1. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 1 Building Your Organization’s Share of Mind & Heart: The Essence of Strategic Marketing SUNY Orange Institute for Nonprofit Leadership and Management 4 th Annual Nonprofit Leadership Conference John Bassler, PhD - President, Know/Go NPD LLC Karen VanHouten - Executive Director, Community Foundation of Orange and Sullivan (CFOS)

2. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 2 Elements of strategic marketing Organizational mission statement Strategic objectives Time-specific Measurable Plan for accomplishing objectives Offering (product or service) Clients and needs (target market)

3. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 3 Elements of strategic marketing Who pays for the service? Other stakeholders Market segments Competition Differentiation and positioning Volunteers

4. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 4 Elements of strategic marketing Promotion (marketing communication) Delivery location(s) Pricing Offering(s): opportunities for innovation

5. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 5 Example: Community Foundation of Orange and Sullivan (CFOS) We connect people who care with causes that matter and we serve people of all means. To donors, CFOS represents an effective and innovative giving vehicle, one that combines maximum tax savings with maximum flexibility and the opportunity to make a difference right here at home in and around Orange County… and beyond. donors To other charitable organizations, CFOS represent the source of grants whose sole purpose is to improve the quality of life in our region. Perhaps most important of all, CFOS is the link between donors and other charitable organizations, and between donors and those students who receive grants from scholarship funds which are established through the Foundation. CFOS currently manages more 75 permanent charitable funds than for individuals, families, businesses, and organizations that turn to us to help fulfill their charitable dreams. And this number of funds continues to grow as more people like you feel compelled to step forward as generous participants in the vision of a stronger community.75 permanent charitable funds

6. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 6 CFOS current marketing strategy Mission statement To assist donors in achieving their charitable intentions through the establishment of funds that collectively create permanent endowments, and thereby enhance the quality of life in the region. Objectives Grow pool of endowed funds under management to $7 million by December 31, 2008 $4.6 million at end of 2007

7. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 7 CFOS current marketing strategy Offering We offer individuals, businesses, and organizations the opportunity to leave a legacy. Our dedication and commitment is to focus on donor services - thus our tagline of connecting people who care with causes that matter. In doing so we support in perpetuity the many charitable organizations and initiatives that help make our region one of the finest places in the world to call home. (Emphasis added.)

8. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 8 CFOS current marketing strategy Clients and needs (target market) All sorts of individuals, businesses, and organizations may have the desire to leave a legacy Individuals who want to establish a memorial Businesses that want a vehicle for charitable contributions Nonprofits that want to establish an endowment And who want to avoid the administrative burden of operating an endowment or foundation

9. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 9 CFOS current marketing strategy Who pays? Each endowment fund is assessed an asset management fee. Other stakeholders Those whom we ask to support us so that we can provide the services we offer to donors. Market segments (See “Clients,” slide 8.) Also: professional advisors

10. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 10 CFOS current marketing strategy Competition Private foundations or endowments Neighboring community foundations Fidelity Donor Advised Funds Vanguard Donor Advised Funds Differentiation and positioning Simplified process for setting up charitable entity Donor involvement in grant making Wide variety of assets accepted

11. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 11 CFOS current marketing strategy Volunteers Part-time administrative help Board members Set strategy Raise operating funds (and in-kind support) Committee members Events Financial oversight Awards of grants and scholarships

12. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 12 CFOS current marketing strategy Marketing communication Web site Newsletter Newspaper insert Leave-behind encouragement cards Tri-folds Pamphlet Seed packets Bookmarks

13. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 13 CFOS current marketing strategy Delivery locations Not relevant for CFOS Pricing 1% of assets under management per year, payable quarterly Innovation opportunities

14. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 14 Developing or modifying marketing strategy Analyze current situation Understand markets, customers, and stakeholders SWOT analysis Segmentation and positioning Marketing mix Implementation plan

15. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 15 Analyze the current situation Internal environment Resources Climate Relationships Keys to success Warning signs

16. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 16 Analyze the current situation External environment Customers/clients/stakeholders—re-examine Who are they--current and potential? How do they use our products (services)? How do non-client stakeholders relate to us? Where do they purchase our products or use our services? What is the context of their purchase or use? On what basis do they choose our brand v. others? Why do some potential customers NOT purchase from us? Why have former customers defected?

17. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 17 Analyze the current situation External environment (continued) Competitors Economic change Political trends Legal/regulatory issues Technological change Socio-cultural trends

18. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 18 Two types of nonprofit competition Organization-level competition: Competition for clients, volunteers, and resources Behavior-level competition: Need/desire competition Generic competition Format competition Offering competition

19. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 19 Understand markets, customers, and stakeholders Analyze markets Broad definition of market and needs CFOS: Who might be interested in outsourcing endowment management? Customer needs and behavior Market-research tools Stakeholder needs and interests Market-research tools

20. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 20 Getting information about customers and stakeholders Observation Self-reports, diaries Interviews Focus groups Surveys Media coverage Organization Web sites

21. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 21 SWOT Analysis Internal Strengths Internal Weaknesses External Opportunities External Threats

22. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 22 Strengths--internal Financial resources Brand recognition Cost efficiencies Management talent Operational excellence Superior quality Alliances Engaged, loyal employees Talented, committed volunteers

23. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 23 Weaknesses--internal Financial limitations Lack of market awareness High costs Inexperienced management Operational deficiencies Quality problems Lack of partners Uncommitted employees Insufficient number of volunteers; wrong skills

24. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 24 Opportunities--external Growth in need for services Strategic weaknesses among competitors Access to new technology New distribution channels (e.g., Internet) Interested potential partners New sources of capital

25. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 25 Threats--external Market decline Emergence of a new competitor Changing client needs New technology threatens obsolescence New distribution channels (e.g., Internet) Loss of a key supplier Demographic shifts Economic disruption Political turbulence

26. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 26 SWOT matrix STRENGTHS (match to opportunities) OPPORTUNITIES (capitalize on them!) WEAKNESSES (apply resources to convert to strengths) THREATS (neutralize or protect against them)

27. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 27 Market Segmentation Goal of segmentation: create identifiable groups of customers such that within each group, customers’ likes, needs, tastes, and market behavior are similar, but are different from those in other groups External criteria for successful segmentation: Segments are identifiable, distinguishable, and measurable Segments are substantial Segments are accessible for marketing communications Segments are responsive Internal criterion for successful segmentation: Firm can tailor marketing strategy to each target segment (What does this mean?)

28. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 28 Bases for segmentation Behavioral Benefits sought Product usage intensity Product use occasions Buying process (very important for B2B) Price sensitivity Demographic Geographic: region, urban-rural spectrum Psychographic Personality Lifestyle Motives

29. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 29 Differentiation and Positioning Differentiation: create recognizable feature and benefit differences v. competing offerings (branding) Give customers a compelling reason to choose you Positioning: manage customers’ perceptions of the product or service Uniqueness Desirability Believability

30. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 30 Differentiation and Positioning: A Fort Worth museum example Kimbell Art Museum Modern Art Museum of Fort Worth Amon Carter Museum

31. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 31 Marketing mix, take 1: The four P’s of marketing strategy Product Price Place (distribution/delivery) Promotion

32. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 32 Product strategy Features, benefits, related services Quality and design Packaging and labeling Product development and management

33. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 33 Pricing strategy Price elasticity (= customer price sensitivity) Value perceptions Margin objectives Competitors’ pricing strategies Channel partners Transient elements (discounts)

34. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 34 Distribution strategy Channel partners’ responsibilities Channel hierarchy (e.g., Dell v. Compaq) Selection of channel partners Competitors’ strategies Customers’ preferences Logistics

35. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 35 Promotion strategy (IMC) Advertising Public relations Events Sponsorships Personal selling Especially important in organizational sales

36. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 36 Marketing mix, take 2: Tailor the mix to each segment Product Price Place (distribution/delivery) Promotion

37. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 37 Optimize your marketing strategy Get the information you need “Testosterone-driven” decision making is a recipe for disaster How many of you know—really know— what your customers want and how well you’re doing? Or are you making assumptions based on your own beliefs and preferences?

38. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 38 Marketing mix, take 3: The seven C’s of marketing strategy Customer—you can solve his or her problem Central user—may be different from the customer Competition—what are they up to? Company—do you have the needed capabilities? Context—you need to know the environment Collaborators—you always need help Commitment—are you willing to support the offering?

39. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 39 The “Anna Karenina” Principle Tolstoy’s novel begins: “Happy families are all alike; every unhappy family is unhappy in its own way.” Translation: in order to be happy, a marriage must succeed in many different respects. For most important things, success requires avoiding all of many separate causes of failure (Jared Diamond, Guns, Germs, and Steel). For all organizations, strength in all seven factors is required for competitive success. This is an empirically demonstrable claim You can’t compensate for weakness in one area with strength in another

40. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 40 Strategy Implementation The best strategy, if not well executed, is worthless (Conversely, good execution cannot rescue a bad strategy!) There are three key elements: 1. Test the strategy for internal consistency Every component must support the chosen targeting and positioning strategy 2. Monitor execution to be sure the plan is implemented as designed 3. Establish performance targets and measure results

41. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 41 What if you’re a small organization? Get volunteers to help develop and execute a marketing program Use board members to help: Get client/stakeholder information Promote the organization Recruit business marketers to the board Market research doesn’t have to be expensive

42. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 42 What if you’re a small organization? HOWEVER... In many cases it takes the nagging of someone like a consultant to get the organization’s top management to give the time required to develop a good marketing plan. It’s very easy to respond to daily urgencies at the expense of strategic thinking.

43. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 43 Resources--books Andreasen, Alan R., and Philip Kotler. Strategic Marketing for Nonprofit Organizations, 6 th Ed. Prentice Hall, 2003. Wood, Marian Burk. The Marketing Plan Handbook, 2 nd Ed. Pearson, 2005. Clancy, Kevin J., and Peter C. Krieg. Counterintuitive Marketing. Free Press, 2000. Andreasen, Alan R. Marketing Research that Won’t break the Bank. Jossey-Bass, 2002.

44. March 26, 2008 K NOW /G O NPD LLC smarter product development ℠ 44 Resources--people Jane Daniels, volunteer-management consultant Zebra Advisors, LLC Mohegan Lake, NY 10547 Jane@ZebraAdvisors.com 914-471-5545 Paola Gentry: project director, Families First NY Expert on funding for management development Poughkeepsie, NY 12601 pgentry@familiesfirstny.org 845-452-1114 x3101