Draft. To appear in Paul N. Bloom and Gregory T. Gundlach, eds., Handbook of Marketing and Society, Sage Publications, 2000. Not to be quoted or reproduced without permission. For further information, contact: Alan Andreasen, Social Marketing Institute, 1825 Connecticut Ave. NW, Suite S-852, Washington, DC 20009 or: aandreas@aed.org

Intersector Transfer of Marketing Knowledge

Abstract

Concepts and tools from the commercial sector have the potential to profoundly affect research and practice in the nonprofit sector. This chapter traces the history of the broadening of marketing from its traditional economic domain. It proposes that the nature and rate of transfer of commercial concepts and tools to the nonprofit sector is affected by similarities in organizational mission and the basic exchanges involved. Transfer is slowest where transactions do not involve economic considerations in either side of the exchange. Recent growth in social marketing is, however, addressing this gap. The chapter also indicates that the transfer has not been unidirectional: there have been important concepts that have migrated from the nonprofit to the commercial sector. The chapter concludes with recommendations that can accelerate future transfers - in both directions.

Introduction

Marketing is, at base, simply an activity carried out by individuals and organizations to achieve certain personal and social ends - just as preaching, plumbing, auto repair and surgery are also activities to achieve personal and social ends. Societies grow and develop as their members get better at such activities, especially if such activities are central to their welfare. Wilkie and Moore make the persuasive argument that marketing clearly meets the test of contributing significantly to a great many dimensions of social welfare (Wilkie and Moore 1999)

Activities clearly improve with practice -- as any athlete will attest. But, great leaps forward in practice areas typically follow major intellectual breakthroughs that stimulate new ways of thinking about and carrying out those activities. While there are many sources of intellectual breakthroughs, a common pattern is for concepts and tools from one discipline to migrate into a new domain where they can afford major benefits. One could argue that this describes athletics where athletes have benefited enormously from improved understanding of nutrition, muscle mechanics, and body chemistry. Similarly, international political analysis has profited greatly from the introduction of game theory from mathematics, agriculture from gene research and the sociology of innovation and, management and economic theory from Darwinian theories of evolution.

It is the central thesis of this chapter that the migration of basic concepts and tools from private sector marketing to the nonprofit sector has the potential to profoundly affect the ways in which the latter operates. In my view, there have already been important cross-sector contributions but the potential for major breakthrough is still just that - a potential. In the sections to follow, I will describe briefly the beginnings of attention to the nonprofit (and government) sectors within mainstream marketing thinking. I will then sketch the ways in which marketing thinking penetrated the nonprofit sector, hypothesizing that the rate of adoption is affected by the nature of organizations and exchanges involved. from this initial breakout to the present. This leads to a discussion of where the major impacts have been on the field of public and nonprofit management and some of the reciprocal influences on commercial thinking and practice. The chapter then concludes suggestions for where and how we should proceed to reinvigorate the cross-sector transfer of these valuable tools.

It must be noted that this chapter does not purport to be comprehensive in its treatment of the vast literature on nonprofit and government marketing. Further, the tracing of the development of the field reflects this authors own experience and perceptions. The chapter seeks to give the beginning reader a sense of the origins of the field, its general progress, and where it stands at present. While testing of the suppositions , hypotheses and speculations presented here may be a useful future enterprise for scholars, there a many more conceptual and methodological issues that deserve more immediate attention.

The Origins

The year 1969 marked a watershed in the way marketing scholars and practitioners thought about the field of marketing and its relationship to noncommercial organizations. Prior to 1969, scholars conceived of marketing as an economic activity in which business enterprises competed to provide goods and services to consumers in order to maximize the enterprises' return on investment. This economic activity necessarily involved the public sector but only as facilitator (e.g., trade missions to foreign markets) or regulator (e.g., rules and actions of FDA, FTC, USDA, etc.).

In the pre-1969 era, commentators took one of three perspectives. In its earliest years, marketing was viewed from either an institutional or a functional perspective. Both of these approaches were descriptive, treating marketing as a basic activity that was carried on by entities in societies about which authors and researchers needed models and theories to explain, predict, and - often - criticize it. To the extent that analysis of marketing resulted in prescriptive recommendations, these were for societal actors such as the public or governmental agencies who needed to curb market excesses.

After the second World War - and particularly after 1950 -- the dominant marketing perspective became managerial. Marketing was seen as a set of activities that managers in enterprises did to achieve corporate goals. It was acknowledged that there were better and worse ways of carrying out these responsibilities and one needed models and theories to tell managers how to optimize impact and profits through customer choices. While there were still scholars during this period who adopted a societal perspective, this perspective more often was directed at evaluating managerial actions and making normative recommendations about how to regulate or otherwise influence such actions for the social good.

In 1969, Philip Kotler and Sidney Levy lobbed a conceptual grenade into this comfortable domain of marketing scholarship. In a classic article (Kotler and Levy 1969a), they argued that:

". . . marketing is a pervasive societal activity that goes considerably beyond the selling of toothpaste, soap, and steel. . . . [An] increasing amount of society's work is being performed by organizations other than business firms . . . [and] every organization performs marketing-like activities whether or not they are recognized as such."

This expanded perspective did not sit well with the scholarly establishment at the time who argued that the "broadening" of marketing was taking the field well beyond where it properly belonged. For example, David Luck argued that marketing obviously involved markets and this meant buying and selling (Luck 1969). "Prominent scholars" who were trying to expand beyond this frame might find that their "self-image is pleasurably inflated" but they will be ignoring important issues still to be resolved within the traditional domain. Broadening the field would divert attention from critical issues and encroach on other disciplines (Luck 1969). Kotler and Levy responded that marketing was about transactions, not just market transactions (Kotler and Levy 1969b).

