 Assalamu alaikum khawatima khazrat. Wasim As-Sin welcomes you to lecture number seven of Marketing for Non-Profit Organizations, MKT 628 at the Virtual University of Pakistan. The component of learning I'm proceeding towards is cost marketing. We have to learn what cost marketing is and why it has become such a significant tool in the area of non-profit marketing. You might have noticed on certain tangible consumer items description of a social cause and the company of that matter that brand talking about making its contribution toward that particular social cause. You might also have heard about certain services with which are tagged with social cause. So whenever you hear about these things or witness these kind of products, the first thing that flashes into your mind is that these companies or these products are doing a service to the society. They are partners with a certain cause which is good and therefore I should buy that product. If you do that, well the purpose is served. I will explain it like the following. Let us take the example of a bank which is trying to promote its credit card. It is approaching its card holders offering them an opportunity to redeem their accumulated bonus points in favor of a social cause. How does it work? Let me explain that further. You are a credit card holder and you have a certain number of bonus points against all the purchases that you have made. In other words, the more you purchase, the more bonus points you accumulate. And against those bonus points, you can get some attractive consumer items starting from ball points to mobile telephones, to wristwatches, to laptops and so on and so forth. There is an array of attractive consumer items toward which you are tempted and you make more purchases, you accumulate more points so that you can get one of those. On the other hand, there are certain causes which are also there for your taking. The bank may have joined hands with an entity that is into eye care or kidney care or cancer treatment as an NPO. What happens then? Well, the bank offers you to donate those accumulated bonus points in favor of a particular cause. For example, eye care. So you tell the bank that the points that you have, instead of getting a consumer item, you would rather give those points to that NPO which is working for that particular social cause you are interested in. For example, eye care. When you do that, you have made your contribution toward that cause. The bank has made its contribution toward that cause. Making with these examples, one important thing that flashes into anybody's mind is how does the holding work? Well, these examples explain in detail that in order for this kind of a collaboration to work, it has to be made mutually beneficial. Until the time both the parties are convinced that it is going to be their benefit, they will not get into an agreement and start working for the cause collectively. Therefore, they have to build on each other's strengths and they have to create a situation whereby they can leverage a synergistic relationship. By doing that, they create value for each other because if the relationship is lopsided, if the one company comes up with a lot of strengths and the other doesn't really have those, other is inflicted with all kinds of weaknesses, then the joint venture is not going to work. It is lopsided and it doesn't really make it convincing for the stronger party to get into that agreement. Therefore, in order for these kinds of agreements to work toward a certain cause, it has to be made sure that both the companies can create value for each other and the way they create value for each other is through some commonality of interests. That commonality of interest is the intersection of corporate interests and societal needs. It is very clear that the NPO is working for the society in order to bring about certain kind of social improvement. The corporate entity is busy selling its products, its brands and it has to be seen how those brands can be promoted to the buy also by making contribution toward implementation of a good social program. This makes it very clear that while this kind of an arrangement is beneficial for the corporate entity, it also is advantageous for the NPO. In other words, it creates value for both the entities. Corporate entities can be acknowledged as socially responsible citizens because of which is a huge achievement in modern day's world and NPO can make its programs very credible by joining hands with a known brand. Then people take that NPO and its programs more seriously and that sets the road toward successful implementation of the whole program. Let me also tell you that this is a relatively young concept. It took its roots back in the 1980s and over the last couple of decades it really has caught on. The amount of sales generated through these kind of cost related programs run into billions of dollars in today's world. Time is not really far when cost marketing will catch on in our society as well and therefore we have to prepare ourselves by looking into what really lays the foundation for this kind of a relationship because the one thing is clear that NPO's want to be positioned into the minds of their target audience very effectively while at the same time corporations need to improve on their profitability because when they improve their profitability they improve other financial numbers and they along with that make it demonstrable to the society that they have taken up a social responsibility and they have come up with their expectations. Why do they really have to do that is a topic of another component which is going to be part of this lecture but let me say for the time being that for these kinds of relationships to work effectively there are four fundamental elements which we have to keep in mind. The one is that of partnership the other is the purpose of those partnerships the third one is the passion or the level of passion that is required to bring that purpose to life so that you can have effective partnerships and the fourth one is the kind of profits which accrue both sides as a result of these relationships. Okay back to these points to the one by one partnerships I think it goes without saying after learning a little bit about cost related marketing that partnerships have to be formed in a way that they create value for each other until the time the value is created for each other the relationship is not going to take shape. What happens is corporations throw their total marketing weight behind the NPO's program the marketing weight is thrown by way of the product itself and then through the trade members starting with distributors to the wholesalers retailers of all kinds small retailers to the big retailers supermarkets