"Not For Profit Market Orientation"
Australia and New Zealand Third Sector Research Eighth Biennial Conference Navigating New Waters 26-28 November 2006 Adelaide MARKET ORIENTATION IN VICTORIAN NONPROFIT ORGANISATIONS Dr. Jan Brace-Govan Department of Marketing, Faculty of Business and Economics Monash University PO Box 197, Caulfield East, 3145 email@example.com (03) 9903 2491 KEYWORDS: Market Orientation, Nonprofit Marketing, Charity Marketing, Societal Orientation ABSTRACT The third sector is currently the focus of much government and business attention. Increasing research activity has focussed on its management both here and overseas. A consistent theme has been the difficulty of directly transferring the commercial experience onto the third sector context. However, there is little Australian-specific information about marketing in nonprofit organisations. Market orientation refers to the operationalisation of the marketing concept within an organisation. This paper reports on a sample of 401 Victorian nonprofits ranging across each of the 11 defined INCPO classifications: Culture and Recreation; Education and Research; Health; social Services; Environment; Development and Housing; Law, Advocacy and 1 Politics; Philanthropic Intermediaries and Volunteerism Promotion; International Activities; Religion; and Business, Professional Associations and Unions. Whether or not a market orientation is relevant to nonprofit organisations is a question raised in the context of these results. INTRODUCTION Over the last two decades the third sector has undergone some significant changes, some of these under political pressure from governments (Vromen 2005) and some in response to international and domestic influences (Lyons 2001, 2002). There is increasing attention being paid to the nonprofit sector (ABS 2000; Treasury 2001; DVC 2004; Salomon et al. 2004) including some considerations of measuring its impact (HBR 1999; Flynn and Hodgkinson 2001; Conroy, D. K. 2005). Marketing however, has not been especially visible in these commentaries and so an overall aim of the larger project from which this report is drawn was to explore the presence of marketing in the Third Sector in one state of Australia. At the same time marketing communications has a long history of being partnered with nonprofit organizations. In 1952 Wiebe famously asked ‘Why can’t you sell brotherhood and rational thinking like you sell soap?’ (p679). Essentially he made a case for using television to communicate ‘social objectives’ with prospective audiences in the same manner as radio, which is a somewhat quaint notion now, but for its time this explored the use of cutting edge technology in the service of good causes. His answer was that you could so long as the ‘essential conditions for effective merchandising exist’ and that there was a ‘reasonable amount of receptivity among audience members’ (1952: 679). The aim of this particular paper is to re-examine what this kind of approach might mean for nonprofit organisations today and, to assess the current role of marketing. After a review of marketing’s place in nonprofits, the particular concept of ‘market orientation’ is presented. There are well- 2 established and widely discussed scales used to measure market orientation and the rationale for the selection of one of these scales is given. Finally, an exploration of some initial results calls into question the concept of market orientation in nonprofit organisations and, in line with some contemporary views of marketing, suggests further investigations. MARKETING Despite the apparent early beginning, marketing has often had an awkward partnership in the third sector. This has been attributed partly to the operational differences between the nonprofit and for profit organizations (Rothschild 1979) and also in part to the different culture of nonprofit organizations (Andreasen and Kotler 2003). Recent developments to one side (AMA 2004), marketing in the business sector has long been underpinned by the 4Ps. This formulation of Product, Price, Place and Promotion is premised on a concept of exchange between at least two (rational) parties. The difficulty of applying the 4Ps directly onto many of the third sector’s activities has led to six distinctions of nonprofit operations being identified: • • • • • • The intangibility of non-business products The non-monetary “price” of purchase The extreme lack of frequency of purchase The lack of behavioural reinforcers The extreme level of involvement varying from very low to very high and The complexity of the nonprofit environment (Rothschild 1999) Indeed, discussion in marketing has raised questions about the relevance of marketing concepts to sections of the nonprofit sector (Butler 2000; Butler and Collins 1995). Others have commented on the push from the public sector for ‘new managerialism’ resulting in a 3 demand for customer focus and evaluation (Walsh 1994; Laing 2003; Vromen 2005), with this being more evident in some sections of the third sector than others i.e. health and education (Day, Reynolds and Lancaster 1998; Ewing and Caruana 1999). Moreover, even though more recent definitions of marketing focus on value (AMA 2004), there continue to be assertions that there are cultural issues in a nonprofit