Not-For-Profit. A Product?

Jason Chuei, a recent MBA graduate from the Melbourne Business School and a Product Management enthusiast and consultant wrote an interesting piece for our blog. This article applies Product Management principles to a product and an industry that may not have considered viewing what they offer through a Product Management lense.

Think of a product, any product, and what do you think of? The vast majority of the population will conjure up thoughts of a new shower gel they are trying, or the recently released iPad, or perhaps a Masterchef promoted food item at Coles, that is, people perceive products to be limited to FMCG, electronics and the like. However, the truth is far from. Products surround us, involve and engage us, run our lives and can even define us.

Take, for example, the not-for-profit organisation. Can a not-for-profit agenda be defined as a product? Upon first glance, we notice that there is an offering of a good or service presented before us, and therefore in its simplest form, yes indeed, it appears to fit the definition. Let us examine this further.

You may be surprised to learn that Australia is home to approximately 700,000 not-for-profit organisations[1]. Considering our relatively small population of 22.4 million, this figure seems astounding. In fact, on a per capita basis, that is one not-for-profit organisation for every 34 people in Australia! So why is it we have only heard of a handful of these organisations?

The Framework

In previous articles, we have clearly set out and established what the purpose of product management is:

Utilising this framework, we examine the two questions posed above

  • Is there such a thing as a not-for-profit product?
  • If so, why are not-for-profit products relatively unknown?

Competition within the not-for-profit industry is an interesting issue. In contrast to many in the for-profit world, no not-for-profit organisation wishes to see the demise of another; all are attempting to address an underlying social problem and exist for the sole purpose of doing some social good. Yet all are competing for the donor dollar, and therefore must adhere to the rules of engagement in a competitive environment.

Defining the Product

With any new product development, first principles should be applied. The product manager must perform analyses as part of the due diligence to determine whether the proposed product is viable within a certain market. The marketing research establishes segments of consumers and what each of these groups needs or desires; which segment is the most attractive in terms of size, growth, and financial and brand gains; and subsequently, determines the positioning of the product as well as its value proposition.

A not-for-profit good or service may take many a form, from free meals to the homeless or recuperation facilities for cancer patients, to sporting facilities for special needs children or neutering programs for stray animals. Products must solve a consumer need or fulfil a consumer desire. What problem or gap does the not-for-profit solve or fill respectively? Donors do not gain anything directly themselves, but an underlying motivation exists in each consumer. These reasons are wide and varied, and can be as simple as the “feel good” factor, or as deep as a personal connection to the cause (e.g. a family member suffering from a certain disease), or as meaningful as wanting to make the world greener for generations to come. Comprehension of these motivations is essential in defining the product offering.

Developing the Product

Once the problem or gap has been defined and the appropriate segment selected, development flows accordingly and begins with a positioning statement that subsequently underlies the entire marketing strategy. In the not-for-profit sector, the population as a whole recognises the products as being important, but not all will donate to such causes, and similarly, not all features of the products will resonate with all consumers (donors). Thus, the segmentation-targeting-positioning process is essential in the development of products, including those produced by not-for-profit organisations; however, this is where they often stumble, at the first hurdle. Organisations all too often attempt to capture the whole market by seeking donations from the entire population, and not performing basic analyses in order to efficiently target the donor most likely to donate. Insufficient resources, in terms of capital and managerial talent, creates generic marketing tactics that are catered for no-one in particular and simply hopes to capture the attention of, effectively, a passerby. Thus, these organisations are relatively unknown from the outset. They must differentiate themselves and develop specific offerings, like any other organisation, in order to address a need create value, create and maintain a sustainable competitive advantage, and to deliver on financial targets.

Some organisations do get it right. Take Singapore Airlines association with Doctors Without Borders (aka Medecins Sans Frontières) as an example. Carefully thought out segmentation has occurred here with international travellers, who have an awareness and appreciation of the fact that many countries experience substandard healthcare, being the target market.

Deploying and Maintaining the Product

Application of an effective marketing mix and integrated marketing communications strategy is integral to a product’s success. The marketing mix is conveniently encapsulated by the four Ps: Product, Price, Place, and Promotion. The product we have, but the price, channels of distribution, and particular features and attributes (as determined by what consumers need and desire) that will be highlighted, and how they will be highlighted during marketing efforts, are open to reasoned interpretation based upon the marketing research previously performed. This part of the marketing strategy is all too often overlooked as many not-for-profits lack the resources to undertake such research, and lack the capability to formulate strategies.

With respect to a not-for-profit offering, the price may be a suggested donation (e.g. The ‘Dollar a Day’ campaign to fight hunger in Africa), or alternatively, if the organisation is a social enterprise, a fee for subsided services. This requires careful thought and the price must remain competitive with similar offerings.

Place may be viewed as channels of distribution as well as promotional channels. The former is often the most difficult to alter in terms of not-for-profit products as the need is usually within a specific field (e.g. breast cancer) or geographic location (e.g. Haiti earthquake), and thus is not subject to interpretation. Promotional channels, on the other hand, are more easily manipulated, and are intertwined with the promotional strategy.

The promotion aspect of the marketing mix is relatively restricted in the not-for-profit context. Television ads and billboards can run into the millions of dollars, and are therefore beyond the reach of many. Hence, this presents new challenges to marketers, where more innovative and novel techniques are required. Much fun is to be had on a low budget, with the internet playing a big part due to its low-cost, high-reach nature. Viral campaigns, guerrilla marketing, stealth marketing and others are all highly applicable. This campaign run by a not-for-profit helping children with autism is a brilliant example of such marketing genius[2]:

Final Thoughts

Hence, we can clearly see that not-for-profit products do exist, and although they have specific nuances, the principles of product management and marketing still apply. Observing the product life cycle, the development and introductory phase is often slower than a traditional product due to capital constraints and access to resources, but utilising creativity and lateral thinking, the not-for-profit product manager is able to accelerate growth rapidly. As products begin to reach the maturity phase, managers and marketers endeavour to prevent the decline phase from occurring, and with a resourceful and fresh mindset already instilled, these product managers are set to continually and progressively prevent decline through innovation.

To summarise, we look back at our initial framework, from which three fundamental questions addressing deeper issues and the next stage of thinking arise:

(i) How do donors determine which organisation is creating more value?

(ii) How do organisations (with limited resources) create and maintain a sustainable competitive advantage?

(iii) How are financial benefits delivered and revenues increased through the organisation’s marketing activities?

[1] Australian Bureau of Statistics (2009). Non-Profit Organisations 2006-07. Reissue. Cat No 8106.0 ABS. Canberra.

[2] Art director: Yosef Khouwes | Copywriter: Bipin Jacob