and the like and then down to the consumer level everybody is involved. It is very interesting that it doesn't and here it also involves companies suppliers suppliers of the ones who supply all kinds of raw materials to the company or it to make that particular product so in other words it is the complete supply chain which is connected with that cost starting with the suppliers to the company its product and then all the way down to the consumer to the trade members it is kind of outside in and then inside out chain of suppliers and the buyers so in other words anybody who's connected with the program by way of inbound activities or outbound activities becomes an inherent part of the effort toward that social program because everybody is contributing. As a result sales of the company increase it improves its bottom line and hence all the related financials it is also very beneficial for the NPO's because it brings a lot of legitimacy to the NPO and the cause it is addressing. The credibility that the NPO gets because of this relationship it makes its programs more implementable and it is in a better position to achieve its mission and we all remember from our past learning that it is the achievement of the mission which is of highest significance when we talk about NPO marketing and not profitability so this relationship paves the way for achieving that mission. Another feature of partnerships is that the NPO's stand to gain to the buy way of acquiring corporate expertise when they work with these kinds of the corporations having very prominent brands there's a lot of exposure which NPO's get and which makes the way for them to further their marketing objectives because there's a lot of marketing expertise which is imparted intentionally or unintentionally to NPO of the marketing team. This happens to be a very important of the contributor toward the total marketing program and then as we know it improves the revenue stream of the NPO for sustaining its program and also developing a finance pool to which well always help the NPO in making its programs implementable. It is not just the traditional charity or philanthropy which is coming to the NPO it also is the additional revenue which comes to the NPO as a result of this kind of relationship. All this boils down to one point and that is that the relationship has got to be very well thought through well planned well structured and then well executed. It is going to be well executed only if it is very well planned. We know the importance of planning from one of the earlier lectures because putting together a program in a very professional and effective way is the only way to convince the stakeholders who are going to be convinced of the validity of the social cause the NPO is working for. Until the time the internal stakeholders are not convinced there is no way that company can move forward to the execution of the program. Here the importance of this factor gets even more pronounced because you're working with a potential partner you're working with somebody who already is very knowledgeable in terms of making marketing plans and business plans. So therefore the marketing plan that you put together has got to be highly sellable and should look like the one to which is going to be implemented with total effectiveness of the social issue at hand. Only then the corporate sector is going to be convinced on the validity of that program and the reason I talked about legitimacy and validity of NPO's getting out of this relationship basically owes to this fact. This further implies and strengthens the fact that both the parties have to build on each other's strengths in order to make the relationship highly synergistic because a synergistic relationship will be effective and it will work both ways and they can draw on each other's strengths and make their respective programs implementable and their objectives achievable. It takes quite a bit of time before these kinds of relationships are going to put into formal agreements because you have to do a lot of assessment of each other and therefore both the parties have got to be very honest and transparent because while they share information with each other they've got to make it easy for the other party to make a very rational objective and honest decision about whether to get into a relationship and not get into it. It is very obvious and natural if they find a convergence of professional outlook only then they will go ahead with the relationship. It is not important that there has to be a very close fit between what the commercial entity is selling and what the NPO is doing. What is more important is uniformity of thought and cohesiveness in terms of the professional way of working and therefore a common cause and therefore the assessment process has to be made as less complex as possible and the complexity could be taken out of the equation only if transparently and honestly information is exchanged between the two parties. The fact is that making these arrangements and giving them a formal shape takes longer than the duration of the campaign so to say. For example a campaign which is directed toward a common cause may last for anywhere from six months to a year or a year and a half but it may take like a couple of years before an agreement on the relationship takes place. It shouldn't really take that long but I have just given you an example about the complexity which you may run into before you formalize these kinds of agreements. The second element of cost marketing is purpose. What is the purpose of these partnerships and what is it that drives the purpose on both sides? Well it is the commonality of interest. In other words it is the interest of the commercial entity as well as the societal interest which is being represented by the NPO and you as the marketing managers of the NPO are the custodian of that particular interest and therefore it is an intersection of corporate needs and societal needs. The job of marketers on the NPO side is to find that intersection and to define that intersection of interest in such a nice and effective way that the commercial entity ends up with a bind that concept and prefer to get into a relationship with the NPO. The reason NPO's are striving hard to develop these relationships stem from the cause inflation and I would define cause inflation in terms of the too many causes floating all around the market for which different companies and different groups are active and working on. So in order for you to differentiate from the rest of the crowd because you've got to do something which is different joining hands with a commercial entity not only gives credibility to your program it also makes your program highly differentiated and when your