setting around the notion of pursuing a customer orientation (Andreasen and Kotler 2003; Sargeant 2005: Wymer, Knowles and Gomes 2006). Marketing can be seen as a philosophy, a process, a culture, a set of tools or a management process (Sargeant 2005) and herein lies one of the problems as each of these views of marketing has a different impact operationally. The erroneous or limited view of associating marketing with either advertising or selling leads to some in nonprofits to hold quite negative attitudes towards marketing deeming it unnecessary, or invasive, or immoral, or stifling (Sargeant 2005: 31). At the same time there are some important differences between nonprofits and the business sector: nonprofits have multiple constituencies; non-financial objectives and; a focus on service. Nonprofits are also susceptible to non-market pressures, such as government policy, often face intense public scrutiny, for example through quality reviews, and can have irresolvable tensions between their mission and the concept of customer satisfaction (Sargeant 2005). In sum, it might appear that marketing has either no role or only a limited role in nonprofit organizations. However, it is clear that most of the large, corporate sized nonprofit organizations are making very good use of marketing so there must be some resolution of these issues available and potentially the resistance to marketing is exaggerated. 4 Separating the managerial or ‘philosophy’ and culture perspectives on marketing from the practical tools and processes of marketing allows a view of a market orientation to be defined differently to a marketing orientation. A marketing orientation is the utilisation of marketing as a business function. A market orientation is an integrated focus from the whole organisation on the needs and wants of the organisation’s market, or customer groups. This later stance has far reaching consequences in terms of, not only the activities of the organisation, but also in terms of its performance, which market orientation proponents suggest would be far superior (Bennett 1998: 32). Market orientation has been shown to lead to increased profitability for business sector and to be especially successful in service orientated and nonprofit organizations (Cano, Carillat and Jaramillo 2004). Although the effectiveness of a market orientation has been asserted for the nonprofit sector (Andreasen and Kotler 2003; Wymer et al. 2006), there is quite limited information available about marketing in Australian nonprofits generally. Studies tend to focus on single sectors such as education (Caruana, Ramaseshan, and Ewing 1998) or libraries (Harrison and Shaw 2004). This study challenges the notion that marketing is absent from nonprofits and redresses the lack of a general picture of the uptake of marketing in Australian nonprofits. The next section will examine the concept of market orientation in more detail which will be followed by a description of the study and the presentation of some initial results. However, the discussion closes using a more critical perspective to suggest future directions. MARKET ORIENTATION Market orientation holds a prominent place in the marketing literature and is central to marketing relying as it does on detailed, shared knowledge of the people that are the beneficiaries of an organisation, either as customers, clients, participants, patrons or patients. While there are at least five views on market orientation in the literature (Lafferty and Hult 5 2001:94), this paper will focus on the first two streams because they are the most widely utilised and discussed: the behavioural perspective (Kohli and Jaworski 1990) and the cultural perspective (Narver and Slater 1990). Although behaviour is inferred in the Narver and Slater (1990) model, they assert that organisational culture is the key to having a market orientation. Without the culture the behaviour will not be present due to lack of reinforcement (Narver and Slater 1990; Lafferty and Hult 2001; Matsuno, Mentzer and Rentz 2005). For Narver and Slater (1990) market orientation comprised an orientation to the customer, an orientation to competitors and inter-functional co-ordination. A detailed, deep understanding of customers ensured an organisations’ ability to tailor its offerings to the customers. While a sound knowledge of their competitors ensured that the organisation could compete successfully long term. Cross functional co-ordination meant that every aspect of the business could focus on providing customer value. Essentially these three elements expressed a cultural commitment to a deep focus on superior customer value. However, customer value is the basis of profitability and hence the purpose of market orientation, and so, this is also the intended outcome of the Kohli and Jaworski (1990) model. The difference here, that is also the reason for much heated debate (Matsuno et al. 2005), is Kohli and Jaworski’s focus on behaviour, or business process. The difference is best drawn out by Lafferty and Hult when they call this model the ‘market intelligence perspective’ (2001: 97). By market intelligence they mean information from monitoring competitors, the wider environment and gathering information about customers both formally and informally. The second and very important step is to ensure that this market intelligence is shared throughout the organisation and finally that it is used as a basis for action (Kohli and Jaworski 1990; Lafferty and Hult 2001; Matsuno et al. 2005). 