Luck's position and that of Bartels (1974) and others who supported him did not prevail. The broadened conception rapidly gained widespread acceptance within marketing academic circles. In the early 1970s, Nickels surveyed 74 marketing professors and found that 95% thought that the scope of the field should be broadened in the ways Kotler and Levy proposed (Nickels 1974). But the 'broadening movement" threw the field into some confusion and sparked debate as to just what the essence of marketing really was. Kotler coined the term "Consciousness 3" to advance his argument that the modern view of marketing is a natural progression and that it follows from (1) a definition that restricted the field to market transactions as a business subject (Consciousness 1) and (2) a somewhat broader definition that permitted organization-client transactions that did not involve money (Consciousness 2). Consciousness 3, by contrast, incorporates "an organization's attempts to relate to all of its publics, not just its consuming publics" (Kotler 1972, p. 48). Bartels, a marketing historian, stated that this debate suggested that the field was in an "identity crisis" and needed to decide whether marketing was defined by its technology (the Kotler-Levy position) or by the class (or classes) of behaviors towards which it was directed (the Luck position) (Bartels 1974). In the year 2000, it is clear that the "technology school" has prevailed!

Early Developments

Because Kotler saw marketing as a technology, he and his colleagues set out to ask what it would mean if one applied it to non-economic settings (cf. Elliott 1991). In an oft-quoted argument, Kotler and his colleague Gerald Zaltman explored what it would mean to apply the technology to social issues where, they suggested, it could be called "social marketing" (Kotler and Zaltman 1971). At the same time, the original provocateurs, Levy and Kotler, speculated on whether it was possible to do away with the troublesome noun "market" altogether. Their proposed solution was to say that what marketers really did was "furthering" and that this might be a better way to think about - and perhaps define - the field (Levy and Kotler 1969). It turned out that marketing academics were happy to broaden themselves but not to re-label themselves as "furtherers" and the term never caught on (Nickels 1974) . However, the term "social marketing" did have a much longer life.

Over the next thirty years later, the issue became non-controversial. Nonprofit and social marketing subjects came to be widely accepted, discussed, researched and taught. Indeed, courses are now routinely taught on the application of marketing to non-profit organizations. Textbooks on marketing management are available for business school courses in the United States (Kotler and Andreasen 1996; Rados 1996) and abroad (Sargeant 1999) and for the general practitioner (Radtke 1998; Herron 1997). There are now journals devoted to nonprofit marketing in general⁽¹⁾ as well as specialized journals⁽²⁾. There are texts in specific institutional or topical areas including education (Kotler and Fox 1995); economic development (Kotler, Jatusripitak and Maesincee 1997); the arts (Kotler and Scheff 1997); places (Kotler, Haider and Rein 1993); healthcare (Kotler and Clarke 1986) and social marketing (Andreasen 1995b; Kotler and Roberto 1989; Fine 1990; Manoff 1985)

On the other hand, as we will discuss below, it remains the case that the broadening "movement" still has some distance to go, both in the nonprofit sector where the concepts can be applied and in academic institutions where the concepts can be researched and taught. Marketing is still limited in its applications in the non-commercial sector and suffers from a negative connotation in many quarters. Nonprofit marketing as an academic subject is found in only limited number of business schools and is rare in MBA programs. Today. it can be considered only a minor specialty for scholars and researchers . For example, there is no Special Interest Group within the American Marketing Association devoted to nonprofit marketing, no regular conference on nonprofit topics, no first or second tier journal, and no academic job description that seeks a specialist in the topic. On the other hand, commercial marketing concepts and tools have had an important impact on the study and practice of nonprofit management.

To understand these contributions and the gaps in the institutional and intellectual structure of this special topic area today, one needs to first understand something of the historical progression of nonprofit market and the factors that appear to be driving it forward - and holding it back.

Some Definitions

In the discussion to follow, the terms nonprofit marketing and social marketing are used to distinguish organizational from program perspectives. As I have defined elsewhere social marketing is the application of commercial marketing concepts and tools to programs designed to influence the voluntary behavior of target audiences where the primary objective is to improve the welfare of the target audiences and/or the society of which they are a part (Andreasen 1994). Social marketing can be carried out by nonprofit and public sector organizations. The management of the latter (lumped together here as "nonprofit organizations") involves many more issues than those that are typically the focus in social marketing such as recruiting volunteers, creating and managing boards, fundraising, and organization-level strategic planning.

Factors Affecting the Broadening of Marketing

In their classic 1969 "Broadening" article, Kotler and Levy asserted that that "the business heritage of marketing provides a useful set of concepts for guiding all organizations," i.e., organizations not in the commercial sector (Kotler and Levy 1969a, p. 15). However, applying commercial concepts and tools to the nonprofit world is not frictionless. One problem is that, as a number of authors have made clear (e.g., Andreasen 1995b; Bloom and Novelli 1981; Fox and Kotler 1980), the nonprofit organizational world is different in important ways from the commercial world and that, if one wants to apply for-profit concepts and tools, one must adapt to these differences. The problem, I wish to argue here, is compounded by the fact that cross-sector transfers not only encompass new kinds of organizations but also new kinds of transactions. Much of the discussion around the Kotler/Levy challenge confounds these two important contingencies.

What has transpired as a result of the "broadening" movement is that marketing is now assumed to be useful to (a) new kinds of organizations and (b) new kinds of transactions. The former comprise both public and nonprofit organizations that are formally distinguished from commercial organizations in the way they are funded and to whom they are responsible. The new kinds of transactions have major non-economic components in that they do not involve exchanges where consumers pay for the economic offerings of the organization⁽³⁾. In both commercial and nonprofit worlds, we can distinguish four classes of transactions at the consumer level:

A. Transactions involving the exchange of money for goods and services (e.g., sales of United Airlines tickets, Big Macs and Girl Scout cookies);

B. Transactions involving the exchange of money for intangible benefits (e.g., donations of money to the American Red Cross);

A+B. Transactions involving the exchange of money for goods and services and an intangible social benefit (e.g., sales of Big Macs where 5% of sales goes to the American Red Cross - often called "cause-related marketing");

C. Transactions involving the exchange of intangible costs for intangible benefits (e.g., going on a diet or giving up smoking).