target audience knows because of what you and the commercial entity really stand for it gives the whole of the program a lot more legitimacy than if the two entities were working in isolation meaning trying to achieve their respective programs without the help of each other. So purpose basically stems from the intersection of interests of stakeholders of corporations and of NPO's. Let me try to explain this concept with the help of a graphical illustration which is going to make it very clear how the whole thing works. As the presentation shows because we have nonprofits sitting right on top in blue and then we have the stakeholders on the left hand side who are a part of the nonprofits because they're a combination of the volunteers, society activists and the board of directors and any other individuals groups foundations or any entity which is supportive of the nonprofit cause and then we have the second partner in by way of corporations which is shown in green and it is very obvious from this illustration that there is a common area of interest which is shown in red and this is where the interests intersect meaning the interests of the nonprofit in terms of achieving its mission and interest of the corporation to promote its product by joining hands with the nonprofit and making a contribution toward the cause appearing as socially responsible citizens and then having that acknowledgement from the society to its benefit. So this is how this relationship works. The important thing here is that the intersection of interests is the basis of the value exchange which I just touched upon earlier. The reason we call it value exchange because both the parties are creating value for each other. They are creating value for business and they are creating value for the cause and that is why we call it a value exchange. This brings us to the next element of cost marketing and that is passion. Passion basically is a reflection of the will on part of both the parties to collaborate for working for a social cause. Until the time there is a strong will on both sides there is no way that partnerships are going to work and passion plays a great role to work that. It is not just the sponsors who are supposed to be the willful to make the programs successful. It is will on everybody's part. As a matter of fact it just so happens that in the US there have been many instances where employees of a company started working on a cause on their own without taking the corporation they were working for on board and it was only because of the interest on part of the employees that the corporations also jumped on the same bandwagon and they thought there should be a party to it. There should be a partner in cause and they took over the programs. In other words the programs were initiated by the employees and then taken over by the corporations. In other words the willingness to work for a cause has to emanate not from just the one quarter rather it has to originate from all the quarters involved. Employees, stakeholders, trade members and all those people who are connected with either the NPO or the commercial entity. It is the collective willingness of all those who are connected with the cause that make the relationship work. The fact of the matter is that working for the community has become so much important and has taken on an added significance that many teenagers in the western societies are working for social causes. Another fact is that their experience of working for the community when shown on the resumes gets them a lot more attention in comparison with those who have not worked for the community. So the working for the community is not only fruitful for people individually it is also very advantageous when their collective willingness is put together to work for a particular cause. The last element is that of profit. I think it is obvious and goes without saying that the purpose that we take forward in order to make the programs workable by forming collaborative partnerships and with the kind of passion that we have learned to the people show or people should show to make these programs successful bring everything to one point and that is of profitability. The relationship is profitable for both the parties. One party meaning commercial entity stands to gain in terms of its commercial objectives. It furthers their marketing objectives in particular whether by way of brand development or the corporate development or relationship management advertising promotions and public relations which is at the end of the day benefit the corporation as a whole and it is also very profitable for the NPO because it goes far beyond the financial contributions it basically is achievement of the mission and in order to understand what are the profitable points on both sides let me take you to yet another graphical presentation which is going to make it very clear what is good for FPO's meaning for profit organizations and what is good for NPO's when they get together for a cause related marketing initiative. This presentation basically is an extension of the one that we saw a little while ago and it basically expands the concept of value exchange as you can see from here we have NPO's on the left hand side right here and FPO's on the right hand side. Now concentrate on the left hand side and just see what are the profitable points for NPO's. First of all it is the legitimacy to which this kind of relationship brings to NPO's. Their programs become much more credible because once they are supported by a corporate entity because the people take them more seriously and they are bound to think of the one fact that a corporation of this kind or a brand of that kind could not get into partnership with a program if it was only a fly by night kind of a thing. It has to be serious and very sincere they really want to work for the society and do something for its improvement and that is why they have joined hands. So it is the legitimacy factor which goes far beyond the financial contribution to which comes the way of NPO's no question about that. The second profitable point is the value beyond money and this is what I just talked about that it is not just the financial contribution toward the financial pool with which the company has to itself it is the value with which the company generates in terms of achievement of the mission and then a very important point that NPO has motivated employees. Naturally when they realize that they have the support of an important commercial entity they work in a much more motivated environment because they know they are being backed by somebody with meaningful pool of resources. Then it brings brand loyalty to the program of the NPO. The NPO can strengthen the concept they are working