| MARKETING
FOR A NON-PROFIT ORGANIZATION
By: Ahmed Alhalal, Charles Hazzard, Dreu dixon, Faisal Al Mubayedh, Kelly Walker
April 11, 2013
Introduction to Engineering Management- 2111-001

MARKETING
FOR A NON-PROFIT ORGANIZATION
By: Ahmed Alhalal, Charles Hazzard, Dreu dixon, Faisal Al Mubayedh, Kelly Walker
April 11, 2013
Introduction to Engineering Management- 2111-001

|

EXECUTIVE SUMMARY

At the start of this project, our team was given a special opportunity to develop a hands-on marketing project with a non-profit organization. This non-profit organization goes by the name of The Lightfactory, and is known as one of four museums of photography and film in the United States. The board of directors requested our team to develop an e-mail campaign strategy to improve membership and donor rates. However, as systems engineers, none of our team members had any prior knowledge of marketing or segmenting. Therefore our team was forced to do some extensive research on non-profit marketing, as well as database segmenting. The ideals and concepts learned throughout the research process were eventually used as a foundation for completing the project objectives proposed by the Lightfactory board of directors.
Segmenting the database was a success and provided some key insights about the LightFactory’s customer base. Most of the customer’s in the database were segmented into three major populations: Big givers, Middle givers, and Low givers. These segments are customers who have donated more than once. Each segment shows the mean, median, mode, upper control limit, lower control limit, and other relevant statistical data. The database was also segmented by regular and former members that had enrolled in classes. Also the concentration of average donations and non-donors in all cities in North Carolina that had people affiliated with The Light Factory to determine where to direct marketing efforts.
The main aspect of the requested project focused on properly segmenting the Lightfactory database. Once the segmenting phase was completed, the team developed a few suggestions through the segmented charts on how to analyze the segmented data. The data was broken down demographically and by transactions, and tendencies were also shown to suggest which audience should be targeted.
TABLE OF CONTENTS I. INTRODUCTION…………………………....................................... [pg. 4] a. Project Overview……………………………..………………………………….[pg. 4] b. Problem Statement ……………………………………………………………. [pg. 4] II. RESEARCH………………………………………………………………………….[pg.5] c. Non-Profit Marketing…………………………………………………………..[pg.5] i. Steps to marketing a non-profit organization……………..[pg. 6] ii. Marketing challenges for non-profit organizations……..[pg.7] d. Database Segmentation……………………………………………………….[pg.10] III. THE LIGHTFACTORY MARKETING PROJECT…………………….[pg.12] e. Project Objectives and Scope……………………………………………….[pg.12] f. Strategy/Approach………………………………………………………………[pg.14] g. Segmenting the Database ……………………………………………………[pg.14] h. Segment Finalization…………………………………………………………….[pg.15] IV. CONCLUSION……………………………………………………………………[pg.16] V. REFERENCES ……………………………………………………………………[pg.18]

I. INTRODUCTION
PROJECT OVERVIEW

The main purpose of this detailed report, is to educate the reader on essential aspects of non-profit marketing and segmenting, while displaying the development of a real world e-mail marketing campaign. The project was first based on a class assignment, but evolved into a unique marketing experience that required a lot on class and field work. Through this report, one will thoroughly learn about common segmenting techniques used, and the marketing concepts that led the team to choosing these segmenting techniques. Application of the learned information is portrayed throughout the report, and so are the conclusions derived from these applications.

PROBLEM STATEMENT

Before commencement of the Marketing project, a clear concise focus had to be established. Every project aims to solve a specific problem, therefore to properly build a project from the ground, a measurable problem must be defined in a way that portrays the entire problematic scenario along with a central solution. Thus, a problem statement was developed in the following manner:

“Research marketing for a non-profit organization from an engineering perspective, which includes database segmentation and segmentation analysis; while effectively applying it in an e-mail marketing campaign”