In addition to these consumer transactions, there are organization-to-organization transactions involving the commercial and non-profit sectors. Elsewhere, I have suggested that there are two variations: joint promotions and licensing (Andreasen 1996). The former is the case where a commercial and a nonprofit organization form a partnership to achieve some social objective (e.g., Glamour magazine and various health agencies promoting "breast health" among young women). Licensing is the case where a commercial organization pays a fee to a nonprofit in return for permission to use the nonprofit's name and/or logo on commercial products or services. An example here would be the American Cancer Society's agreement with SmithKlineBeecham allowing the latter to use the American Cancer Society logo in advertisements for NicoDerm patches. In return, SmithKlineBeecham paid the American Cancer Society a fixed licensing fee.

In my view, the transfer of commercial marketing concepts and tools to nonprofit contexts can be explained in terms of these distinctions. Thus, I would propose the following hypotheses:

Ho1: The greater the similarity of the nonprofit organizational environment to a commercial environment, the earlier and more extensive the adoption of commercial marketing concepts and tools.

Ho2: The greater the similarity of the nonprofit's focal transaction to an economic transaction, the earlier and more extensive the adoption of commercial marketing concepts and tools.

To understand the impact of the factors, we must consider, in turn, the ways in which organizations and transactions differ between the sectors.

Differences in Organizational Environment⁽⁴⁾

a. Structural Differences

A number of authors have sought to explore the differences between the for-profit and nonprofit sectors (Kotler and Andreasen 1996; Bloom and Novelli 1981; Rothschild 1979).). Among the unique characteristics frequently found in nonprofit organizations are the following (Andreasen 1995b, pp 59-63):

1. Funding by non-owners. Nonprofit organizations are directly funded by individual and corporate donors, foundations, and government grants as well as by revenues from sales (Weisbrod 1999). They are also indirectly funded by tax concessions, donations of goods and services, and voluntary labor. Those who provide these resources often have limited - or zero - direct influence on organizational decision making. They also receive no distribution of organizational surpluses and so their commitment to organizational success must come about in other ways.

2. No Simple Bottom-Line Metric. Commercial marketers have very clear, relatively simple metrics by which to guide and evaluate their efforts, such as sales, market share, and profits. Nonprofit marketers are often challenged to achieve difficult-to-measure goals like reducing spousal abuse, increasing physical activity, or making the end-of-life years less stressful. Such challenges are hard to measure, very long term, and subject to all sorts of influences outside the marketer's control.

3. Public scrutiny that constrains risk-taking. Nonprofits receive donations and tax concessions because it is believed they are acting to improve the general welfare. As a consequence, it is typical that some form of formal or informal public scrutiny will be accorded their performance. This scrutiny may be by the government, a funding source and/or the general public as represented by the press or academic researchers and critics. This scrutiny, among other effects, makes risk-taking more difficult for nonprofit marketers and increases the importance of "politics" and "public relations" in the marketing mix.

4. Multiple Publics. The constant need for outside assistance and/or the constant oversight by other individuals and agencies increases the need for nonprofits to market simultaneously to target customers and to those who are giving assistance or regulating activities.

5. Limited budgets yet daunting goals. Commercial marketers often have generous budgets to meet given challenges. On the other hand, nonprofit marketers typically have severely restricted promotional budgets and big challenges ("eliminating hunger"). In addition, their ability to invest in building greater long-term capacity is limited by watchdog groups who are suspicious of expenditures on "overhead." They think that an organization that pays too high salaries or "wastes" too much money on overhead or advertising or sales commissions is somehow not being frugal with taxpayers' money or donations (Letts et al 1999; Cordes et al 1999).

6. Fewer Opportunities to Modify Offerings. Many nonprofits market in environments where desired behaviors involve offerings that are relatively fixed and less-than-desirable from a customer's perspective. Quitting smoking or drugs is neither pleasant nor easy. Condoms are the major (current) method of presenting sexually transmitted diseases. Wagner's Ring Cycle is very long! In each case, marketers must devise strategies where they are "stuck" with a product or behavior that cannot easily be modified. In the private sector, resources and science is more often available to make such changes.

The inference from the above is that one may be expected to find more adoption of commercial sector marketing concepts and tools where there is:

• Less public scrutiny
• Fewer publics to accommodate (e.g., fewer donors, no political jurisdictional problems, etc.)
• More generous budgets
• More opportunities to modify products or services
• Clear, short term, traceable objectives.

b. Cultural Differences

A second set of factors influencing the rate of adoption of marketing knowledge across organizations is the attitude toward marketing within the organization or industry. As Jean Manning and I have pointed out elsewhere (Andreasen and Manning 1987), many social marketing organizations are affected by a basic conflict between two or more "cultures." Many nonprofit and public sector marketing organizations were founded to achieve basic social service missions. They want to eliminate homelessness, reduce child abuse, or improve the physical and mental well-being of the very elderly. Their managers care deeply about this mission and are often willing to overlook waste, misdirection and inefficiency if its "in a good cause." Those with this "social service" orientation frequently conflict with marketers who come from a "corporate culture." The latter often enter the organization many years after its founding and attempt to increase the efficiency and effectiveness of the organizations and sometimes often dramatically increasing the number and range of programs offered. The concerns of those inhabiting the corporate culture mindset are often seen by the social service people as heartless, uncaring, even immoral. For their part, the corporate people often see their counterparts as ill-focused, wasteful and somewhere on "cloud nine." Conflicts between the two cultures can have highly debilitating effects on social marketing programs if not resolved..