6 Setting aside the question of which is the antecedent, behaviour or culture, there seems to be little to choose from across these two models and, although the separation is generally acknowledged, many discuss the two in tandem in order to describe market orientation as a concept (Bennet 1998; Siu and Wilson 1998; Homberg and Pflesser 2000; Gonzalez, Vijande and Casielles 2002; Vazquez, Alvarez and Santos 2002; Matsuno et al. 2005; Mavondo, Chimhanzi and Stewart 2005). Some synthesise the two to devise a further model (Ruekert 1992; Lafferty and Hult 2001) and others defend the use of a combined model for their research (Gonzalez et al. 2002; Vazquez et al. 2002). While both models offer a scale by which to measure market orientation MARKOR and MKTOR (Farrell and Oczkowski 1997), it was the MARKOR scale developed by Kohli and Jaworski that was used by researchers in the U.K. to survey the nonprofit sector (Balabanis, Stables and Phillips 1997; Bennett 1998). Balabanis et al. (1997: 586) defend the use of Kohli and Jaworski’s MARKOR scale to measure market orientation by arguing that it focuses on the organisation’s market and “emphasizes specific inter-functional co-ordination operations based on the collected intelligence and focuses on activities related to intelligence rather than its effects”. Both Bennett (1998) and Balabanis et al (1997) note the anti-marketing stance adopted by some charities and the intensely competitive environment for nonprofits that has emerged over the 1990s. This suggests an ambivalent state for some nonprofits whereby a market orientation might not be supported by the organisation’s workers but concurrently might be the best response to challenging times. For his study Bennett re-words the MARKOR scale to be appropriate for fundraising in nonprofits. The 21 statements that comprise the altered MARKOR scale are reproduced in appendix 1. Bennett (1998: 33) selects small and medium sized charities as his focus arguing that “a handful of large charities which – through skillful marketing – have attracted donations possibly to the detriment of smaller charitable 7 organisations”. Smaller organisations, he suggests, are less likely to have formal procedures, likely to have fewer marketing staff and fewer resources but in these competitive times be in high need of a market orientation (Bennett 1998: 35). Balabanis et al (1997: 588-589) examined the top 200 charities in the UK citing “compassion fatigue”, declining incomes and high profile disaster- rescue projects, in addition to the nonprofit environment itself, as factors that could undermine a market orientation. Both studies found the existence of market orientation with some limitations and provisos. In sum then, marketing seems to be in an ambivalent position in nonprofit organisations but a case has been made in other parts of the world to review the marketing orientation of nonprofits using a scale that focusses on business process rather than organisational culture. In Australia, in spite of the progress made in managerial research in nonprofits, (Lyons 2001; Giving Australia 2005), there is a remarkable paucity of information about marketing. The wider aim of this study was to address that lack by taking an exploratory look at market orientation in the nonprofit environment in Victoria. The intention was to identify further useful avenues to investigate with the view that the Australian experience cannot be directly interpreted from the experience of Europe or America. Therefore a broad, information gathering study was designed and is described next. This leads to some questions about marketing and the measurement of market orientation and these are raised in the discussion. METHOD One underlying assumption that could be extrapolated from the literature was that in order for the business processes to be market orientated it would not be absolutely necessary to use the word “marketing”. In other words, an organisation that was focussed on knowing a great deal about its operational environment and its clients or stakeholders and shared this information 8 widely, could use an alternative vocabulary. The MARKOR scale becomes germane under these conditions because of its focus on activities and processes as opposed to overt culture, although both Balabanis et al and Bennett re-word the MARKOR (Kohli and Jaworski 1990; Jaworski and Kohli 1993) scale to make this more appropriate to the charities they investigated. Bennett (1998) published the tested and re-worded MARKOR scale that he utilised (see appendix 1). As noted earlier, the nonprofit environment is particularly complex with multiple stakeholders and customer groups for the marketing function to consider. In order that this study had some comparison point it was decided to continue the overseas focus on the donor market (Balabanis et al. 1997; Bennett 1998). This singular focus has the disadvantage of being quite narrow but has the advantages of streamlining the survey and not fatiguing respondents (Burns and Bush 2006). This latter point was an