I. RESEARCH NON-PROFIT MARKETING

Nonprofit Marketing is the use of marketing strategies to further the goals and objectives of nonprofit organizations. Gathering and processing information for Decision-making is considered components of nonprofit marketing. Relations with governments, board members, donors, and volunteers are part of nonprofit marketing. Nonprofit marketing is a management orientation that helps the nonprofit organization expands its limit beyond its internal operations and programs to also include the external world that affects the organization (Wymer 2006). The nonprofit sector thus includes religious congregations, universities, hospitals, environmental groups, art museums, youth recreation associations, civil rights groups, community development organizations, labor unions, political parties, social clubs, and others. The nonprofit sector is sometimes called the voluntary sector. It is also called the civil society, or the independent sector in other countries (Wymer 2006). Included in the non-profit sector, there are two type of nonprofit organizations: An Informal non-profit organization which organizes for an event or project and disbands on completion, volunteer operated, having no paid staff; and a Formal non-profit organization which usually, not always, has one or more paid staff, usually chartered or registered with the government in their country (Rados 1993). Non-profit organizations usually focus on helping the community and are concerned with only enough profit to keep the organization running. Aside from non-profit organizations there are other companies that are focused on making money, which are called For-profit organizations. The Lightfactory is typically considered as a Formal non-profit organization.

Steps to Marketing A Non-profit Organization

Marketing is an unfamiliar concept for many nonprofit organizations. It's important that these organizations understand that marketing is more than just the old sense of making a sale or obtaining a donation. Marketing is a way to satisfying the consumer and donor needs, but at times tends to be unclear as to where a nonprofit organization can start. Below are eight steps that helped our team brainstorm some specific marketing ideas that potentially can make a significant difference in the bottom-line of a non-profit organization. 1. Define your target market, research similar organizations and associations. 2. Determine the desired outcome of your marketing efforts. 3. Using the information gathered in Step 1 and 2 develop brochures and marketing materials that describe the benefits, services, donation opportunities, and values of your organization. 4. Develop a social media marketing strategy. Social media such as Twitter and Facebook can provide you with ways to reach out to those interested in your organization in a low cost and effective way. Social media works great when it comes to reaching those who are passionate about causes that individuals hold dear to their hearts. 5. Develop and maintain a professional internet marketing presence by creating a web site. You can use a web site as a great resource to display useful information, news, monthly newsletters, events, create community, share alternatives to donating money, and showcase the benefits of your organization. 6. Research and maintain your prospect and customer databases. Do not let these resources be wasted. Use them for special mailings, follow-up telephone calls, event invitations, alliance development, research profiling, and market segmentation. 7. Show and advertise the results and objectives that your organization achieves. You will find that it is effective to showcase those that are receiving benefits, inversions, activities, and projects. 8. Always actively search for alliances with other organizations, commerce, government, advertising media, and business. This step alone often brings the most benefit to nonprofit organizations.
(Lake 2012)
These steps were essential in identifying certain segments to use, and in finalizing our e-mail campaign strategy.

Marketing Challenges for Non-profit Organizations
As a Non-profit organization, struggling to compete with other For-profit corporations, or just maintaining can be an intense struggle. Although a company’s main focus may be to provide service for outreach, the proper amount of revenue must be present to keep a company running. Factors such as low focus due to too much variety, converting email clicks into donations, consistency and staying up-to-date can all affect the prosperity of a non-profit organization in a negative way. Below are a few specific challenges that many non-profits face, sometimes unknowingly.

1. When too many specific programs dominate an agency’s central brand: If an organization offers a variety of programs and services it can be difficult to establish and maintain a marketing campaign. An organization’s reputation and ability to attract fundraising for other programs may be damaged as a result. Because the organization offers a variety of different programs, its leaders have found it extremely problematic to market those in a systematic way that connects them all back to the umbrella of nonprofit (Levy 2011). The outcome is a fragmented, unfocused marketing strategy that ultimately fails to give the organization the strong brand image it deserves. If each program creates its own marketing, then they compete with each other rather than complementing one another and strengthening the agency’s overall brand and image.

2. Problems with converting clicks into donations and devotion:
One’s non-profit organization may have an interactive and informational website that engages your target audience. However, hundreds of followers on Twitter and more “Likes” on Facebook than one can count are useless if they don’t produce evident results in terms of contributions of effort, money and time to the main cause. Whether a radio station seeking to convert listeners into members, a museum looking to turn fans of a subject into supporters of the institution, or a nonprofit trying to encourage a program participants to become donors of the agency, many find it difficult to convert listeners, site visitors and event attendees into organization donors, members and advocates ( Levy 2011).

