 As-Salaam-Alaikum-Kawad-Unih-Hasrat. Wasim As-Salaam welcomes you to lecture number 27 of Marketing for Non-Profits, MKT 628 at the Virtual University of Pakistan. The overall area of learning still remains channel development, but the module of learning which I am going to touch upon right away is going to be the area of coordination and control. These are the factors that have to be looked into very carefully by the non-profits to the while they deal with their channel members. And since in many of the cases their channel members are commercial intermediaries, it is incumbent upon the non-profits to try to understand how they operate, how they think, what their values are, and what their priorities are. Unless they understand their turf or the business philosophy on their terms, non-profits will always be at a loss to do business with commercial intermediaries. And like I pointed out, the problem arises because both parties have different values, different priorities, and different missions. Commercial distributors could have the mission of making profits through the making their programs highly efficient and effective, whereas non-profit organizations could basically work for their mission, and which is attainment of a particular noble cause. So there is a need to develop a common turf where relationships can be taken to the next level, to a higher level, where both can be satisfied and happy with getting into the relationship that they have gotten into. Let me give you one example of how and why this problem can occur. There is a commercial distributor who is selling so many different products and he's got a very wide scope of distribution. And this is how he attains very high efficiency, whereas a non-profit may not be in a position to supply to that distributor the product, non-profit wants distributed according to the program which the distributor has carved out for himself. Because non-profits basically are not into business, they are at a loss to understand the importance of the efficiency of distribution systems which commercial intermediaries develop. They have to call on their wholesalers and retailers according to a pre-planned program which could be once a week, twice a week, or maybe even more. So whatever the frequency is, when distributors' sales force go to the market distributing different products for which they happen to be distributors, the product from the non-profit also has to be present there. Because retailers who are going to sell that product or distribute that product to the ultimate consumers do develop expectations that along with other commercial items, the product from the non-profit will also accompany those because in the absence of that they feel embarrassed by not getting complete provisions what they have been expecting or what they have ordered. And therefore any lapse on part of the non-profit can lead to embarrassment on part of the distributor and also the non-profit itself. And this is where non-profits have got to understand how commercial distributors operate. And there is a dire need on part of the non-profits to understand their turf and the variables which are important to develop and maintain the commercial relationship that they have gotten into with the intermediary. Because these commercial intermediaries generally complain that non-profit organizations do not really have the savvy, meaning the marketing savvy, to be able to understand the pressures under which we operate and the variables which are very important for our success. And therefore non-profit organizations have to look upon such intermediaries not as just agents or channel members but rather as target audience. Only when they try to understand and appreciate their existence and their posture as a target audience will they be in a position to understand how they really operate and what it really takes to make them successful. And this really takes us back to the point of costs and rewards. Non-profit organizations have got to understand that commercial intermediaries have certain costs to incur and once they have incurred those costs they look for certain benefits and it is those benefits which non-profits have got to really appreciate. And therefore to align themselves or to align their programs with those of the distributors all such understandings have got to be made practicable for non-profits to make the whole relationship successful. And therefore the problem of coordination and control has got to be resolved if it exists and if it really prevents the commercial intermediary from carrying out you know his programs to the level of efficiency to which he envisages. So this is all for coordination and control. Let us now get on to the next module of learning which is going to be about occasion strategies. You will recall that we have learned channel strategies but along with those strategies we also have to have occasion strategies. I think it is common sensible because we have got a place from where we distribute our products or programs and that place has got to be made very friendly and we can make that place very friendly if we create occasions which are memorable which are easy and which are consumer friendly and in order to make those occasions easy emotional and rewarding that we have to understand how we can make them easy for our target audience and what is it that it takes to make them emotional and how can we reinforce the behaviors of our target audience by rewarding them. So let us take a look at all these factors one by one that we can make the occasion or the behaviors while we undertake execution of the program by a couple of different means. The first is we can make the behavior easy in terms of timing. If you happen to be a blood collection unit you can make the behavior easy for your target audience by having such hours of collection that do not really clash with the general work hours and same could be the case with training sessions. You are getting out training sessions for edits and you want them to be at the place of training without fail so that you have got to look at the ease which could be provided to them by way of having flexible hours and that is how you make occasions easy for the target audience. You can also have the behaviors fully explained on the website that also could be one of the means of making behaviors easy. Another way of making behaviors easy is by way of creating an easy location. How do you do that? Well we already have learned that the marketing people from non-profits go to the target audiences. In certain