These cultural differences would predict that, other things equal, one would find more rapid adoption of commercial marketing concepts and tools in organizational categories where there is:

• Less hostility toward marketing

Similarities and Differences Between Economic and Non-economic Transactions

Many nonprofit organizations sell goods and services as a major revenue source, one that is becoming more and more important in the 21^st Century (Weisbrod 1998). However, as Kotler and Levy noted originally, what is unique about recent "broadening" is the transfer of marketing concepts and tools to transactions that are not economic exchanges of goods and services for money. This occurs at two critical junctures. First, the majority of nonprofits raise funds through charitable donations or through foundation grants. These might be called quasi-economic transactions in that there is money exchanged but the "other side" of the transaction does not involve goods and services⁽⁵⁾. This is not to say that there are not important returns to donors or funders in psychic and social satisfaction, indeed, as we shall note below, one of the important challenges for nonprofit marketers is to craft effectective "psychic benefit packages" that produce desired exchange levels.

The second juncture at which purely market exchanges are absent is in the core mission or specific programs of many - if not most - nonprofits. This is clearest for nonprofits promoting transactions where the "payment" by the target audience is the undertaking of some behavior that incurs non-monetary costs such as psychic pain, social embarrassment, significant time commitments, and so forth. These kinds of transactions are the principal focus of many social marketing programs (Andreasen 1994; Goldberg, Fishbein and Middlestadt 1996).

In addition to the fact that quasi-economic and non-economic transactions minimize the role of money, they often display a number of other unique characteristics:

1. Negative Demand. It is rare for a private sector marketer to be asked to market a product or service for which the target audience has a clear distaste. Yet, as Kotler and Andreasen (1996, p. 27) note, nonprofit marketers: "must try to entice 'macho men' into wearing seat belts, timid souls into giving blood or taking medication around which swirl rumors about devastating effects on sexual potency, or aging citizens to finally admit they are infirm or otherwise need assistance."

2. High Involvement Issues. Most of the behaviors that nonprofit marketers are asked to influence are much more highly involving than most of those found in the private sector. Asking parents to begin to regulate family size or a rural mother to regularly weigh her child and expose the fact that her family has little food is much more serious than asking them to buy a bicycle or new furniture. One consequence of this very high level of involvement is that it often makes it very hard for nonprofit marketers to carry out the customer research that they need to be effective. As Bloom and Novelli have noted: "While people are generally willing to be interviewed about these [nonprofit marketing] topics, they are more likely to give inaccurate, self-serving, or socially desirable answers to such questions than to questions about cake mixes, soft drinks or cereals (Bloom and Novelli 1981)."

3. Invisible Benefits. Whereas in the private sector, it is usually relatively clear what benefits one is likely to get with a Hilton Hotel room or a new Xerox machine, nonprofit marketers are often encouraging behaviors where there is no obvious immediate benefit, nothing happens. Immunization is supposed to prevent disease, birth control prevents children. In each of these cases, the absence of outcomes is a sign of success. This does not mean that one cannot find ways to talk about the benefits of those absences (the freedom of not having "too many" children). It also is the case that some commercial organizations must market products where nothing happens (using a deodorant means no one will criticize you).

4. Benefits in the Future. Many behaviors require immediate costs but promise only long-term benefits. Stopping smoking or increasing physical activity will result in a longer life and happier "senior years." Not "smacking" a child will mean he or she will grow up with more self-confidence and less psychic damage.

5. Benefits to Third Parties. Some behaviors advocated by nonprofit marketers have payoffs for third parties such as poor people or society in general and not to the person undertaking the behavior. This is the case, for example, for energy conservation and obedience to speed laws.

Again, other things equal, one might expect to find more adoption of commercial sector marketing concepts and tools where:

• There is no negative avoidance of the proposed transaction
• The behavioral domain is not particularly involving
• The benefits of the behavior are visible
• The changes in behavior result in relatively immediate benefits.
• The benefits of the behavior are primarily - or totally - to the target audience

The History of Intellectual Transfer

There are two dimensions along which one can observe the transfer of commercial marketing concepts and tools. First, we can observe the kinds of organizations that adopted marketing concepts early and late and the kinds of transactions to which marketing was applied. Second, we can observe the concepts and tools that were widely adopted early and late.

a. Organizations Adopting Marketing

One way to trace the organizational acceptance of marketing concepts and tools is to look at the published literature, particularly published texts, cases and articles in the period following the Kotler and Levy "broadening" article. This reveals that the earliest response to the broadening challenge was the development of texts, readings books, and cases on nonprofit marketing in general. The first text was Kotler's, Marketing for Nonprofit Organizations⁽⁶⁾, published in 1975. The topical organization of this text followed the general structure of Kotler's very popular general marketing management texts - but with public and nonprofit sector examples. Not surprisingly, a great many of the examples in Kotler's original edition were in higher education. While this orientation reflects Kotler's own interests and experience, it also fits the predictions of this chapter in that the central transaction in higher education is very much like a traditional services-for-money business. Indeed, many commercial consultants today prosper by offering high-priced workshops and seminars and, for nonprofit business schools, executive education is a highly lucrative cash cow.

The first major case involving nonprofit marketing that received widespread use in MBA programs was Rangun's case of contraceptive marketing in Bangladesh. This, too, was a predictable early extension of commercial marketing ideas because the case very much involved the selling of condoms and other contraceptive products, albeit at a highly subsidized price.

The first book to take marketing concepts and apply them to a particular organizational specialty was by Robin MacStravic, a health care specialist, who produced a book, Marketing Health Care in 1977. This was followed by a readings book by Philip Cooper (Cooper 1979). These volumes were consistent with our hypotheses in that they focused on the selling of hospital services, an industry that features a significant mix of for-profit and non-profit competitors (Marmor, Schlesinger and Smithey 1987)).

