According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the United States alone. Their increasing importance and role in international markets calls for an investigation of specific marketing strategies that should be employed. Therefore, we will look at differences between non-profit marketing and for-profit marketing strategies.
Non-profit marketing organizations have many distinctive characteristics that indicate specific requirements regarding marketing strategies. Several key differences between non-profit marketing and for-profit marketing can be identified, particularly in relation to marketing communications.
Key Differences between Non-Profit Marketing and For-Profit Marketing
Non-profit environments include the charitable sector, government, social enterprise, and social marketing. In the last case, marketing is used to advance social causes. For such causes, specific marketing communications are required. The key differences between non-profit marketing and for-profit marketing include the aspects discussed below.
- With non-profit ‘products’, there is typically a weaker unique selling proposition (USP), involving weaker direct benefits, which makes it more difficult to direct target audience behavior in the desired way. For instance, donating to charities provides us with a sense of ‘doing good’, but this feeling may not be sufficient to induce many people to give.
- This important component of the marketing mix has different roles in non-profit situations. For example, in a political marketing context, what is the price in relation to marketing a political party? Is it the effort needed to go out and vote, or the opportunity costs for that voter’s household of voting for one party’s economic promises versus those of another? In relation to charities, the amount donated is often left to the discretion of the donor, rather than being specified by the seller, as in a commercial transaction.
- While speaking of ‘high’ and ‘low’ involvement in commercial situations in relation to the extent to which consumers become involved with a product or service in order to learn more about it, the involvement in non-business situations displays more extreme tendencies, which requires specific strategies. For instance, people either really engage with a charity or political party, or show strong reactions against them.
- In the non-profit environment, it may be necessary to develop a campaign to drive behavior in all target audiences rather than a specific one, as in commercial markets. For example, a road safety campaign might seek to encourage all adults to drive at the speed limit rather than a specific audience. Nevertheless, there may well be a sub-group that needs a specific targeted message, for example young male drivers who may persistently break the speed limit. The point is, however, that the general message is applicable to all.
Further Differences between Non-Profit Marketing and For-Profit Marketing
After having identified the primary differences between non-profit marketing and for-profit marketing, let’s take a look at some other key differences that require adapted strategies.
Although for-profit or private-sector organizations need to interact with a range of stakeholders in order to achieve their business goals, their focus is primarily on target market customers and shareholders. What is different about non-profit organizations is that they are concerned with a wider group of interested parties, which we generally refer to as stakeholders. These stakeholders include shareholders, regulatory bodies, other charity or non-profit partners, supply chain partners, customers, and employees. In private companies, revenue is distributed from customers to shareholders, initially converted into profits by the organization, and shareholders are rewarded with a dividend, as a share of the profits earned. Private companies have stakeholders also, but those stakeholders are less likely to have influence on how an organization’s profits are distributed. In commercial firms, this remains the privilege of shareholders.
Non-profit organizations also provide products and services, but their customers or users do not always pay the full costs incurred by the organization to provide it. Many non-profit organizations rely on a range of stakeholders to provide the finance to support the organization. Instead of revenue from customers being used to reward shareholders, there are often no profits to be redistributed, because those who help to fund the organization do not require a return on their resource provision. For example, charities are supported by individual and corporate donations. Museums, to provide another example, may rely on a mixture of grants, entrance fees, and individual donations.
With these key differences between non-profit marketing and for-profit marketing in mind, non-profit organizations should be able to adapt their marketing strategies to fit the distinctive characteristics of non-profit environments.