cases they are undertaking programs which require that marketing people take a visit to those remote areas, target audience from where they may not undertake the effort to come to them and I think this goes without saying that we are talking about the very first stage of pre-contemplation and that is the time when we know that our target audience does not really have a clue about the existence of the non-profit organization or the program that we envisage undertaking and therefore we have to go to them and by visiting them we make the behavior occasion easy for them. Well the fact of the matter is that it is incumbent upon non-profit organizations to create such occasions otherwise they may not succeed in execution of their programs and hence attainment of the mission. They can make location easy by placing literature about the non-profit. Let's go back to the area of communications because we have so many different kinds of communications that we think that the people should take a look at. Not only take a look at, rather they should engage themselves with the communication so that they know who we are, what we are, what we do and what we stand for. So you can as a non-profit organization put such literature at public places like the airports even at bus stands, at supermarkets, at all those places where people go to deposit bills, could be banks, could be any other channel which is supportive of this particular occasion behavior. So there could be so many different areas in which you can make the behavior occasion easy by the way of creating a location which is close to them. You can make fundraising possible with the help of telephones and that also is the one example of creating a location which is easy and that is how you create circumstances and conditions whereby your target audience gets engaged with the cause. The next area which is important for non-profits to understand is that they have to make the occasion very emotional by creating conditions that the target audience emotionally can engage with the cause and they can do that by undertaking so many different kinds of programs and as a matter of fact you all are familiar with such programs which non-profits undertake for this particular purpose and I would like to take you back to the example of musical concerts or the Mahfale Millad or Nath competition and so on and so forth. These are the very classic examples of creating occasions where you really can evoke emotional feelings on part of the target audience and engage them with the cause. You can create things like the marathons and walks and that is what the many non-profits do nowadays all over the world. Non-profit organizations have so many different ways to create such occasions whereby they can create emotional bonds and a couple of more could be from the area of healthcare. Non-profit is operating in basic healthcare provision and they are undertaking certain procedures which could be painful. They can make those procedures less painful by employing advanced equipment and materials. If they cannot do that they can have staff that is very friendly and through their behavior can make that particular occasion less painful or rather easy or less difficult so to say. Under such circumstances what happens is that the target audience members develop a sense of security, protection and well-being and this is what could be a very good basis for changing their behaviors and therefore they are good catalysts. In order to do that it is not just the staff members that the non-profit organization has to have. They also have to create the environment which is very friendly. The environment is all about looks and this takes us back to the concept of the experiential level of the brand-raising process whereby we already have learned that the good environment which is full of good things, they have good furniture, they have good colors on the walls, they have posters all over the place and they are very attractive, they talk about their mission, their values and they communicate with the target audience with the help of certain absorbing and engaging stories and so on and so forth. These are the kind of environmental factors that develop that particular sense of the well-being and the protection on part of the target audience members who tend to think that they are in good hands and therefore they tend to develop a sense of satisfaction which lead to a change of behavior. Another area that we need to look into to make behaviors very rewarding is that non-profit organizations have got to be very good at expectation management. You may get surprised why I am talking about expectations. Well it is for the simple reason that people coming to the non-profit organizations do come there with a certain level of expectations which if not met will leave them unsatisfied and unsatisfied people are never going to talk about the service because they go out of the place and the occasion unsatisfied and therefore what it really boils down to is that the place and occasion both should create conditions whereby people leave the organization with a very high level of satisfaction because that is going to meet their expectations and once those are met they are going to talk about that satisfaction with others and that is where the concept of social power again comes in because the people talking with more people and then more people in turn bringing more people into the fold is going to be the force multiplier and that is the beauty of this particular concept, the place and the occasion. They both have got to be very effective at the same time for people to be satisfied leaving the organization as satisfied donors, clients, volunteers and activists any stakeholders they may take the form of they have to be satisfied with the ones they are there. It is also very important to keep expectations of your target audience a little lower than what you really can offer and I think this also takes us back to the concept of communications where we have planned that we are not to overdo our communications, we are not to over commit ourselves rather we should be a little lower than what they are expecting or what they will expect after they have gone through the literature or the communications that we have sent their way because that way the ones people have a certain level of expectation to the which you are confident is going to be lower than what you really can offer you in actuality will delight them and nothing works more than having delighted customers who can be loyal to the cause and if they are