A third area into which marketing concepts filtered in the early years was arts marketing (Andreasen 1995a; McLean 1998; Mokwa, Dawson, and Priere 1985; Kotler and Scheff 1997; Kotler and Kotler 1998) Here, a number of researchers looked into how and where individuals might be persuaded to attend symphonies, theaters and museums. These settings also involved semi-economic transactions with consumers paying for services. The one area where this involved ventures beyond this realm was at museums where entry was often free.

b. Nonprofit Exchanges Where Marketing Is Applied

In the organizational settings and transactions described above, applications of marketing were to products (contraceptives) and services (hospital care) that did not differ in important conceptual ways from commercial transactions. However, there were early developments where the transactions were different in important ways. First, there was very rapid growth in applications to fund-raising. In these cases, target audiences were asked to give money where the benefits of such actions were ephemeral, hard to portray, in the distant future, and/or benefits to other third parties. In my estimation, the early adoption of marketing ideas here was in the rather narrow domain of direct marketing where nonprofit practitioners could see the real value of an array of marketing concepts. However, the applications were more tactical than strategic.

Different strategic thinking, however, was required in two other areas of interest in the late 1970s and 1980s, blood donations and recycling. However, unlike the examples mentioned above, both of these domains presented new challenges for marketing thinking because they were fully non-economic and reflected many of the characteristics of such transactions cited earlier. This growing focus on non-economic transactions led to journal articles that began to explore the differences between the two sectors. In 1979, Michael Rothschild asked "Why Can't We Sell Brotherhood Like Soap?" (Rothschild 1979) and two years later Bloom and Novelli sought to define the special problems inherent in social marketing (Bloom and Novelli 1981).

The most recent applications in nonprofit marketing have been in an area where the transactions are typically not economic, as in the case of many social marketing program and campaigns. While social marketing of "pure behaviors" (as opposed to social marketing of contraceptives) has been around since the earlier 1970s with the participation of marketers in the National High Blood Pressure Education Program, its growth has been phenomenal in the last 15 years (Andreasen 1995b; Novelli 1990). At this point, social marketing has been adopted by a wide range of private, public and private-nonprofit organizations and institutions world wide, including the Centers for Disease Control and Prevention, the U.S. Agency for International Development, the U.S. Department of Agriculture, the National Cancer Institute, and the American Association of Retired Persons (AARP). There are now social marketing textbooks (Manoff 1985; Fine 1981; Kotler and Roberto 1989; Andreasen 1995b), readings books (Fine 1990; Goldberg, Fishbein and Middlestadt 1997), chapters within mainstream texts (Kotler and Andreasen 1996) and a Harvard teaching note (Rangun and Karim 1991). There have been reviews of the accomplishments of social marketing (Fox and Kotler 1980; Malafarina and Loken 1993) and presidential addresses for two different consumer behavior organizations calling to researchers and academics to become more deeply involved in studies of social marketing (Andreasen 1993, Goldberg 1994). Centers for social marketing are now present or proposed in Tampa, Ottawa, and Glasgow, Scotland. A social marketing "listserver" now has over 600 participants and there are several social marketing websites.

c. The Role of Academic Institutions

There was relatively slow growth in the number and range of nonprofit texts and materials that were developed in the 1980s and early 1990s. This reflected a greater focus in the Reagan years on private sector growth and on personal self-centeredness. It also reflected a shift in the interests of the scholars and researchers who produced the early work in this area in the face of the realities of academic life in schools of business in the 1980s. First, in most schools of business, it was relatively rare for students to consider a career in nonprofit marketing. Most undergraduates were interested in private sector careers and saw few role models in nonprofit sector. Further, they were unlikely to think far enough ahead to the time when they might be on nonprofit boards and could benefit from exposure to the nonprofit world as undergraduates. For their part, MBAs could appreciate the possibility of a future board role, but they too were oriented toward private sector careers. Thus, business schools did not seek - or reward - faculty who wanted to teach about nonprofit marketing or do research on the topic..⁽⁷⁾

In the 1990s, several forces have resulted in something of a rebirth of interest in work in this area. First, some business schools have learned the value of research that stretches their faculty and have rewarded seminal contributions in this domain. Second, business schools have taken a greater interest in issues involving social responsibility and have observed that more corporations are becoming involved in social initiatives. Thus, one saw in the late 1980s and 1990s the reappearance of nonprofit marketing texts that were first written in the early 1980s (Rados 1996, Lovelock and Weinberg 1989), as well as the continued revision and publication of the original Kotler text, now co-authored by me (Kotler and Andreasen 1996). There also has been a growth in the number of papers and presentations at marketing academic conferences on nonprofit and social marketing topics.

In the absence of interest by business schools in teaching nonprofit management (with the major exception of Yale University), the 1990s saw the emergence of a number of nonprofit degree programs outside of business schools at places like Case Western Reserve, Indiana University, and the University of San Francisco. On the other hand, a review of the curricula in such nonprofit programs indicates that courses with marketing titles are still relatively rare.

Finally, scholarship on nonprofit marketing topics has been aided by the growth in the number of nonprofit managers who have experience in the private sector and who can appreciate marketing as a management tool. The latter two forces have spawned a significant market for nonprofit marketing "texts" that are written in a much more popular and accessible style. Publishers have been quick to fill this gap, particularly Jossey-Bass, the leading publisher in this area. A June of 1999 search of the Amazon.com website turned up 21 books under "nonprofit marketing." Of these, only four were by scholars identified by this author to be in marketing departments or business schools.

Conceptual Contributions to Nonprofit Marketing Management

I have argued that marketing can best be thought of as a mindset, a process and a set of concepts and tools (Andreasen 1995b). In my view. the conceptual contributions from the commercial to the nonprofit worlds have been in all three areas.

a. The Customer Mindset

It is only possible to enumerate some of the more important conceptual contributions that commercial marketing has made to nonprofit and social marketing management. Probably the single most important contribution of marketing to the nonprofit world is what has been in teaching them what has been called the "customer mindset." For many years, often under quasi-monopoly conditions, nonprofits thought that all they really needed to do to get patients or donors or volunteers to do what the organization wanted was simply to announce the opportunity and tell the intended target audience about the benefits of the proposed action (giving money to the United Way, volunteering at the YMCA, or quitting smoking). The so-called marketers knew what the problem or need was and thought that relatively simple communications vehicles such as clever direct mail would achieve their ends. This organization-centered mindset often led the managers in the case of program failure to think of the customers as the enemy and this, in turn, got in the way of organizations developing a research orientation and being willing to make significant changes in their offerings. Their solution to a lack of success was simply to say to themselves that somehow they "have to tell our story better."

