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RELATIONSHIP MARKETING. TARGET: NONPROFITS
Alexandra ZBUCHEA
National School of Political Studies and Public Administration, Bucharest, Romania
alexandra.zbuchea@comunicare.ro
Abstract: Most of the companies are very careful in managing their relations with
other businesses, economic partners and important clients, due to evident
advantages. But how would companies design and maintain relations with nonbusiness parties? Are economic reasons alone worth the investments? Many
companies consider that the profits are all but financial, and that the balance is
negative? Even the debated and fashionable corporate social responsibility is seen
more as a beautiful concept good only to improve the company’s image. The paper
will discuss the advantages of the companies which develop good relationships with
nonprofit organizations.
Keywords: CSR, nonprofit organizations, relationship marketing
1. MARKETING - MORE THAN BUSINESS ORIENTATION
The marketing attitude changed especially in the last decade from customerdriven to market-driven. Being market-driven is a development of being customerdriven It means (Webster 1994 b) understanding how customer desires and needs
intersect the company’s capabilities in a competitive context. Because of these
interactions the customer's definition of value is formed. This definition rarely has
only an economic dimension. The non-economic aspects are increasingly more
important for customers. In order to better understand and satisfy their customers,
companies need to listen more carefully to them. In this context, Webster (1994 b)
proposes 15 guidelines for better marketing. Some of these refer to organization’s
relationships: build relationships and loyalty, grow with partners and alliances - with
present and potential customers, suppliers, distributors, and competitors etc. But his
view is customer-centred, considering that the entire network should be focused on
the customer.
The discussion regarding the role of marketing is not limited to how wide its
field of expertise and its implications are. The status of marketing is debated and
contested inside an organisation by other specialists. The non-marketers accuse the
marketers (Baker 2004) of being unaccountable for the activities they are involved
in… This view seem to also be influenced by the fact that increasingly more of the
marketing’s attentions are drawn by the non-economic activities, and increasingly
more results are non-economic, related with the company social-responsibility.
Therefore this part of the marketing is difficult to measure and less evident within
the company.
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2. SOCIAL RESPONSIBILITY - A POWERFUL ASSET OF A
COMPANY
Following this international trend, in the last years in Romania the concept of
corporate social responsibility (CSR) has been debated both by pro-profit and notfor-profit worlds. CSR has been defined (Basil et al, 2006) as activities that protect
and improve both the welfare of society as a whole and the interest of the
organization (e.g. donations for social or cultural causes, environmental initiatives,
etc.) Thus, the corporate behaves as a good citizen.
The theoretical debates and the increasing implication of companies in social
and cultural fields raise several ethical and practical problems (Kryhul, 2006). The
importance of the customer prevailing values is stressed in the context of setting
company’s values and its social responsibility. In order to be effective in this social
field, the effects of the CSR programs have to be measured. These results are not
only social (and cultural if the case), but also economic.
Higgins (2002) shows that the association of the marketing philosophy and the
supporting of a social goal (cause related marketing) leads to increased sales,
besides improvements in the company’s image. Another important outcome, that
also leads in time to economic benefits, is the improvement of the employees’ moral
and loyalty. Thus social and commercial are interconnected. This view is shared
both inside and outside a company. A study developed recently by Basil et al. (2006)
shows that CSR is valued by the general public, but especially women and older
persons tend to buy based on the CSR programs of a company. In order to be
socially responsible and to fully benefit from such a business perspective, a
company has to develop large social responsibility programs. Part of this programs
should be associated with corporate’s social marketing policy (CSM). Bloom (1995
a) highlights that a company should devote time and money to persuade people to
engage in a socially beneficial behaviour (CSM). Both CSM and CSR relate the
company with nonprofit organizations as well as with non-economic publics.
3. RELATIONSHIP MARKETING – DEFINITIONS AND TRENDS
The organization’s and the marketing’s roles are changing in the 90s. More
attention was dedicated to long-term relationships and networks. In the beginning,
especially in the 80s the important of the relationships with clients was stressed
(Peck et al., 1999), later other economic relationships became equally important
(Webster, 1994 a). The customer markets are related by the new relationship
marketing (RM) concept with 6 market domains by Christopher, Payne and
Ballantyne in 1991 (Peck et al., 1999): supplier & alliance markets, recruitment
markets, internal markets, referral markets and influence markets. Still, the stress
remain on the business aspects, and the relationship marketing remains customer
oriented. The not-for-profit sector (including the governmental one) could be
encountered in the referral and influence markets. A year later, in 1992, Kotler
identifies 6 key players outside a company: financial companies, government, allies,
competitors, media and general public (Peck et al., 1999). The relationships with
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each segment is the object of specialized marketing domains (i.e. financial
marketing, governmental marketing, allies marketing etc.) Taking into consideration
the theoretical importance of the non-profit sector defined by this model, one
observes a setback.