donors they will repeat that the behavior over and over again if they are volunteers and activists they would like to work for the organization over and over again but not just the program they have enrolled themselves into they may also offer their services for any future program that you may envisage launching. What is it that you need to do in order to keep them motivated well you can get back to the concept of rewarding them you can offer them certificates of acknowledgement and this again is something that we learnt as part of the communications process and by rewarding people we make them more and more committed to the cause and it is obvious when people get acknowledgements they get rewarded and the rewarded people always repeat their behaviors because this is something which behavioral psychologists do believe in and the bottom line is to offer rewards to your target audience wherever you can with those certificates and once you have done that you can use your target audience to give you testimonials so it is kind of a two way process and once you know they start giving testimonials you fulfill one of the fundamentals of the good communications where by you create that connection between your target audience remember the example of your own university because it is somebody who already has graduated talking about the goodness of the programs offered by the virtual university and the level of placement which they get or they have gotten as a result of the degree which the university offered so this is how you use testimonials and rewarded customers are satisfied customers and rewarded customers are the ones who would repeat their behaviors over and over again you may think of the example that I just cited how would a student who already has graduated from the university they will get into repeat behavior well the fact is that I am going to talk about that in one of the following components and that will make a lot of sense why it is important to maintain contact with those who already have been to the program to which the organization is offering that could be an education program could be health program that you see these cancer survivors to the from shaukat khanum talking about the regaining of the health and the whole recuperation or the recovery process that they have gone through and that really gives a lot of strength to those the patients who already are in the process of treatment so on and so forth so there are so many different ways that the marketing people can create conditions for rewarding their target audiences who in turn will work for the cause with this we now get on to the next component which is on pricing pricing as we all know is a very important variable of the marketing mix concept and without pricing there is no organization which really can complete the whole strategic marketing process I think it goes without saying how do non-profit organizations undertake the concept of pricing when they sell their products because the fact is there are many products which are not sold and there are products which are sold but are sold at a price which is less than what it otherwise would have been if it was offered on commercial basis or maybe it would have been less expensive it if it was sold on commercial basis and this is a very interesting phenomenon and I'm going to talk about that why a product sold through a commercial setup could be less expensive than its counterpart offered by non-profit organizations because of the fact that the concept of pricing takes into its fold two important components but the one is that of social costs and the other is that of business costs when we talk about commercial entities or commercial products we take into consideration just business costs and we all are familiar with the concept of overall costing that we have so many different kinds of costs some are marginal costs and some are fixed costs and we know what marginal costs are you know we have to pay for raw materials for salaries for overheads and so on and so forth there are so many different the portions to that particular component which is known as the or we may call as the business costs in the context of non-profits because we are trying to differentiate between business costs and social costs what are social costs well they basically are all those extraordinary or un-traditional costs that commercial organizations may not have to undertake because they are working on a regular basis churning out production on a repetitive basis on very uniformed lines day in and day out that may not be the case with non-profits they deal with newer situations every time and the programs are not the ones with which are repeated over and over again unless it happens to be hospital but in many cases they have to incur social costs for example they have to train people volunteers and activists because they would like them to be fully educated on the program and its mechanics before they go out in the marketplace and start rendering their service so before they could perform their desired behavior and they have got to be taken into complete confidence and are to be educated about the different dimensions of the program of which they are going to be a part of social costs therefore are extra costs and the question here is how do non-profits manage to take into the pricing model social costs as well as business costs because not all the time non-profit organizations are in a position to recover all the costs they can recover a certain portion of the cost that they have incurred and the remaining portion of course is funded by somebody else and that is exactly where donors come in where they are fed in that is why we need donations and the concept or the role of the donors again real importance when we talk about the pricing factor there are consumers or customers who may be willing to offer you a price which they may cover both your costs the meaning social costs as well as business costs but that generally is not the case and there are clients who are not willing to pay what it really has cost you for the simple reason they know that you happen to be a non-profit organization the working for a noble cause and their expectation of paying at your facility is at a low level with the meaning they expect a lower cost so how do they operate this really is a challenge for the non-profit organizations challenge in the sense could because if they try to recover all the costs they have to go for a price which is higher meaning which is higher than what it could have been or would have