3. New technologies and staying up-to-date
With companies, there is a constant battle to remain the most “up-to-date”. Records show that many organizations portray in their brand review applications that they’re interested in using social media to promote their organization, but that they just don’t know where to start. After all, there are numerous social media platforms (Facebook, LinkedIn, Flikr, Twitter, Google+, Foursquare, Tumblr and more. One nonprofit even expressed in their brand review application that they are worried that their target donor demographic consists of people who are reluctant to test out new technologies, and so they fear that using new media and the web to market their cause will ultimately be unfruitful and a waste of time (Levy 2011). The social media realm is always evolving and at times is hard to keep up with, thus many organizations are intimidated with the swift changes. Learning how to navigate through this fast paced realm can be very influential to organizations marketing successes.

4. The Quality of Naming
The name of an organization is one of the first factors that affect the perception a donor has on an organization. The name of an organization should portray the image and purpose, while appealing to the viewer in a unique light.

5. Reliance on one funding source Some nonprofits are funded primarily through governmental organizations or large foundations, yet it is generally steadier and allows nonprofits more freedom if they pull funding from a wider diversity of sources. If an organization relies heavily on just a few donors, a single annual fundraising event, or government grants to supply it with the money needed for certain programs and operating expenses, it could be in a very difficult situation should one of the central funders not renew their grant. It takes a significant amount of time and effort to build a thorough plan and develop an extensive base of donors. (Levy 2011).
All of these challenges commonly arise in the non-profit sector. An organization should always be aware of these challenges, so that any strategies can be initialized properly. These challenges, in conjunction with the earlier stated steps to market for non-profit organizations can be used as essential pieces to an organizations marketing triumph. Our team used this information to bring a new clarity and perception into the Lightfactory project.

SEGMENTATION

Segmentation is a useful tool for marketing because it allows the person or company who is trying to get a message across a way of finding people who will more than likely show an interest in their product or service. Segmentation is the process of grouping potential customers by finding similarities amongst them that will help connect them to the product or service the user is trying to market. Segmenting requires going through a large amount of data and trying to summarize it into useful information. This is called data mining (Data Mining: What is data mining? n.d.). There are dozens of ways to find similarities and patterns within a database, but there are two main categories for segmenting when dealing with non-profits which are demographic and transactions (Fisk 2009). Demographic is information such as age, location, gender, and occupation. When segmenting by using demographic information finding similarities or patterns within this data set can help the user to discover a common need that the service or product being offered could fulfill. For example if you are trying to sell new and used textbooks and you have a database that contains the names, emails, and occupations of all of the people in Charlotte it would be best to try and find a common link such as those who list their occupation as student. Similarly when dealing with transactions you are looking at an individual’s or group’s interaction with your business. For instance if you own an ice cream shop and you have a database that includes the names, addresses, and the flavor of ice cream that each customer buys you can use this information to better market a new or existing product. If there is a new flavor of chocolate hitting the market, it would be a waste of time to market to those who only buy vanilla because it is less likely that your efforts will result in a sale. Instead you would want to market this product to those who frequently buy chocolate ice cream because there is an increased chance that they will buy your new product. Demographic and transactional data can be used in conjunction to determine patterns amongst customers. For a non-profit looking to increase the amount of money they get from donations, they may look at donors who have given the largest amount of money. After looking at this info they may find a pattern of high donations coming from a particular zip code. Or they may see that they are seeing more frequent donations from a particular age group. This would help focus the efforts on the individuals who will more than likely insure a higher return on the time and money invested in marketing.
A popular technique used in database marketing is RFM (Recency Frequency Monetary) analysis (Rouse 2005). This uses a lot of transactional data such as how recent someone donated, how frequently they donated, and how much they donated. This data can uncover patterns amongst customers and donors. People who donate once are likely to donate again (Rouse 2005), therefore people who donate more often, recently, and make larger donations are definitely more likely to make more donations. The way it works is customers, or donors in the case of non-profits, are given a rank from 1 to 5 in each of the three categories (Rouse 2005). Those receiving the highest score are found to be better targets for marketing.
Database segmentation can increase a company’s return on investment, but segmentation can be done improperly. Three things to consider when segmenting are the segment size, growth of the segment, and the completion for that segment (Viveiros 2013). If a segment is too small, then it could be a waste of time to spend marketing efforts on such a small group of people. Growth of a segment is important because getting new customers in is one of the best ways to keep revenue coming in. If a segment has plateaued or is declining, then it is harder to compete for that segment because of the amount of customers. Competition is also important. When entering a market if the product being offered is unique and best serves a segment then it is easier to get or retain customers, also known as niche marketing (BusinessDictionary.com 2013).