important consideration because the survey was to be conducted by CATI (computer assisted telephone interviews) and it was crucial that the data gathering process was short, focussed but still valuable (Malhorta, Hall, Shaw, Oppenheim 2006). A further limitation was the reliance on information recall by the respondent, but the balancing factor was the response rate of the CATI process which is both higher and faster than mail or email (Burns and Bush 2006; Malhorta et al. 2006). One advantage of a telephone survey is that the participants can respond immediately, or set a convenient time for a call back, which increases response rates quite significantly (Burns and Bush 2006; Malhorta et al. 2006). In short, the design required a balance between the amount of information gathered and the number of respondents. The survey administered incorporated a re-worded version of Bennett’s (1998) adaptation of the MARKOR survey. Essentially this changed the wording “charity” to “nonprofit”. The 9 survey also included questions about the size of the organisation by asking about staffing numbers, both paid and volunteer, and about annual turnover. The extent of the marketing function was explored by asking how many marketing staff there were and the allocated budget, as well as the organisation’s principle sources of revenue. Finally, in order to ensure reasonable coverage of most types of nonprofit organisations, a quota sampling method was used (Bush and Burns 2006). All 11 defined sectors of the ICNPO (International Classification of Non-Profit Organisations), which is replicated in ANZSIC (Australian and New Zealand Standardized Industrial Classification) (ABS 2000: Appendix 4, p.39), would be represented: Culture and Recreation; Education and Research; Health; Social Services; Environment; Development and Housing; Law, Advocacy and Politics; Philanthropic Intermediaries and Volunteerism Promotion; International Activities; Religion; and Business, Professional Associations and Unions. The twelfth category, ‘Miscellaneous’, was omitted. Also omitted were organisations with fewer than five staff. The aim was to gather at least 30 respondents from each sector using a combination of industry lists and the telephone directory. Using these criteria it was anticipated that no one sector would dominate the sample and that a range of sizes of organisations would be included. The geographical area covered was Victoria, Australia. While many organisations have operations in multiple Australian states, the decision was taken to concentrate the data gathering on a single state to increase the depth of the picture that this exploratory study could reveal. The survey was conducted over a two week period in October 2004. The telephone interviewer was instructed to ask for the fund raising manager or the person who was responsible for fund raising for the organisation. The results described below begin with a descriptive overview of the sample which is followed by a discussion of some early findings and the avenues this opens for further research. 10 RESULTS In all 401 Victorian nonprofit organisations generously responded to the survey and all 11 sectors are represented. However, as table 1 shows, organizations from the sectors of Health and Social Services are most numerous with Culture and Recreation, Education and Research and Development and Housing next. Every effort was made to gather data from the remaining groups but some sectors simply have a lower presence than others. For example in the International category there were no more organizations that were willing to participate that could be included and this is likely to be an effect of using a single state, Victoria. Nonetheless, a range of services, organisational size, staffing arrangements and revenue sources are present in the database. Table 1 Victorian Not for Profit Organisations 11 Sectors from ANZSIC/ABS definitions Victorian Not for Profit Organisations No. Culture and Recreation Education and Research Health Social Services Environment Development and Housing Law Advocacy and Politics Philanthropic Intermediaries International (dev/human rights) Religion Business/Professional Total n Type of Services Provided Organisations were also asked what kind of service they provided and the four most frequently provided by nonprofit sectors were welfare services and help for disadvantaged (30%), educational services and programs (25%), general services related to health and wellbeing (15%) and support for people with a particular health problem. The organizations varied across turnover and staff profile. 47 46 52 58 33 40 27 31 9 24 34 401 % of Sample 11.7 11.5 13 14.5 8.2 10 6.7 7.7 2.4 6 8.5 100 11 Annual Turnover The sample varied across six categories of annual turnover, although some respondents (n = 65) did not provide the organisation’s annual turnover. As might be expected, around half of the organizations representing most sectors reported an annual turnover of under $500,000. The remainder varied from $500,000 to over $10,000,000 (see table 2). Table 2 Annual turnover Not for Profit Sector Up to $100,000 Annual Turnover in Victoria $100,001 $500,000 $500,001 $1,000,000 $1,000,001 - $5,000,001 Over $5,000,000 $10,000,000 $10,000,000 Total Culture and Recreation Education and Research Health Social Services Environment Development and Housing Law Advocacy and Politics Philanthropic Intermediaries International Religion Business a& Prof. Assoc./Unions Total 17 9 7 22 8 5 5 8 1 4 6 92 15 21 7 8 12 6 7 4 3 9 9 101 3 5 6 2 2 2 1 1 1 2 1 26 4 5 8 4 5 17 6 5 3 1 5 63 1 1 9 6 3 2 2 1 7 9 1 2 2 2 40 42 44 51 28 35 23 22 8 19 24 336 2 26 3 1 28 Number of Staff in Victoria The staffing arrangements of nonprofit organizations varied; around one third had 5-20 staff in Victoria, with over a quarter having more than 100 staff (see table 3), however more than half the sample had under 50 staff. 