been if it was sold by the commercial sector and they may not like to do that because the people or the clients could would feel kind of demotivated and that they will shy away from the program and it may not offer you the full potential of reachability and connectivity so therefore you've got to be very careful about how you price the product conversely if a non-profit organization offers a price which is lower than the total cost it cannot sustain itself it suffers losses and it has to cover those losses it is easy to say that the donors will come to the aid of the non-profit and cover that portion but it takes a lot to the work toward that end needless to say that the non-profits are all about generating funds through that way also but why make the job of the non-profit marketing people unduly difficult or more difficult we have to see to it that we are in a position to sustain our organizations and we can sustain our organizations by charging a price which covers our costs to the maximum possible extent as a matter of fact non-profit organizations could have got to maintain a balance between what they really can forego as part of the cost and what they're going to charge their target audience in order to come up with a package to the which is reasonable and this is where the concept of the hybrid model of pricing that comes in the most of the non-profit organizations the fact of life is do not charge a price which totally covers their social costs as well as business costs and they have to have the support of the donors who will cover certain portions or total portions of the social cost whereas their customers would like to weigh their product or their program in typical to the business terms by looking at those features which they think should cost just about so much and they do not take into account what it really has cost you to come up to that level to have been able to develop that particular product or program to the which has reached the level where you are offering at a place where they happen to be and the occasion that you have created to make it very successful they only look at the business side of it and do some of the working in their minds arriving at a figure in which of course is definitely less than what it generally costs the organization so again and again the question arises of the covering that portion of costs which happens to be the social costs now this is not to say that you are extremely mechanical in terms of talking with your donors that the following happens to be the social portion of costs and the following happens to be the business portion of costs because donors generally do not really go into those details as long as they're convinced that your program really has a social impact and once convinced of the social impact they always would like to donate toward the cost but the challenge here is that you have to cover both the costs and the implication therefore is that the nonprofit organizations have to think of the pricing model in terms of social lines and business lines because both are very important variables of the pricing model and it is on the basis of these two particular components that nonprofit organizations come up with their pricing another challenge that they really run into is the opposite of what I talked about the social impact and the perception of the social impact on part of the donors there could be certain donors who may not be as convinced as others about the social impact of your program and they they make question about the level of giving that they have to make on their part and therefore you've got to be prepared about together all the factors of your costs so that you can talk with them about together all the variables that are responsible for the make up of the cost factors do not forget that you have stakeholders and in particular the many donors who also happen to be the business people the factors in most of the cases they are business people and business people being very commercial in their approach they may like to ask you questions about such pricing decisions and not for the reason of checking your integrity but just for their own sake for their interest so that they can make up their mind as to what would be the realistic level of for the endowment or the donation which they should make toward the cost now having known all this and having considered the two components of the cost factor i.e the social cost and the business cost we are now all set to go ahead with the pricing model but it is not that easy again before we go ahead with the preparation of the model there are a couple of strategic considerations that we have to undertake and those are what really are the objectives of pricing i mean the non-profit organization because they just cannot go for a price because they think it is a very reasonable price or they cannot determine the price because they think it is good enough in order to be able to recover the most of their costs leaving them less room for donations and less hard work for collecting those donations it is a generalized form of making a statement toward that pricing model but that's not the way the pricing model works we've got to be extremely careful and very clear about our objectives and our objectives could be for example maximization of profits and we all know there is nothing wrong with maximizing profitability when you are working for a non-profit organization as long as you are ethical and you're not crossing the boundaries of those ethical limits you need to have profits to have a very high level of reserves in order to invest into future programs or in order to carry your existing program through all the phases toward implementation of it and the other objective could be that you want to recover your costs to what extent you should recover your costs we're going to talk about that and the third objective could be that you want to increase the usage of the product that you are selling or distributing you are always wanting to increase the usage of the program because you want to bring in more and more people into the fold of that program may that program be about smoking meaning an anti-smoking campaign may that be about improving the environment or may that be undertaking of rehabilitation process carried out on addicts meaning drugies so whatever program you are undertaking you would like more and more people walking into it so that you can have a great level of social impact so the objectives are number one you may like to maximize profits number two you may like to