The adaptation of a customer mindset by the more sophisticated nonprofits has led to increased use of a wide range of research techniques at three stages of the typical marketing campaign. First, more nonprofit and social marketing organizations are now more often conducting formative research to guide them in the development of their initial plans and tactics. Second, organizations are more often likely to pretest their major tactical elements before committing them to the field. Finally, a few organizations have seen the importance of continuing customer research to track performance and to adjust strategies and tactics.

A customer mindset has led to the exploration of many consumer behavior models from mainstream marketing (or that are used by mainstream marketing thinkers) in an attempt to understand how people make decisions to act in socially important situations. Works by Ajzen and Fishbein (198o) and Bagozzi and Warshaw (1990) have been particularly useful.

One of the areas that has made extensive use of "customer research" is political marketing (Newman 1994). Here, major and minor campaigns of politicians and issues commonly use "focus groups" to understand target audiences and to test out possible positions and potential advertisements. Regular polling (often overnight) has become a mainstay of politics, particularly at the national level.

b. The Marketing Planning Process

A number of authors have focused on how to introduce marketing more deeply into nonprofit organizations (Kotler 1979) and a number of nonprofit organizations have learned to make extensive of use of marketing planning processes (Andreasen 1990, 1992). These processes are of two types. First, there is organization-level planning where the institution plots its course of action over an extended period of time. Many of the components of this process, such as the development of mission statements, SWOT analyses and portfolio models are drawn from standard management and strategy texts and articles. Marketing thinking has also pervaded the planning process in the following respects:

• Marketers make clear that communications is only one element of the marketing mix. Two many nonprofit managers think that (a) marketing IS just communications and (b) this is all you need to influence behavior. Yet many nonprofit communications are failures because of inadequate attention to the design of products or "benefit packages" or the pricing of offerings or the distribution of behavioral opportunities.
• The concept of the marketing audit (Kotler, Gregor and Rodgers 1977) has been found to be helpful in a number of nonprofit and social marketing programs (Andreasen 1978, 1982; Herron 1978; Berkowitz and Flexner 1978);
• Marketers have emphasized the importance of tracking systems to assess organization and program performance. For example, in the 1980s, family planning programs in developing countries sought to develop retail audit methodologies for contraceptive sales to give themselves better information and to help answer questions about the overall market effects of their programs⁽⁸⁾ (Andreasen 1988a).
• Marketers have introduced the concept of brand management as an alternative form of organization for nonprofits.

c. Marketing Concepts and Tools

There have also been important developments in transferring concepts and tools in specific areas from the commercial to the non-profit sectors. Among these are segmentation, branding, and alliance-building.

1. Segmentation

For many years, the nonprofit world segmented markets relatively crudely on the basis of standard demographics. However, in recent years, contact with private sector organizations and consultants has led to more sophisticated approaches. A good case in point is the imaginative use by Cynthia Currence and her colleagues at the American Cancer Society of geo-demographic clustering and related segmentation techniques. The American Cancer Society now routinely uses the PRIZM system to improve the efficiency and effectiveness of its fundraising efforts by tailoring messages and effort levels to the 62 neighborhood clusters established by Claritas. They have also begun to use this approach for their health intervention programs. For example, a recent project discovered through this technology that programs to increase the frequency with which women obtained mammograms in specific urban areas could be focused on only four PRIZM clusters where mammogram rates were particularly low and clusters had other characteristics identifying them as underserved (Currence 1997).

2. Branding

Two forces have led nonprofits to become much more interested in the branding possibilities inherent in their names and reputations. The first is the growing importance of alliances in the nonprofit sector where negotiations inevitably involve considerations of the value of the nonprofit brand, particularly the value to specific partners. Second, branding has become more important as nonprofits face more competition. Competition has always existed in traditional areas like fundraising and volunteer recruitment. However, many more nonprofits have entered heretofore exclusively commercial markets with products and services. Between 1977 and 1996, the number of nonprofits increased 36% while the revenues of those in the so-called independent sector⁽⁹⁾ increased more than fivefold (Independent Sector 1998). This means that nonprofits must fight each other harder for traditional financial and human resources. But as many supplement their revenues with for-profit ventures, they also are faced with competition from the private sector itself. Finally, many nonprofits are finding that domains they once considered their own preserve, now face competition from the private sector, for example in areas such as hospital and long term care, worker training, and public services such as prisons, waste removal, and transportation(Weisbrod 1998).

As a consequence of these competitive pressures, nonprofits have come to realize that they could be more successful if they (a) had a clearer idea of how they were perceived; (b) what the dimensions are on which those perceptions are formed; (c) how they differ from competitors on these dimensions; and (d) what gains might be obtained from various repositioning strategies. One of the top ten US nonprofits recently hired a major consulting organization to carry out branding and positioning research for the organization and each of its major resource-attraction and service-delivery areas. This exercise made significant use of laddering concepts from the private sector to understand fundamental values that under-girded impressions of the organization. As in the private sector, these fundamental values then are becoming the basis of many of the organization's present and planned marketing initiatives (Ritchie, Swami and Weinberg 1999).

3. Alliance Building

Nonprofits have become increasingly involved in alliances with commercial organizations. There have, of course, been such alliances for many years in the areas of advertising and volunteer service. Campaigns by the Advertising Council have produced some of our most memorable ad copy and most enduring icons. For example, consider the tag lines:

• This is your brain on drugs
• A mind is a terrible thing to waste
• Only you can prevent forest fires
• Take a bite out of crime
• Friends don't let friends drive drunk

Ad Council campaigns have given us Smokey Bear, McGruff the crime-fighting dog, and the crash-test dummies.