In this context Webster (1994 a) develops a value-delivery concept strategy and
relates relationship marketing with customer relationship management (CRM). He
points out that the new marketing concept calls for defining the business "from the
outside in," being an informed "expert" about the customer, and letting the customer
define value by matching up the customer's needs and preferences with the firm's
capabilities. He argues that an organization has to be a network organization and it’s
marketing role is to keep all of the partners focused on the customer's definition of
value. Again the customer importance is stressed. Despite the broader 6 market
domain model proposed by Christopher, Payne and Ballantyne, some specialists still
stressed the economic aspects. For instance Hunt (1994) states that RM refers to all
marketing activities directed at establishing, developing, and maintaining successful
relational exchanges in the supplier, lateral, buyer, and internal partnerships.
In the same time, other specialists, such as Morgan and Hunt in 1994 or Doyle
in 1995 deepened the analysis of the macro-environment and designated a place for
nonprofit organizations (Peck et al., 1999) Morgan and Hunt define lateral
partnerships as comprising non-profit organizations (along with competitors and
government). Doyle identifies as external partnerships strategic alliances (besides
competitors and government). Thus increasing stress is set on the relationships with
nonprofit organizations and their strategic importance for a company.
Generally, analyzing the concept, specialists are not oriented in identifying the
organizations at the other end of the relationships, but in pointing out the way RM
works and how to develop its specific programs. This interests are evident in the
later definitions. For instance, for Palmer (2005) RM is concerned to identify,
establish, maintain and enhance relationships with customers and other stakeholders,
at a profit, so that the objectives of all other parties involved are met, while for the
American Marketing Association relationship marketing is defined as marketing
with the conscious aim to develop and manage long-term and/or trusting
relationships with customers, distributors, suppliers, or other parties in the marketing
environment. The literature is very diverse in dealing with the concept. For instance,
a more general approach discusses 4 dimensions of RM: bonding, empathy,
reciprocity and trust (Yau et al., 2000). Another useful concept analyzed by
literature is the relationship chain (Payne et.al., 1998). This concept is defined by
Payne et al. as related with the economic transactions and aiming the customers. It
could be extended to a philosophy as ensuring quality, mutually advantageous
relationships throughout the networks an organization is part of.
But despite the broadening of the concept and practice, specialists still stress
customer relationships. For instance Hart (1999) highlights the importance of client
loyalty and suggests ways of developing relationships that lead to total trust.
Because for such customers see no competition on the market he strongly
recommends relationships investments (of course, customer-oriented).
The loyalty of the clients is developed also by giving them more freedom in
interacting with the company. In this context it is recommended to help clients to
customize and control their relationships with the company (Flack 2001). Thus, new
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key concepts could be considered: service flexibility, accessibility, communication,
better customer understanding, etc.
The economic benefits of the company that develop strong customer
relationships are important: lower customer price sensitivity, reduced expenditure to
attract new clients, improved organisational profitability (Rowley, 2005). The
amplitude of these effects depend on the customer’s loyalty degree: captive,
contented, convenience-seeker, committed. The marketing programs should aim in
committing its clients. Because the customer relationships also depend on
distributors who directly influence customers and shape their reactions and thoughts.
Thus the channel relationships are important, and the company should take into
account the preferences and needs of its distributors (Blesa 2005). Strategic alliances
could be developed in order to better satisfy the customers and to increase profits of
those involved. It also leads to long-term relationships, retention and loyalty both
regarding customers and other members of the so-developed networks.
Strategic alliances could be developed even with the competition. Hunt (1994)
points out that the concept of competition has changed in the global economy, that
the global partnerships and alliances involve also competitors, not only suppliers,
distributors or peer partners. Zineldin (2004) advocates for collaborating, cooperating and coordinating with other companies serving the same markets. He
proposes a new attitude: co-opetition. Co-opetition thus implies that organisations
can interact in rivalry due to conflicting interests, and at the same time co-operate
due to common interests... It involves relationships, interactions, attitudes, motives,
behaviour, needs, actions and satisfactions.