increase the usage of the product number three you may like to have the objective of cost recovery and once the you are clear about these objectives you then are in a position to go ahead with the pricing strategies but before I start talking about the strategies let's talk about the objective of profit maximization I think we're all convinced that there is nothing wrong with making profits and in not for profit organization does not really bar itself from making profits we have to have profits in order to survive the only thing is because we do not take those profits home those profits stay back into the kitty of the organization for future things and let me give you with one example of a few programs or occasions that we may undertake as nonprofits because we conduct things like the mafia like Milad not competition musical concerts and these are the examples which are the stereotypes of so many different kinds of non-profit programs but the concept here is that of pricing we charge a price to the target audience that's coming there at a level to the which may sound a little higher or which may feel a little higher if it was conducted by a commercial organizer the price he would have charged but there would have been lesser than what we are charging this is a fact that we know and this is a fact that the target audience also knows but they do pay why because they know that the money is going to go toward a very noble cause and that is where the opportunity is to make good of that and this is a very convincing manifestation of the phenomenon of the profit maximization you may have a question kind of flashing into your minds here that this is kind of a short term thing or this is kind of a thing that which is sporadic you know that this is not something which will take place consistently this happens at the once in a while like the once in a quarter once you know in six months but whatever the case maybe we have to keep in mind that this is an opportunity available to nonprofits who can organize such events that provide them with the opportunity of maximizing profits although for the once in a while you may have this question flashing into your minds that this is kind of a one-time thing and this is not something that happens on a consistent basis it happens to the once in a while so because of this sporadic existence of such programs or undertaking of such programs because we cannot really count on them but the fact is that everything adds up and because we've got to look for opportunities that will provide us with this kind of a platform which will be contributing toward that profitability that I'm talking about then talking about the consistent basis let me give you the example of a university that may charge its students a very high tuition fee because it is offering a very specialized level of courses or it is offering courses in areas which are highly specialized and they are extremely research oriented they happen to involve a set of faculty which is not easy to put together and therefore the university can may decide to maximize its profits in order to recover its costs to the extent possible and this is where they like to get into the pricing model by envisaging a certain level of response because this is where the demand level has got to be ascertained as realistically as possible to see what kind of a price level is going to be practicable charging for that particular service and in this case because we are talking about a university offering some high level courses in specialized areas so what is important here is to see what will be the level of demand if we offer price x the falling number of students may enroll if we offer price y falling number of students they will attend the course whatever is the case we can work with different numbers at different demand levels in order to come up with a price which we think is or could be practicable and this is the example that fits very well into a non-profit context in the area of education the other objective is cost recovery let me talk about cost recovery before I start talking about the maximizing usage of the product cost recovery is extremely important because without covering our costs of course we are not going to sustain ourselves and like I said earlier it is here that we have to decide what portion of the cost is going to be borne by donors and what is the remainder that is going to be borne by the organization itself the level of donation is something which is to be determined by looking into the history of that particular program or by looking into the history of the organization that we know the kind of donations that come our way on a consistent basis or you can say from time to time and we have a history of donors who have been donating toward our cause and we know the strength of those donations and we know the level that is required to offset the costs that we are going to incur as a total of social costs and business costs and therefore this objective really necessitates that the organizations look into the extent of the donations to which they are expecting and the extent of the recovery to which they expect at a certain level of price here again you work with the level of response to which you expect level of response in relation to demand and to work out your prices but what is important here to see is to what extent you really can recover your social costs and your business cost portion well you have to be sure about one thing while you have the cost recovery objective that you as a nonprofit must be in a position to recover at least your operating costs this is the bottom line here that you should not go lower than the recovery of your operating costs because the remaining costs could be recovered with the help of donations so if you work out that more than 50% of total costs are going to be covered through donations and less are going to be covered through the actual the pricing of the product so be it you have to work more on donations and run after donors in order to make sure that you really can sustain yourselves organizations at times to recover costs to the extent that they are safe on account of both social costs and business costs this is a fact of life now if you have a program which really allows you to do that you are most welcome to do that but if you think it is not going to be practicable and people or other target audience are going to be demotivated with the kind of pricing level that you're going to offer then you may reconsider that and the recent organizations with those kind of