MARKETING STRATEGY FOR SOCIAL ENTERPRISE

REVISE: Role of marketing in the public sector

Contents Role of marketing in the public sector .................................................................................................... 3

Marketing and government ................................................................................................................ 3

Public Sector/Government ............................................................................................................. 3

Public sector marketing mix ................................................................................................................ 5

Marketing Mix ................................................................................................................................. 5

The Marketing mix in detail ................................................................................................................ 6

Product ............................................................................................................................................ 6

Price ................................................................................................................................................ 7

Place ................................................................................................................................................ 7

Promotion ....................................................................................................................................... 8

Customer focus in the public sector ............................................................................................... 9

Importance of customer ................................................................................................................. 9

Developing customer focus in the public sector ........................................................................... 10

E Government and Role of Exchange ............................................................................................ 11

What is e government ................................................................................................................... 12

Role of Exchange ........................................................................................................................... 13

Role of marketing in the public sector

Public sector carries out the production, provision & distribution of goods & services that are essential for the government, as well as, its citizens. Public sector marketing seeks to articulate and propose solutions regarding the exchange and relationships occurring between a government organization and individuals, groups of individuals, organizations or communities in connection with the request for and performance of public-oriented tasks and services government helps the employment of the Internet and the world-wide-web for delivering government information and services to the citizens.

Role of marketing in the public sector

Applying marketing to the public sector is the result of developments in both marketing and public management. For two main reasons it is not possible to determine whether marketing can really be applied to the public sector or not. That is the nature of the public sector where some elements of the public sector are very close to the private sector The second reason concerns the services and obligations delivered by the public sector. In some cases, the same public body may offer both freely available fixed price services, and at the same time oblige citizens to respect norms or stipulations.

Marketing and government

Public Sector/Government

The public sector is also called “the state sector” or “the government sector”.

As Oxford (2000) describes, it could be described as a part of an economy that is controlled by the state .

Public sector carries out the production, provision & distribution of goods & services that are essential for the government, as well as, its citizens.

The activities carried out by the public sector can be listed as follows:

Delivering social security

Administering urban planning

Providing national defense

Taxation

Various social programs

Waste management

Water management

Health Care

The public sector activities would be mostly funded by the taxes paid by the citizens of its country.

Also it could be funded by loans & grants provided by the foreign countries or institutions.

Most public sector organisations are intended to provide their services for the betterment and the well being of the society. Hence, they have no direct obligation to achieve commercial success. The production decisions of such organisations are taken by the government.

Also, there are a handful of public sector organisations that would operate based on the profit motive.

At times the public sector has the exclusive rights to carry out the activities, mentioned in the former slides. The reason would be to make sure that all the citizens of the country get an equal treatment and a service.

However, at times the public sector may provide services, which overlap with the private sector. Water management, Waste management and Transportation services are some of the examples for those services.

One intention of such a move would be to create a variety in the service offering available in a country. As a result, the government can focus on the most needy or economically challenged sector of the society & provide them with the essential basic services at a reasonable rate. On the other hand, the ones who can afford to pay more could get the same service in a more customised manner, according to their preference.

The other reason for both the public sector and the private sector to offer the same services would be to cater to the unmatched demand for particular services in a country or a region. Sometimes, the government may lack resources to cater to the overall demand of the country. At that time, getting the private sector involvement would be a wiser move than keeping the demand unsatisfied.

Getting the private sector involved means creating the competitiveness in the market. As a result, the overall standard of the service offered by both the private & the public sectors may increase.

Further, at times, the government may lack expertise in providing some of the services to the society. At those times, the government may opt to completely outsource or contract the task of delivering the service, to the private sector.

Example

In many countries of the European Union, govt. intervention in form of export promotion (EP) is a traditional pillar of economic policy, not just a tool for times of crises.

Activity

Q What are the main activities carried out by the public sector?