What has changed in the relationship between nonprofit and private sector organizations recently is the shift in corporate philanthropy from giving programs to strategic investments (Smith 1994; Burlingame and Young 1996). This has changed nonprofit approaches to corporations from begging to partnering (Weeden 1998; Austin 2000). Corporations have realized that alliances with nonprofits can have important effects on sales, company image, and employee morale. Alliances can also help them in political battles many face. Beginning with creative insights from American Express, these new alliances first took the form of cause-related marketing activities (Varavaradjan and Menon 1988) where transactions were tied to charitable contributions. As companies began to see the strategic advantages of these partnerships, they began to create alliances that I have labeled joint issue promotion (Andreasen 1995b) where both parties, for example Avon and various breast cancer organizations, pursue the same social goals. Finally, there has been a recent spate of licensing arrangements, for example where the American Cancer Society has allowed its name to be used by the marketers of NicoDerm and Florida Orange juice in the belief that such use of the ACS brand will increase the number of people undertaking important cancer-prevention behaviors.

Marketing alliances have proved to be a mixed blessing for some partners and many observers have raised questions about the ethics of such relationships, particularly licensing. Leaders of the American Medical Association found themselves in significant trouble with members over the agreement the association signed with Sunbeam Corporation. Recently, attorneys general from 16 states and the District of Columbia issued an advisory opinion to regulate some of the activities in this new area of collaborative promotion between nonprofit and for-profit organizations.

Reciprocal Intellectual Benefits

As I have argued elsewhere (Andreasen 1993), the transfer of knowledge is not unidirectional. Mainstream marketing has benefited in important ways from the "broadening" experience. In the developing world, this is because nonprofit marketers and their consultants have diffused management and research concepts to commercial organizations that were unfamiliar with them⁽¹⁰⁾. More generally, Peter Drucker has argued that mainstream management even in the developing world has much to learn from nonprofits that "are practicing what most American businesses only preach" (Drucker 1989).

In the area of scholarship and research, the nonprofit domain has yielded - and can yield - important intellectual contributions to mainstream marketers and can offer even more in future. I offer a limited number of examples.

a. Foot-in-the-Door Theory

Marketers have always faced the challenge of motivating people to take actions where the payoffs to the actor are vague and long term, e.g., convincing a promising brand assistant to take a position in Myanmar because of the "growth opportunities." As noted above, the nonprofit world is replete with challenges wherein marketers must induce target audiences to undertake actions where there is no obvious personal, concrete payoff.

It is not surprising, therefore, to find that fundamental research on securing compliance with requests was done in a nonprofit context. Pioneering work on the foot-in-the-door technique was carried out in the 1970s and early 1980s (Scott 1977) on what it would take to get householders to help out with a social cause and later by Reingen and others in soliciting charitable donations (Reingen 1978). This early research was then extended to the creation of strategies to get people to respond to marketing research survey requests (Allen, Schewe and Wijk 1980) in the private sector.

b. Exchange Theory

I believe that it can be convincingly argued that one of the most fundamental changes in the way we understand and study marketing came about because of the broadening trend in the field in the 1970s. Richard Bagozzi's pioneering work on exchange theory (Bagozzi 1974; 1978) was, in fact, an essential for marketing to venture beyond the traditional confines of economic transactions. To make it possible to apply marketing to

charitable giving or getting people to stop smoking, we needed to develop a way of thinking about the "exchanges" that marketers were trying to solicit as something other than an offer of economic goods or services for a financial payment. The field also had to allow for transactions that went beyond simple two-way exchanges to account for the fact that, in some cases, the prime beneficiary of an exchange (especially in the nonprofit world) was a third party, for example, when recycling benefits not the recycler (who mostly has costs) but the society as a whole. Bagozzi was able to develop a fundamental framework that would account for these differing exchange models. Exchange theory is now fundamental to most basic marketing and consumer behavior texts and to much research in both mainstream and nonprofit marketing.

c. Other Past and Potential Reciprocal Contributions

The fact that many non-profits have limited budgets yet are urged by their mentors to engage in customer research in early years created considerable frustration. As a result, I wrote a series of articles and a textbook, Cheap But Good Marketing Research (Andreasen 1988b) to help such managers. One of the articles introduced the concept of "backward" marketing research (Andreasen 1985) as a process for ensuring that research would have maximum usefulness - and thus minimize the waste of limited resources. Both publications have seen wide use in the private sector (and the classroom) and the "backward" approach was adopted at one point as standard procedure at DDB Needham's research department.

Social marketers often are charged with influencing highly sensitive behaviors in foreign environments. As a consequence, they have had to develop approaches that would allow them to obtain deep understanding of culture-bound behaviors with little budget. To achieve this, several social marketing programs have developed a technique called "Rapid Ethnography" which involves applying many of the in-depth interviewing and observational techniques of cultural anthropologists over a very short time span to topics like the treatment of diarrheal disorders in developing countries (CITE). Such approaches would seem have considerable potential for mainstream marketers with limited budgets - or immediate deadlines -- serving unique but poorly understood cultures

Because the language and culture of many target audiences represents unfamiliar terrain for nonprofit marketers, social marketers have become adept at perfecting community-based approaches to the development of research instruments, communications messages and other intervention components. A common technique is to involve the target audience itself in the design process. For example, a campaign by Porter Novelli in Tijuana effectively solicited the help of female sex workers in the development of a series of comic books intended to teach skills for dealing with various types of clients who did not want to use condoms (Ramah and Cassidy 1992). Such customer-created instruments capture well the basic marketing concept and deserve wider adoption in the commercial sector.

Summary and Future Directions

This review of selected aspects of knowledge development in the nonprofit sector permit the following tentative conclusions:

1. Today, no one in the marketing or academic communities seriously questions whether the marketing concept should be broadened to include the nonprofit and public sectors.