programs which could be very promising and which are very specialized in nature and which offer them the potential to recover all the costs through the pricing model are the ones who are also skeptical about donations from their donors they always doubt that they are going to generate funds from donors to recover their social costs and therefore they go for a pricing model given the nature of their program as well which enables them to recover all costs the next one is about the market size maximization I think that this is a concept which takes us back to the commercial marketing activity and we all know that everybody in this world likes to increase their to the market share and they increase their to the market share by increasing the usage of their particular product and same really applies in the area of nonprofits who would like to have more and more people coming to join their program and when that happens they can recover the costs by having a larger size of the market and there are two different options which nonprofits could mostly have at their disposal when they envisage their pricing objectives because one is that they offer the programs or their product for that matter at zero price the other option is they offer a very low price now these two options meaning zero price and low price are the ones which nonprofits think they will let them increase the size of the market exponentially when they charge no price at all because the people will wrong and that they would like to enroll themselves as part of the program or they would like to buy the product which they are offering absolutely free of cost by the same token they also believe that a low price they will also maximize their the market now the option of zero price is not a good option the history of nonprofit marketing shows that zero price in most of the in most of the cases rather always has turned out to be a negative force because the people think of that particular product being offered with no price at all as divide of quality they think it is a low quality product and that is why the organization is not charging any price and the fact is this has been a case in point in the Indian market where nonprofit organizations distributed ORS through commercial distributors at zero price and the fact is the usage was not increased because the target audience thought that the product was not good and commercial intermediaries thought that they did not really have any commercial interest because they were not getting commissions on offer that supply chain mechanism there was no price and therefore no commissions and therefore no interest on part of the commercial channel members so we have to keep in mind to the what extent we can be benevolent or be flexible with the pricing factor if we think that by offering something at zero price we can increase the market the evidence of this philosophy in the not working is right before us so in other words we have got to create conditions where by not only the target market looks upon the program or the product as something of very good quality but also commercial intermediaries also stay engaged because they know they have a commercial stake in it without that commercial stake they will never make the program successful and I think you know that that takes us back to the concept that I just talked about a few minutes ago that nonprofit organizations have got to understand the mentality and priorities and values and objectives and goals of commercial intermediaries as their channel partners only then will they be in a position to make their programs successful and I think this Indian example is a very classic example that really fits into that particular concept whereby commercial people complain of nonprofit organizations not having the marketing savvy to be able to make their products successful coming to a low price that is something that might work in the marketplace because people may have a very positive view of that particular marketing objective or strategy for that matter on part of the nonprofit organization. Therefore we can say with a lot of confidence that the pricing model given this particular objective of maximizing usage of the product has to be worked out on the basis of making sure that your product does carry an appeal for the target market and at the same time it is attractive for those members of the channels who are going to make the whole program successful toward implementation and you pick the right price with the bioconsidering these particular considerations. So in turn we can say that we have to have a pricing model which stimulates demand and it increases revenues so I think you know at the end of the day it sounds real hard business because you have to be able to generate a level of demand or a level of response which really enables you to increase the market size and before you increase the market size because you've got to give the whole concept a very serious consideration as to what really is going to be your objective and once you have started working with that objective what should really be the price level and the considerations that I've talked about right in front of you and I don't really think of the we as non-profit marketing managers that should have any problem coming up with the right price or at least giving advice the right advice to our peers and they're sitting in the finance department as to what could be just about an appropriate price level to engage the target audience and to make our program successful. So just in order to give you a summary of these three considerations of these three strategic objectives which must be the basis of going ahead with the pricing model or for that matter pricing strategies let me say that once again the one is a maximization of profits and the other is recovery of cost and the third one is maximizing the usage of the product so that you can increase the market. So whatever program you are into whatever non-profit you're working for you've got to have these three considerations and then decide for yourselves which one is the most appropriate under your circumstances good meaning which one of the objectives is just about the right one which you should follow or rather you must follow because on the basis of that particular objective you have to come up with strategies and let me say here in addition to what I've said that it is a very strategic process and the pricing strategy has got to have a certain solid rationale and that rationale is the objectives that I've just talked about. Thanks.