II. THE LIGHFACTORY PROJECT

THE PROJECT OBJECTIVES AND PROJECT SCOPE

The project objectives and scope are along the same lines of completing the project, however the scope is a broader picture and vision whereas the objectives are specific goals that must be met within the project scope. The most effective way to organize this information is in a somewhat simultaneous manner to ensure that neither the scope nor the objectives are overshadowed.
Research Historical Process / Campaign Analysis
Researching the historical process and campaign analysis are derived from the beginning area of the project scope. Researching the historical process of an organization usually includes researching past successes and failures, and some of the processes of any competitors. The Lightfactory directors were unable to retrieve information on their past campaign strategies, and there weren’t any other museums of photography and film close by. Thus, this required the team to do extensive research on methods of marketing and segmenting that are commonly successful. The research was based on non-profit marketing and what it involves. This research also correlated to the campaign analysis portion of the project. A deeper evaluation on exactly what the Lightfactory offers, what problems they face, and what they plan on achieving helped the team better understand what kind of angle to pursue in completing all the objectives. This work was seen as a pre-objective to the three main objectives given by the Lightfactory, entitled strategy development.

Segmentation Analysis
Nearing the middle phase of the project, the Lightfactory provided their email database so that the team could segment and analyze. This area of the project is when the main three objectives came into effect. These three objectives are as follows: Renew old members, Up-sale, and Retention and were specifically given to the team by the Lightfactory board of directors.
The renewal of old members was needed by the Lightfactory because the company was having a big problem with members continuously becoming uninterested. This drop in membership led the team to search for answers to specific questions such as: why did the leave, or what needs to be changed.
Up-sale was the next objective, and was defined to the team as gaining more out of current members. Our plan was to achieve this increase by figuring out how to make the campaign more appealing, to in turn sell higher levels of membership.
The final objective was entitled as retention, and expressed to the team as keeping and maintaining loyal members. To fulfill this objective, our team had to figure out ways to get customers to renew by showing that the company has remained competitive and appealing.
Program Design
This was the final stage of the project scope, and involved designing a new e-mail campaign strategy. The program design would include a new hypothesis and strategy that was based on the specific segmenting done to the database.

STRATEGY/APPROACH

The strategy that the team used to approach their goals was simply based off solid teamwork, meetings, and communication. After understanding the problem and the objectives, the team divided the work equally in order to save time and proceed toward the objectives. The team also had to maintain a solid communication base where a multi-media application for the cellphone was used to directly communicate amongst one another to discuss tasks and to set up meetings. The team met twice a week and sometimes 3 times if necessary in order to guarantee a great performance, keep proceeding, and to make sure that there wasn’t any conflict with any part that a member were assigned to do with another member’s task. E-mails were the most important communication method, where it was used to exchange documents between one another, and it was the only way to communicate with The Light Factory staff to keep them updated on the team’s project. The only constrains that the team faced were setting up urgent meeting or meetings in general where there was a free time conflict among the team members due to school classes and jobs, which forced them to set up meetings at late hours.

SEGMENTING THE DATABASE

Segmenting the database was a time consuming task, but the final insight it provided made it worth the effort. At first, the database was broken into several excel worksheets. Each worksheet held different relevant info that made it easier to find similarities amongst the accounts in the database. These segments were high level segments, and were not specific enough to reach the main group of accounts that make up most of the donations. The high level segments were then broken down further into the email click to open ratio, former members who have taken classes, regular members who have taken classes, average donations, have not donated, and each account year by year. These segments were better at identifying the accounts that would be more likely to respond and the best email campaigns, but they still failed to tell why.