for and if they keep on working in creative ways they can make a brand out of the initiative that they have taken toward that particular cause they are working for and then another important point they get corporate orientation. I think I did touch on this earlier by working with a corporate entity they get exposed to the culture of the commercial setup which is very highly organized. It is here that some detractors with the talk in opposition of this particular point because they think this brings in commercialism among NPO's but the fact remains if NPO's stay true to their purpose and they work on achievement of their mission orientation acquired from a commercial partner is more helpful than harmful and then all these points that they translate into one thing and that is achievement of mission. Let us now take a look at the other side which is for-profit organizations and as is clear from the top they have a great opportunity of having their social work or contribution toward a social cause acknowledged by the bi-society at large or by their target audience in particular when they know that this company is contributing toward the social cause they have more much more strengthened preference for the brand of the company and therefore the corporate entity can enhance its reputation and once you know they have enhanced reputation of course it is a question of reputation management which they can carry out to the by getting into creative programs of similar nature and stay in the eyes of the public and the target audience in particular and then they also on the commercial side have the motivated employees the motivated employees are a great asset for any company may that be a commercial entity or a non-profit organization they produce better results and they make the programs of the company implementable and even when they are contributing toward a social cause their contribution which comes forward by way of the passion I talked about earlier that means a lot a lot for the company they are working for and a lot for the social program they are contributing towards and then of course you know that they have improved the bottom line their profitability increases because naturally it pushes sales and when it pushes sales it gives the company a better bottom line and better related to the financial ratios and so on and so forth important point here is the point of convergence where the profitability of the two sides meet and that is the value exchange what it really means is that this kind of a cause related marketing initiative creates shareholder and social value it creates value for the shareholders on the commercial side and it creates value on the social side it helps NPOs achieve their mission and it adds value to their programs it also does a couple of more things but I'm going to talk about those because once I am talking about wrapping up this concept into giving you a structured definition for cause related marketing we are now getting into the next component which is definition of cost marketing as a matter of fact our learning that we have developed in a through the lecture so far has brought us into this component which is now going to build up on the elements of a structured definition of cost marketing we have seen with the help of the graphical presentation of a little while ago that cost marketing is beneficial for the two partners in cause with the meaning the corporate entity as well as the NPO and cost marketing is something which goes far beyond financial contributions it is not just charity or philanthropy it is something which is very well structured and it goes a long way a long way toward achieving the mission of the NPO and also strengthening the brand of the commercial entity the main feature of this relationship is that the commercial organization throws its marketing weight behind the social cause and marketing weight as I explained earlier is thrown to the by way of the distribution network of the company as well as the integrated marketing communication campaigns initiated by the corporate partner it is very beneficial for the NPO because they can have an outreach with which in the absence of this kind of a relationship is not really possible just think of the distribution setup of the corporate entity and look at the distribution of the product the meaning distributors to the wholesalers and all kinds of retailers and then consumers spread all over the marketplace getting exposure to the social cause and getting motivation to actuate into preferring the product which is working for the social cause are some of the things which are not really possible if the NPO was to work on its own meaning in the absence of this relationship so the collective strength of the working and contribution by the members of the trade or the distribution channels is awesome when it comes to NPO there is just no way that the NPO could have done that without this kind of a relationship now this is not to say that the NPO is an underdog and the commercial entity is the overdog the fact remains that the NPO also has a lot to show and a lot to contribute to the by way of its assets of different kinds volunteers who are working for the organization stakeholders in the form of board of directors its employees and then all kinds of social activists here and there who can make their contribution to make the NPO a very noticeable and viable kind of an organization which qualifies to become the partner of the commercial entity in question or in focus generally it is the feeling on part of the non-profits that they are at a disadvantageous situation whereas the commercial entity has an upper hand that is not so because even if the NPO happens to be a small organization they have to contribute a lot by way of what I just talked about NPO's however stand to gain also through the multiple exposure to the program by way of the communication campaigns kept off by the commercial entity just think of the marketing collaterals which carry the description of the social problem the social cause and the contribution which is envisaged to be made by all the connected constituents of the whole program the meaning all the people connected with the commercial entity as well as the NPO and it would not have been possible if the NPO wants to work on its own because the communication campaign that would have cost so much that the NPO would be facing a hard time meeting those promotional budgets and therefore this partnership is very beneficial in terms of providing the kind of communication support which would be offered only by a commercial brand or a commercial entity the strength of different tools of communication in the bag in the mixed bag of integrated communications the marketing people on the