12 Table 3 Number of Victorian staff used by not for profit sectors Number of Staff in n % Victoria (Total N = 401) 5-20 134 33.4% 21-50 100 24.9% 51-100 56 14.0% 111 27.7% > 100 Although all variations of numbers of staff were represented in all sectors, there were some clear differences. For example, three sectors, Health, Social Services, and Environment most often had over 100 staff while some sectors, International, and Business and Professional, rarely had over 100 staff (see table 4). Table 4 Number of staff in eleven not for profit organizations in Victoria Not For Profit Sector n orgs for Number of Staff in Victoria Sector 5-20 21-50 51-100 > 100 Culture and Recreation 47 22 12 5 8 Education and Research 46 18 14 5 9 Health 52 13 7 5 27 Social Services 58 14 12 11 21 Environment 33 13 5 3 12 Development and Housing 40 10 13 9 8 Law Advocacy and Politics 27 10 7 1 9 Philanthropic Intermediaries 31 4 12 8 7 International 9 1 6 1 1 Religion 24 10 3 4 7 Business and Prof. 34 19 9 4 2 Assoc/Unions Total 401 134 100 56 111 Paid and Volunteer Staff The number of volunteer staff in Victoria significantly exceed the number of paid staff. The actual number of paid staff significantly differed across nonprofit sectors with the Health sector having the greatest number of paid staff in Victoria and the International sector having the least (see table 5). 13 Table 5 Mean number of paid employees Not for Profit Sector n (Total = 394) International 9 Culture and Recreation 47 Education and Research 44 Philanthropic Intermediaries 31 Law Advocacy and Politics 27 Environment 33 Development and Housing 40 Business and Prof. 34 Assoc./Unions Religion 23 Social Services 56 Health 50 χ2 (df = 10) = 38.81, p < .000 M number of paid staff 11.67 16.70 32.66 38.65 46.74 53.06 75.93 103.94 157.35 157.45 421.38 The number of volunteer staff significantly differed across nonprofit sectors (see table 6) with the Religious sector having the greatest number of volunteer staff in Victoria and the Business and Professional Associations/Unions sector having the least volunteers. Table 6 Mean number of volunteers Not for Profit Sector n (Total = 382) Business and Prof. Assoc./Unions 33 International 9 Development and Housing 38 Education and Research 43 Law Advocacy and Politics 27 Social Services 55 Culture and Recreation 45 Religion 21 Health 49 Environment 32 Philanthropic Intermediaries 30 2 χ (df = 10) = 30.90, p < .001 M number of volunteer staff 25.09 47.00 49.79 63.21 74.63 144.96 194.93 201.86 332.71 387.88 390.93 The actual values were reflected in the categorical data where, compared to the volunteers, there are more volunteers in the highest two categories (see table 7). 14 Table 7 Number of paid and volunteer staff Number of Staff Paid Volunteer in Victoria n % N (Total = 394) (Total = 382) None 40 10.2 38 1 or 2 51 12.9 9 3 or 4 31 7.9 10 5 to 9 56 14.2 38 10 to 19 53 13.5 81 20 to 49 64 16.2 94 50 to 99 37 9.4 36 100 to 499 46 11.7 51 500 or more 16 4.1 25 % 9.9 2.4 2.6 9.9 21.2 24.6 9.4 13.4 6.5 Although most organizations reported having two or fewer paid fund raising or marketing staff (see table 8), there was no significant difference in the number of paid marketing and fund raising staff across nonprofit sectors. Table 8 Number of paid marketing or fund raising staff Number of Paid n % (Total = 394) Marketing or Fund Raising Staff 0 175 44 1-2 123 31 3-4 48 12 5-9 30 8 10-19 10 3 20-49 7 2 50-99 1 .3 Annual Marketing Budget in Victoria Almost a quarter of managers did not provide information about their Victorian annual marketing budget (n = 95). Of those who indicated their budget, about half had under $5,000 allocated to marketing while the rest had more generous amounts ranging from $10,000 to over $100,000 and the Health sector was the clear leader. 15 Sources of Revenue in Victoria Lastly, the main source of revenue for the organizations in this study varied across a broad range, including donation, fund raising and fees. However, the principle source of funding at the time of the survey for just over half the organisations (n = 206) was government derived, either State or Federal (see table 9). Table 9 Organisation's first source of revenue First Source of Revenue Frequency State Govt 89 Government / grants 46 Memberships/ membership fees 43 Donations 43 Fed Govt 28 Dept of Human Services/ DHS 27 Fundraising 19 Fees/ charges / Service fees 18 Local Govt/ Council 12 Corporate Donations/ sponsors 11 Student fees/ fees for courses 9 Property rental/ venue hire 7 Trusts/ Foundations/ Philanthropic 5 Trusts Retail Store/ Op shops 5 Events/ Activities 5 Other Particular Govt Dept 4 From Other Particular Services 