Due to changing environment and practices, the marketing changed to
relationship marketing (Payne et.al., 1998). The concept of RM also changed
(Lindgreen, Palmer & Vanhamme, 2004). Different aspects of RM are transaction
marketing, data-base marketing, network marketing, e-marketing, interaction
marketing or relational marketing (focused on customer retention). RM can be seen
behavioural or attitudinal (Palmer, Lindgreen and Vanhamme, 2005). The
behavioural approach is more traditional and business oriented, aiming to achieve
repeated transactions. The attitudinal perspective is related to obtaining a mutual
acknowledgement that the relationship exists, are stable and capable of developing
the business. No matter the approach, the results of RM programs should be
measured. The study of Yau and his colleagues (2000) shows that RM maximizes
the long-term efficiency of a company.
4. RELATIONSHIPS WITH NONPROFITS – PROS AND CONS
Specialists did not always relate CSR, cause related marketing or other forms of
social marketing with relationship marketing. Despite this, at the present the
importance of being socially involved is largely accepted, even if the place of such
an approach within the marketing policy is not definitely set. Another general
assumption recognized nowadays is that the social implication of a corporate should
be extended to its employees.
For instance M.Thomas (2006) recommends that managers should consider
themselves citizen professionals with responsibilities. He points out that the civic
professionalism is inter-connected with several dimensions: inter-professional
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collaboration, mutual empowerment, learning networks and organizations,
sustainable global well-being. They all are related with and lead to social-cultural
capital and strong relationships with the civil society.
The civic professionalism should not be associated only with the upper
managerial levels. The managers are those who direct action within the organization
and are the most prominent spoke-persons, but to fully benefit from such an
approach, all the employees have to act, to recognize themselves and to be
recognized as active citizens. Such an organization would be more civic-dynamic,
would have a better image from a social-cultural perspective and would be more
trustworthy from the nonprofits perspective. It would be accepted as a close
associate of the nonprofit world.
Many companies of this time promote not only sponsorhips and other forms of
passive involvement but also cause related marketing. It is a long-term partnership
between a non profit group and a corporation that, unlike corporate philosophy, is
part of a coordinated marketing program (Higgins 2002). The relationship is
intended to benefit both the nonprofit’s goals and the organization’s objectives. In
order to be effective for the benefit of everybody involved, such programs have to
be designed for at least 3 years. They also have to me promoted inside and outside
the organizations and to obtain support from within and without.
The relationships between companies and nonprofits are effective only if the
parties are able to communicate and interact with each other. This could be a tough
task because many times nonprofits are suspicious at the address of business world.
On the other hand many tensions could arise inside a business do to the (sometimes
only) perceived contradictions between the economic objectives and needed social
actions. In order to long-term cooperate, each party should be willing to give up
something valuable in order to receive value from the other partners. The
relationship is a negotiation in order to be mutually rewarding. This process should
be beneficial not only for the parties involved but also for the beneficiaries of their
activity, broadly speaking the community or even the society.
The art of this negotiation consists in attaining a positive balance between the
pros and cons of the relationship. Everybody involved has to be satisfied taking into
account a long-term partnership. Because conditions are dynamic, the relationship
could change, but the above mentioned balance has to be stable.
The companies bring information, experience, skills, know-how, connections in
the relation with nonprofits. They also bring finance and highly trained
professionals. Nonprofits understand better the cause and the social environment,
know and can positively address the public, understand the messages.
One of the most stressed downsides of the association between a nonprofit and a
corporate is the internal relationship between the two sides. Especially in set longterm partnerships, nonprofits tend to become financially dependent which could lead
them to give up or pervert some of their goals. Bloom, Hussein and Szykman (1995
b) highlight this paradox: in order to be effective long term commitment of the
companies is necessary, but this could lead to conflicts of interest with the partner
nonprofits. Another aspect researchers stress is that a long-term and tight
relationship could develop problems of image. The bad aspects and image crisis of
the nonprofits are also reflected upon companies and vice versa.
Even if cooperation is not easy and is a long-term process, it is necessary.
Nowadays the public expects the companies to be socially responsible. The reasons
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why products associated with CSR efforts may vary (Basil et al., 2006). Some of
these are even egoistic and persons concerned for their social appearance could buy
these products to enhance their ego. No matter the reason, companies should
convince the public not only to buy from them, but also to be loyal and to advocate
for them. In this context, corporate social responsibility and relationship marketing
associated with nonprofit sector are a must.
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