A

1. Population Control 2. Agricultural Development and Farm Productivity 3. Education and Manpower Training 4. Industrial and Entrepreneurial Growth 5. Export Promotion

Public sector marketing mix

Marketing Mix

The Seven Ps of the marketing mix

In the pursuit of marketing objectives an organisation requires a strategy that makes use of the marketing mix.

This term, originally used by Borden (1965), comprised of the 4Ps (Product, Price, Promotion and Place).

The original 4Ps of the marketing mix were considered by many to be too restrictive, particularly with the developing service economy.Other academics extended this framework to include three additional variables –People, Physical evidence and Process – thus making the 7Ps.

A successful marketing mix will combine these variables in a way that will facilitate meeting or exceeding organisational objectives.

As the public sector offers more of a service than the product 7 Ps model would be used as the Marketing mix for public services (refer Figure 1)

Figure 1: The Seven Ps of the marketing mix

The Marketing mix in detail

Product

Not familiar as a term in the public sector for those who associate the label with tangible goods in the private sector (refer Figure 2)

As explained in the marketing theory, this could be broadly interpreted to anything that can be offered to a market by an organisation or individual to satisfy a want or need.

Not only for physical goods and services, but also it appeals to an array of additional organisational offerings being “sold,” such as events, people, places, the organisation itself, information, and ideas.

Examples of Product Types in the Private and Public Sectors

Price

Price is one of the key marketing tools that an organisation uses to achieve its marketing objectives.

It also influences buyer’s decisions.

In the public sector, price isn’t just related to fees for products, programs, and services.

Four additional pricing tools can be used to influence citizen participation and behavior (Kotler and Lee, 2007: 74):

– Monetary incentives (e.g., discount coupons for bike helmets)

– Monetary disincentives (e.g., fines for littering)

– Nonmonetary incentives (e.g., public recognition as an environmentally-friendly business)

Nonmonetary disincentives (e.g., public exposure for owing back taxes)

Place

Distribution channels, are the ways means you use to deliver your offerings and the ways that citizens have to access them.

Place “P”, is considered one of the most critical components in the marketing mix

Choice of “P” gravely affects citizen response (Kotler and Lee, 2007: 92):

-Participation in programs (e.g., where and when CPR trainings are offered)

-Utilization of services (e.g., ambiance of a community center)

-Compliance with rules and regulations (e.g., where trash and recycling receptacles are placed at a city park)

-Purchase of products (e.g., where a university’s branch campuses are located)

-Satisfaction (e.g., how early a business traveler has to get to the airport in order to get through security lines)

Promotion

Marketing communications are used to inform, educate, and often persuade a target market about a desirable behavior.

The word Promotion is used specifically to mean persuasive communication and is the fourth “P”, the tool you count on to ensure that target audiences know about you or your offer, believe they will experience the benefits you promise, and are inspired to act.

These communications represent the voice of the brand and are designed and delivered to highlight your offer, determined by decisions you have already made regarding your product, price, and place.

Your marketing objectives rely on this tool for support. Your target audiences are your source for inspiration and the ones whose opinion and response matter most.

Developing these communications is a process that begins with determining your key messages, including a desired style and tone.

It moves from there to considering who will deliver these messages or at least who will be perceived as delivering them and only after this do you select communication channels as the content and format of your messages can and should drive these choices.

A brief description of each component is noted here (Kotler and Lee, 2007: 138) :

Messages are what you want to communicate: They are inspired by considering what your target audience needs to know and believe to be likely to act.

Messengers include any spokespersons, sponsors, partners, and actors used to deliver messages, and this includes who you want your target audience to think is the “seller” or “supplier” of the product and behind the communications.

Communication Channels refer to where promotional messages that you have developed will appear. These are not to be confused with distribution channels, described earlier as where and when the customer actually purchases the product, performs transactions, receives services, and/or participates in programs.