4 Offered Publications/ merchandise 3 Community help/ volunteers 3 Community Groups/ Organisations 3 Other 2 Investment returns 2 Grants/ Project Grants 2 Churches/ Religious Groups 2 Bequests 2 Business and Trade revenue 1 No answer given 6 Total 401 Government 206 Percent 22.2 11.5 10.7 10.7 7.0 6.7 4.7 4.5 3.0 2.7 2.2 1.7 1.2 1.2 1.2 1.0 1.0 .7 .7 .7 .5 .5 .5 .5 .5 .2 1.5 100.0 51.4 Overall then, the sample contains a diversity of Victorian nonprofit organizations with variations across all eleven sectors by type of service, size by annual turnover, size by paid 16 staff and numbers of volunteers. As well, there were variations around the number of staff in marketing activities, the amount of budget allocated to marketing and the organisation’s main source of revenue. Market Orientation in Victorian Nonprofit Organisations The aim of this study was to explore the market orientation in nonprofits by asking fundraising managers to rate the 21 statements of a re-worded MARKOR scale (Bennett, 1998) on a five point Likert scale 1. The survey included six statements related to donor orientation, five related to competitor orientation and three question statements related to customer orientation. The Market Orientation scale had strong reliability (α = .83). Reliability of the Donor Orientation subscale (α = .70) and Influence of Marketing Personnel (α = .60) were moderate and the Competitor Orientation subscale was poor (α = .42). The highest overall Market Orientation score was obtained by the Religion Sector but statistical analyses revealed no significant difference across sectors for the four Market Orientation scales (see tables 10 and table 11). Table 10 Market Orientation of eleven not for profit sectors (N = 401) Marketing Orientation Scale N of items Range M Score Reliability (α) Donor Orientation 6 6 – 30 17.00 .70 Competitor Orientation 5 5 - 25 14.60 .42 Influence of Marketing Personnel 3 3 – 15 8.39 .60 Overall Market Orientation 21 21 - 105 60.72 .83 * Responses ranged from 1 – 5 (1 = strongly agree, 2 = agree, 3= neutral, 4 = disagree, 5 = strongly disagree). 17 Table 11 Market Orientation of eleven not for profit sectors Not for Profit Sector N M M M M Donor Competitor Influence Overall Orientation Orientation of Market (6 items) (5 items) Marketing Orientation Personnel (21 items) (3 items) Culture and 47 16.87 14.19 8.45 60.34 Recreation Education and 46 17.57 14.28 7.80 60.85 Research Health 52 17.35 14.46 8.62 61.10 Social Services 58 17.38 14.21 8.76 61.67 Environment 33 17.24 14.91 8.61 61.85 Development and 40 16.95 14.48 8.57 60.70 Housing Law Advocacy and 27 17.67 15.19 8.48 61.78 Politics Philanthropic 31 15.19 14.58 8.32 57.00 Intermediaries International (develop/ 9 15.56 15.78 7.00 57.00 human rights) Religion 24 16.67 16.17 8.96 63.54 Business/Professional 34 16.74 14.50 7.62 58.82 Total 401 17.00 14.60 8.39 60.72 2 9.36 12.50 12.27 6.79 χ (df = 10) (p > .05) (p > .05) (p > .05) (p > .05) * Responses ranged from 1 – 5 (1 = strongly agree, 2 = agree, 3= neutral, 4 = disagree, 5 = strongly disagree). There was a significant difference in the degree to which marketing and fund managers perceived that information was shared (Question 15, “Information gathered by our marketing people is shared with all other people, sections and departments within the organization”) (see table 12). The International nonprofit sector managers perceived that they shared information most and Social Services and Philanthropic Intermediaries shared information the least. 18 Table 12 Mean ratings of marketing and fund managers across eleven not for profit sectors about sharing of information* Not For Profit Sector n M (401) ratings* * International 9 2.00 Business and Prof. Assoc./Unions 34 2.12 Education and Research 46 2.20 Culture and Recreation 47 2.38 Law Advocacy and Politics 27 2.44 Environment 33 2.61 Health 52 2.69 Religion 24 2.75 Development and Housing 40 2.78 Social Services 58 2.83 Philanthropic Intermediaries 31 2.84 2 χ (df = 10) = 26.46, p < .003 * Questionnaire item asked whether or not “Information gathered by our marketing people is shared with all other people, sections and departments within the organization” ** Responses ranged from 1 – 5 (1 = strongly agree, 2 = agree, 3= neutral, 4 = disagree, 5 = strongly disagree). DISCUSSION The starting point of the wider study was to explore marketing in the Victorian third sector by conducting a market orientation survey . The organisations included in this study (n = 401) came from all 11 defined sectors of nonprofits and they ranged in size, staffing and turnover and he indications around market orientation are ambivalent. For the purposes of this paper there are five interesting and important points to consider: (1) about half of the organisations had under 50 staff, (2) an annual turnover of below $500,000, and (3) just over half relied on one of the three levels of government for revenue. Around half of the organisations had (4) no paid marketing staff and about half had (5) less than $5,000 as a marketing budget. Even if we remember that a quarter of all respondents did not answer the question on marketing budget, this is a significant lack of staff and financial investment for a market orientated organisation. It could be inferred that