction are no longer appropriate. bated by the charity’s corporate vision
Stakeholders with a variety of respon- being misunderstood by funders, so that
sibilities will appear, and distinctions will the product that they believe they are
exist between those involved with ‘buying’ for the beneficiaries is different
resource allocation and resource attrac- from the product being ‘marketed’ to
tion roles. Systems and procedures will them. This can produce a short-term
be developed as the organisation grows. approach to both resource attraction and
Full-time workers employed by the resource allocation strategies. The con-
charity will start developing spheres sensus that existed between stakeholders
of interest and exerting a role as while ‘cause orientated’ becomes dis-
stakeholders. At this stage fundraising is sipated. Corporate objectives and their
important as the fuel for the achievement hierarchical configuration become con-
of wider corporate strategies. However as fused and a shared vision becomes
a result of circumstances such as a unobtainable. The need for funds can thus
reduction in the importance attached by become so fundamental to the charity that
the public to the cause, or the arrival of its success is measured purely in those
other more pressing and glamorous terms.
causes, the task of attracting funds
becomes more complex. The charity Need orientation
develops distinct resource attraction Need orientation emphasises a strategic
strategies and targets, and the ability to response that is focused on resource al-
achieve these successfully directly affects location. Fundraising activities are seen as
the charity’s responsiveness to its con- subservient to servicing of the identified
sumers. beneficiary of the charity’s activities. The
Charities will develop promotional stakeholders of the charity will have a
activities that segment their proposed shared vision, particularly in terms of
donor market. They will endeavour identification of need and the solution to
to commit donors to planned giving it. Therefore those involved in the cor-
through such instruments as cause-related porate governance of the charity will be
marketing or Deeds of Covenant. Adver- agreed upon the charity’s mission. This
tising will emphasise the problem that the may be based on a variety of shared values
charity is up against rather than the and beliefs, whether ideological ones such
solution, and may even use highly as those held at Oxfam or religious ones
emotive imagery that pushes ‘the right such as those of World Vision. Fundrais-
button’. Literature about the charity will ing will emphasise longer term commit-
emphasise its administrative and financial ment on the part of funders and a greater
Figure 3
Primary
corporate Market response Orientation of
objectives Funding strategy strategy fundraising
strategy
Cause Solution Short-term
orientated Event-based Under-developed

Sophisticated
Funding Survival Segmentation Reactive
orientated CRM Secondary
Brand-based

Need Vision-led Relationship Primary


orientated Market-led Fundraising Proactive
Product-based Indicative of
vision

flow of information from the charity. NPM organisations. Systemic theory was
Wider involvement in corporate gover- used to show that new concepts may have
nance may be available in exchange for to be developed to explain new contexts,
commitment by funders due in part to such as those within which NPM or-
the greater consensus developed among ganisations operate. Thus a revised con-
stakeholders. Promotion of the charity cept or framework was required within
will emphasise its vision and its view of which resource attraction and resource
problem solving. allocation could be examined and ex-
The success of the charity will plained.
be measured not in terms of To enable such an examination and to
resource attraction, but through ‘market provide such an explanation the authors
response’. The charity will be able to have presented a basic framework, which
protect its shared mission from the has as its objectives the reconciliation of
incursions of specific funders, thus these two elements. The framework
making it orientated towards need, not presented is tentative and requires further
funding. This need will be responded to refinement, but does enable the relation-
only if it is within the charity’s mission ship between resource attraction and
and the stakeholders consider the charity resource allocation to be considered from
has the resources to make the most a new perspective, and does highlight the
appropriate response, rather than a importance for charities of effecting a
response that is either inappropriate or reconciliation between these two ac-
beyond the corporate objectives. tivities, by the identification of a clear and
coherent vision.

CONCLUSION
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