2. Managers in the nonprofit sector have learned much from the commercial sector in terms of:

• The customer mindset
• The marketing planning process
• A wide array of concepts and tools

3. Adoption of these commercial sector concepts and tools was - and is - most likely to come about where the organizational environment and the exchanges involved are most like the private sector. For example, adoption of marketing technology in the nonprofit sector appears to have taken place first in settings where the transactions involved are largely economic in character and only more recently in settings where transactions do not involve the exchange of money in either direction.

4. Transfer of this knowledge to the nonprofit sector has been carried out both by business school scholars and professors and by scholars in other disciplines.

5. While they are shrinking in number, some practitioners in the nonprofit and public sectors resist the adoption of marketing technology in areas where it might be appropriate. This can be attributable to an unclear conception of what good marketing is all about.

6. Despite the growth in importance of the nonprofit sector, nonprofit courses are rarely found in business schools. (It is also true that the major professional association in marketing, the American Marketing Association, offers little institutional support for the topic.)

7. While the "slack" in management education for nonprofits has been taken up by schools other than business schools, nonprofit marketing courses are still relatively rare.

8. Knowledge transfer between the sectors is not one-way; it is better conceived as an interpenetration of marketing ideas. Research and conceptualization about the unique problems of marketing in the nonprofit sector have yielded important conceptual breakthroughs of value to the commercial sector as well as to the nonprofit sector.

Although there has been a substantial amount of interpenetration between the sectors, the potential for further knowledge growth in both directions is significant. A number of steps need to be taken:

1. Business schools should recognize the growing importance of the nonprofit sector and the potential value of marketing technology to individuals who will work, consult or serve on boards in that sector. Therefore, they should

• More frequently offer courses in nonprofit marketing in undergraduate, graduate and executive programs;
• More frequently offer short courses and workshops on nonprofit marketing as part of their executive education offerings

2. The American Marketing Association should also recognize the growth of the nonprofit sector and the potential value of developments there for the commercial sector and:

• Actively solicit members from the nonprofit world
• Establish a Special Interest Group on nonprofit marketing
• Fund or at least facilitate periodic - or annual - conferences on nonprofit marketing

3. Faculty who are mentoring doctoral students should seriously consider non-profit contexts in which to study phenomena of general relevance to marketing. Among the topics where this context might provide breakthrough mainstream insights include:

• Long-term acquisition of new behavior patterns or lifestyles (hobbies, sports, etc.)
• Research methodologies for non-literate or low-education targets;
• Modeling alliance formation, evolution and management
• Ethical issues across diverse stakeholder groups
• Private-public-nonprofit competition

4. Marketing teachers, textbook writers and consultants should investigate the transfer potential of many additional research and planning tools being widely adopted in the private sector but rare in the nonprofit world. Nonprofit managers are, in fact, eager to learn more about such topics as:

• Electronic commerce
• Horizontal alliances among marketers
• Co-branding by non-profits
• Relationship marketing
• Mathematical modeling of decisions about distribution, pricing (especially across segments), promotional spending⁽¹¹⁾
• Advertising schedule optimizers (as more nonprofits pay for advertising instead of relying on public service spots)

5. Commercial marketing professionals should be encouraged to lend their talents to nonprofits in order to facilitate one-to-one transfer of marketing thinking.

Concluding Comment

A future marked by increased transfer of marketing knowledge from the commercial to the nonprofit and public sectors seems assured. Typical of what is happening today is an August 1999 news story in The Nonprofit Times describing a two-year reorganization effort of the American Heart Association (AHA). This initiative forced the AHA to a "redefinition of [their] driving forces." The organization concluded that the four major forces on which it need to concentrate for future success are:

• Generating resources
• Communicating its key message to medical and lay audiences
• Advocating for the general public
• Determining where the organization's biggest impact would be from the standpoint of focusing resources.

Since three of these factors clearly imply major marketing efforts, it is not surprising that the article concluded that: "In addition to taking advantage of technological advancement, the AHA also decided to bring in more marketing expertise." (McNamara 1999).

This is an organizational trend that can be expected to be repeated frequently throughout this sector in the next decades. And it is a trend that can support accelerated transfer of marketing concepts and tools - in both directions.

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NOTES

¹ Journal of Non-Profit and Public Sector Marketing; International Journal of Nonprofit and Voluntary Sector Marketing

² Health Marketing Quarterly; Journal of Hospital Marketing; Social Marketing Quarterly; Journal of Marketing for Higher Education.

³ Of course, the promotion of non-economic behaviors has indirect economic consequences for the nonprofit. Many institutions that do not charge directly for their services (public libraries, museums) obtain indirect economic benefits in that their budgets bear direct relationships to the levels of service provided.

⁴ Material in the next three sections are adapted from Alan R. Andreasen, Marketing Social Change. San Francisco: Jossey-Bass 1995.

⁵ Of course, many donations yield some tangible returns in goods and services such as access to special events, subscriptions to newsletters, commemorative t-shirts or coffee mugs and so forth.

⁶ It was a measure of limited significance of the nonprofit marketing field that the publisher, Prentice-Hall, did not bother to create a teaching manual for this book until its fourth edition!

⁷ An informal Public Interest Affinity Group (PSAG) has emerged in recent years to explore more systematically the possible role of nonprofit issues, training and research in MBA programs. Early meetings of this group were funded by the Aspen and Kellogg Foundations.

⁸ A persistent question of such programs was whether subsidized contraceptive sales were merely taking sales from the commercial sector.

⁹ Organizations classified by the IRS as 501.c.3 or 501.c4. and religious organizations.

¹⁰ I once interviewed a commercial marketer in south Asia about his role in carrying out a contraceptive social marketing program. When I asked about the benefits he received from this involvement, he was most enthusiastic about learning about focus group research which he assured me he was going to employ regularly in his commercial venture.

¹¹ For example, could airline yield management models be helpful to those in the theater or the arts?