marketing as a business function is not well supported in Victorian nonprofit organisations. However, there are some factors that are not well 19 interrogated by the MARKOR scale that leave this open to doubt. Given the extent to which Victorian nonprofits seek revenue from government sources, the donor/fund raising orientation, which the MARKOR scale investigates, is arguably not the best focus for a nonprofit to maintain. A more relevant focus could be on grant writing and the relationships maintained and nurtured with each government level. To deal with this a new direction in “market orientation” would be required, or perhaps a new “orientation” needs to be defined. At this stage though, it is not certain which size of nonprofit is most affected. While it is likely that the smaller nonprofits maintain almost no marketing presence, conversely, one of the reported barriers to market orientation in both the for profit and nonprofit sectors is the size of the organisation (Balabanis et al. 1997; Jaworski and Kohli 1993). It is asserted that the higher number of departments in larger organisations has a negative impact on market orientation because it is more difficult to keep information circulating in a timely fashion. This would infer that the market orientated organisations would be less likely to be the larger ones, but these are the organisations with the well-resourced marketing departments. Furthermore, there are differences around divisions into separate sectors in terms of probable size, as well as in terms of business activities. Some sections are more likely to have larger organisations, such as health or education, while other sections more usually have smaller organisations as is the case for community services. Alongside the differences in size are clear differences in relationships to what marketing nearly always calls ‘customers’, for example the patient in hospital, the patron of the Arts or the volunteer at the community art group. At the same time, in nonprofits overall there was some evidence of a market orientation. The next step will be to examine the various sectors in the database in more detail and to compare the descriptive data to ABS and other sources. 20 Nevertheless, further examination will not necessarily resolve the issue that perhaps a different question needs to be addressed. That is the extent to which the commercial experience can be transferred to the third sector, or to put this another way, the extent to which adjustment is required and whether that varies according to which section of the third sector is being examined. For example, Gainer and Padyani (2002) manipulate the market orientation concept in order to include artistic reputation in their model. But, market orientation is intended to be measured against performance and this is a notoriously difficult task with the third sector (Balabanis et al. 1997: 590). A better starting point might be to follow Sargeant and question the fundamental assumption that a ‘market orientation’ is viable for nonprofit organisations and mount a strong argument for a concept of ‘societal orientation’ (Liao, Foreman, Sargeant, 2001; Sargeant et al. 2002). There are many pertinent differences between nonprofits and for-profits, such as, the underlying implication that an exchange is taking place, which is not always clear in nonprofits. Secondly, not only is demand often insatiable in the third sector, which therefore alters the nature of the fundamental, for-profit concept of competition, but thirdly, there is also often the need for extremely rapid response times, for example following natural disasters. Moreover, there are often different definitions and expectations of marketing held by the staff of nonprofits, as presented earlier, which could explain some of this study’s ambivalent findings. An orientation that could take account of the intended mission of nonprofits and that could recognise the related outcomes as often intangible and less amenable to measurement, would help approach issues from the nonprofit perspective. This could potentially re-define success with external communications, internal exchange of information and relationships with all manner of stakeholders in more pertinent terms. 21 A consideration of the value (worth) and the values (ethics, norms) could be a useful starting point for such an orientation. The leading international marketing association, the AMA, has defined marketing as: An organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (AMA definition of marketing August 2004) What follows from this is that marketers suggest that for organisations, including nonprofits … value can be created at every contact the customer has with an organization. If one understands what creates this value, it is possible to enhance the design of all an organization’s systems with the simple goal of delivering the maximum possible value to the customer (Sargeant 2005: 23). However, the term ‘customer’, particularly in connection with the concept of ‘value’ in the third sector remains a sticking point for nonprofits because it continues to assume an underlying exchange process and underplays the role of altruism. There is a need to re-define terms and with that, also re-define the implied relationships and all the shared meanings and interaction effects that this encompasses. Once ‘customer’ is re-defined to relevant public, either donor or recipient, then marketing can be concerned with ‘facilitating an exchange process between an organization and its public, so that a societal need can be fulfilled’ (Sargeant 2005: 25). A model with potential, albeit requires changes in some terminology, the Value Exchange Model proposed by Gabbott (2004) outlines an approach to marketing that reduces the effect of commercial competition and instead focusses first on customer desired benefits and outcomes in tandem with provider designed benefits and outcomes. 