SEGMENTING FINALIZATION

The second set of segments was still at too high of a level to be useful for tactical decisions. These segments had to be broken down again further in order to really show which accounts will be more likely to respond while providing statistical backup. The last segments included a year by year look at donations for the aggregate donors, the big givers, the middle givers, and the low givers. Each of these segments also provide the frequency of donations every year aggregately and for all of the other sub groups. It also shows the average and the sum for the aggregate donors. For the big, middle, and low givers, each section shows its segment’s total and average donation year by year, mean, median, mode, upper control limit, lower control limit, and what percentage each group contributed to the total donation amount for each year. These segments also tell what percent of the total and local population they are. At the bottom of each worksheet for the “Givers”, there is a chart showing the donation trend for each population of giver year by year. All of this statistical information provides why each account is in its respective segment and what each segments tendencies and trends are. There is also a worksheet that shows the donors donation amounts in a percentage of their total amount donated. This shows how each giver and the aggregate givers donates by percentage allowing for a comparison year by year to determine when each population would hold more of their money and spend more. The non-donors tab was broken down by city to get a side by side comparison and see where the largest concentration of donors resided. Inversely with the “Average Donations tab” the information is broken down to see where the largest average donations are and also the count of donors from each city. Former class participants were segmented by whether they were regular or former members. Given their affiliation with The Light Factory they will be targeted differently when marketing for class re-enrollment.

III. CONCLUSION Initially, the knowledge and understanding required to fulfill many of the objectives included in the Lightfactory project were not present in any of our team members. The majority of the Lightfactory e-mail database campaign was based on certain marketing and segmenting skills that we were unaware of, which required an extensive amount of research. Through this research, our team learned a variety of things, such as what non-profit marketing entails and some effective methods used, and also the importance of segmenting in marketing and certain techniques. During our research, we discovered concepts such as effective steps in marketing a non-profit organization, as well as common marketing challenges and how to overcome them. We also uncovered some common segmenting information, for instance: the two main categories for segmenting when dealing with non-profits, and how they can be used in conjunction to determine patterns amongst customers. Once a better understanding was gained, we focused this knowledge on the actual hands-on segmenting, which eventually led to the development of our final marketing strategy outline. The strategy outline was derived from the many concepts learned through research, and optimization of the team’s hands-on database segmenting. The strategy outline is to target these segment groups and find which aspects of The LightFactory email campaigns have worked and have the most potential to gain for returns. As a team, we feel this strategy outline would be most effective because, they are backed by statistics and each segment is small enough to target certain customers.
In retrospect, our team was given a special opportunity to learn about an unfamiliar subject and apply it to a real world experience. Although marketing for non-profit organizations may not relate much to our concentrations as systems engineers, the concepts and ideals, as well as the real world experience, were a priceless exposure that definitely can have an essential impact on many of our future endeavors.

IV. REFERENCES * MARKETING REFERENCES 1- Wymer,Jr, Walter , Patricia Knowles, and Roger Gomes. Nonprofit Marketing:Marketing Management for Charitable and nongovernmental Organizations. First Ed. United States of America: Sage Publication,Inc, 2006.

2- -------------------------------------------------
Levy, Howard. "Brands Review Competition Reveals Nonprofits' Marketing Challenges." Nonprofit Marketing. (2011) 3- Gelatt, James. Managing nonprofit organizations in the 21st century. 1st ed. Phoenix,AZ: The Oryx Press, 1992. Print 4- Nugent, Chuck. . Hub Pages, Online Posting to For Profit vs Non-Profit Form of Business. (2012)

5- Laura , Lake. "Marketing Basics for Nonprofit." . about, Online Posting to Steps to Marketing Your Nonprofit Organization .

6- L.Rados, David. Marketing for Nonprofit Organizations. Second Edition. United States of America: Greenwood publication Group,Inc., 1933. * SEGMENTING REFERENCES
7. BusinessDictionary.com. 2013. http://www.businessdictionary.com/definition/niche-marketing.html (accessed April 5, 2013).
8. Data Mining: What is data mining? n.d. http://www.anderson.ucla.edu/faculty/jason.frand/teacher/technologies/palace/datamining.htm (accessed March 17, 2013).
9. Fisk, Robin. News Strategies for Segmentation. October 2009. http://www.fundraisingsuccessmag.com/article/demographic-transactional-data-givens-but-theyre-not-be-all-end-all-donor-information-gathering-412846/1# (accessed March 7, 2013).
10. Rouse, Margaret. RFM analyisis (recency, frequency, monetary). November 2005. http://searchdatamanagement.techtarget.com/definition/RFM-analysis (accessed March 17, 2013).
11. Viveiros, Beth Negus. Chief Marketer. January 4, 2013. http://www.chiefmarketer.com/database-marketing/increase-your-marketing-roi-with-the-right-segmentation-04012013#_ (accessed April 5, 2013