commercial side have is known to all of us and that we can appreciate the multiplier effect of different tools because when they are put together to send the message across there is yet another benefit that NPO's derive out of cost marketing or cost related marketing and that is they're not really limited to one particular relationship with one particular corporate entity they can always get into similar relationships with other players within the corporate sector all the need is credibility in the marketplace and if they have work very sincerely if they have achieved their mission or they are very close to achieving the mission then they can be considered by other players very seriously because of the legitimacy they have acquired by getting into one program with one player this is a huge benefit which can make this kind of an exercise almost perpetual if the NPO wants to be very active and wants to be kind of proactive I think I did point out earlier that it basically owes to the cost inflation that the NPO's could have to differentiate themselves from many others could be working in the same area and then joining hands with commercial entities and commercial entities have to consider NPO's because they want to prove their corporate citizenship and this therefore works with both ways so we have seen that cost marketing has become a very important tool of marketing at the disposal of commercial marketers as well as social marketers in other words the marketers working on the NPO side it really has become a new arm of marketing in the words of a few experts they say in addition to advertising promotions and public relations cost marketing is a tool which many companies should employ in order to prove their corporate citizenship and for NPO's to achieve their mission with this we are now all set to take a look at the definition of cost marketing or cost related marketing but again before I talk about the structured definition as put forward by an expert let me show you a summary of what I've talked about in a graphical form which will automatically take us to that definition for a greater sense of clarity if you take a good look at this presentation you will see that this basically talks about the complementarity of the two sides meaning the commercial side and the cause side represented by NPO's and therefore this also becomes kind of an extension of the presentation that we had just a little while ago take a look on the left side and we have commercial marketing sitting here commercial marketing creates a lot of value for the corporation in terms of improved sales and a healthier the bottom line and all those benefits that I talked about in terms of the value exchange if you take a look at the cause side represented by NPO's here we have for the particular cause and we are convinced that this cause because of the contribution by the corporate side and the primary working of the NPO creates some social value by addressing societal value based needs the needs that are addressed by NPO's are societal based we know that and NPO's work for those needs and we also know there is an intersection of interest with which was the subject of the first graphical presentation I showed you and it is that intersection of interest with which actuates the two sides to join hands and then then work together collaboratively for a common cause and for a common end and therefore if you take a close look at these two sides one is value for the corporation other is addressing of societal value based needs this integrates the value which is right here on the commercial side and values which is right there on the cause side now try to understand the difference between the value and values value is the one that is created by the commercial marketing side for its product its brand and its own existence by way of improved earnings that's the value and it does come that way there is no denying that but values values are the ones that are addressed collectively and in order to address those values the two sides have joined hands and by joining hands working for those values they have created a social value so this is the difference between value and values so in other words by addressing those social values both the sides reflect certain values in which they believe in because they believe in the welfare of society they are working on one particular cause they are reflecting those values for which they are working and while working for those values they are creating value they're creating value for the corporation and they're creating value for the npu as well it is because of that that you see this shareholder and social value at the bottom purple circle and this is the same thing that you saw in the earlier presentation however there is one additional factor here and that is the connection of all the constituents along the supply chain on the left hand side you can see employees the shareholders operators customers all making their contribution toward the cause meaning toward creating that shareholder value and social value at the same time you see those constituents on the right hand side by way of society influentials employees and volunteers and community activists and then of course you know we have the combined assets from both sides that come into play and with all these features becoming inherent to the program they all create shareholder and social value this presentation that you've just seen makes four very significant conclusions number one is that cost marketing creates shareholder and social value cost marketing creates some mutually beneficial collaborative relationships between corporate entities and npu's cause marketing connects and engages different constituents on both sides meaning on the commercial side as well as on the npu side we have seen the kind of contribution they make and number four cost marketing communicates values of corporate citizenship the reason i talk about this point number four is because npu's are known for their existence meaning the reason for being of an npu is known that it works for a good cause and it exists for a good cause but it is the corporate sector that has to prove its demonstrable ability to word working for a cause which is good for the society at large and with this i now show you the structured definition of cost marketing cost marketing is a mutually beneficial collaboration that aligns the power of a company's brand marketing and people to a charitable causes brand and assets to create shareholder and social value connect with constituents and publicly communicate values i think this definition should now be very clear in the minds of all of us and we know what cost marketing is and why it has become such an important tool of marketing thank you