22 A strong focus upon customer value will form the foundation of an organisation’s sustainable competitive advantage. …. In contrast focusing on competitors may mean that you focus on things which your customers many not consider to be important. Once you have developed a strategy designed to deliver value for (your) customers, then you can focus on your competitors’ activities. (Gabbott 2004:61) By utilising this intense focus on the customer, it is argued that distracting energy onto competition can be avoided which is a response that resonates with much third sector culture. Using this framework could support defining distinctive competencies and highlight the organization’s mission, as well as incorporating all types of stakeholders. However, a deeper discussion of the links between values and the stakeholders of a nonprofit organisation remains under-developed and unanswered. This would be a key component of a research agenda with potential to lead to a new scale that measures success differently. CONCLUSION The overarching aim was to explore the presence of marketing in Australian nonprofit organisations. A contribution is made by offering some descriptive information about marketing in Victorian nonprofit organisations. The initial results brought attention to the lack of investment in marketing as a business activity or process, but left unresolved the existence of some market orientation in nonprofit organisations. However, the ambivalent nature of this leads to the question of whether there is a need to create new measurement scales specific to the third sector. It was suggested that a new question, raised first by Sargeant et al (2002), of societal orientation with a focus on mission values and a reexamination of the relationship with stakeholders would be a good start point. Moreover, a 23 model exists from which to launch this investigation. This could facilitate the identification of nonprofit activities as different to, and separate from, for-profit business activities. It has the potential to measure success for nonprofits from within their own orientation and values. 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(2006) Nonprofit Marketing, Sage Publications, Thousand Oaks, CA. 28 Appendix 1 Table 13 Section of SMC MARKOR survey derived from Bennett (1998) 1) We set precise targets for our fund raising programs. 2) We regularly compare our fund raising performance against the fund raising performances of comparable charities. 3) We often experiment and innovate in our use of promotional materials, advertisements, public relations techniques, etc. 4) We have a good knowledge of the characteristics of the types of people who donate to this charity (e.g. their backgrounds, locations, how much they earn, their lifestyles, etc.). 5) We have systems to determine the value and frequency of donations of various individuals and/or category of donor. 6) Our fund raising strategies are based on understanding the motives, characteristics and behaviour of donors. 7) We quickly detect changes in patterns of donations. 8) We survey a sample of donors at least once a year to assess the factors that cause people to donate to this charity. 9) If other charities similar to our own implement a new fund-raising idea we quickly adopt it ourselves. 10) Top managers within our charity regularly discuss other charities' marketing programmes. 11) The effectiveness of our fund raising programmes is frequently evaluated. 12) In this charity, people and departments periodically get together to plan responses to changes in the overall fund raising environment. 13) In this charity, information on donor behaviour and on the activities of other comparable charities is generated independently by several departments. 14) We regularly check out the marketing and advertising activities of other charities. 15) Information gathered by our marketing people is shared with all other people, sections and departments within the organisation. 16) Marketing people in our charity interact frequently with other sections and departments in order to discuss current and intended fund raising programmes. 17) In this charity, marketing people make a strong input into how the charity is organised and managed. 18) Donors to this charity are liable to switch their donations to other charities (at our expense) at any time. 19) Competition for donations in the field in which this charity operates is very intense. 20) Our fund raising performance has been better than that of charities similar to this one. 21) How would you assess the fund raising performance of this charity over the last 5 years? Source: [Bennett, 1998: 37] 29