Example

IKEA’s Key selling points are; low cost, ludicrous commercials, social and ethical responsibility, unique brand identity (blue and yellow buildings), fair quality, voucher promotions, large inventory and parking space, impulsive shopping experience and family experience.

Activity

Q What is Service Marketing Mix and what are the additional elements

included in.

A

Service Marketing Mix: The ideal marketing strategy for a firm selling services includes the traditional marketing mix and three additional elements: people, process and physical evidence.

Customer focus in the public sector

Private organizations sole objective is to maximise shareholder wealth and maximise customer satisfaction. Similarly public organization also should focus on customers or in other words the public who pay their taxes and oversee their activities

Importance of customer

The private sector has elevated the standard for customer service and now citizens anticipate the same from governments. One-size-fits-all solutions necessitating citizens to steer a complex arbitrary network to obtain services simply do not apply it in today's "on-demand" world.

In the public sector much of the marketing related activity is concerned with the satisfaction of customers even though there is no direct or indirect form of competition. Despite a monopoly in terms of supply, the priority for marketing hasn't been hindered.

Marketing in the public sector, one needs to consider replacing the term customers with stakeholders in any definition of the role and scope of marketing. It is because, public sector marketing includes customers as well as the many other individuals, groups and organisations that deal with or are even employed by an organisation. The values communicated to stakeholders by the public sector occur through a combination of all forms of communication and the message communicated is more persuasive. By and large, with the usage of marketing strategies & concepts, public sector organisations are more concerned with providing services rather than products.

Example

The United States Postal Service put customer satisfaction strategies into action by establishing a Consumer Affairs Tracking System and a Call Management Initiative with a single 1-800 number available 24 hours a day. Further, the Postal Service used focus groups of customers and employees, as well as feedback from customer satisfaction surveys, to develop a process for resolving customer complaints.

Activity

Q How does McDonald’s provides service in terms of payment?

A McDonalds do accept cash and cheques as a payment method but they do not take credit cards although there are ATM machines available outside most stores so the money can be obtained from the credit card easily.

Developing customer focus in the public sector

Change is inevitable and affects the public as well as the private sectors.

Not only private sector, but the public sector also, is subject to new challenges and new competitors which may call for a restructuring of the organisation or its termination.

Like businesses run out of existence without sufficient profit, public sector agencies also may also terminate due to lack of funding levels.

Like businesses, public sector agencies must read the landscape of changing forces and technologies & think strategically.

Most importantly, they must think of the “ Customer” or in other words the publics who pay their taxes and oversee their activities.

Public sector agencies must market their merits to them.

In the public sector much of the marketing related activity is concerned with the satisfaction of customers even though there is no direct or indirect form of competition.

Despite a monopoly in terms of supply, the priority for marketing hasn’t been hindered.

In the case of the public sector a poor customer image does not enhance the organisation's image in the eyes of its other stakeholders.

When talking of marketing in the public sector, one needs to consider replacing the term ‘customers’ with stakeholders in any definition of the role and scope of marketing.

It is because, public sector marketing include customers as well as the many other individuals, groups and organisations that deal with or are even employed by an organisation.

A definition of marketing that best suits the purpose here would be:

Marketing is the management process responsible for identifying, anticipating and satisfying stakeholder requirements and in so doing serves to facilitate the achievement of the

organisation’s objectives’ (Proctor, 2007:5)

The various attempts made by a public sector organisation to bring about satisfaction are used to communicate ideas, benefits and values about products and services that it has to offer the stakeholder. This marks the importance of Marketing Communication for public sector organisations.

The values communicated to stakeholders by the public sector occur through a combination of all forms of communication and the message communicated is more persuasive.

By and large, with the usage of marketing strategies & concepts, public sector organisations are more concerned with providing services rather than products.

Use of marketing techniques and concepts with services in the private sector has a different aim.

On the other hand, the use of marketing techniques and concepts within aspects of public service are concerned with promoting ideas and are frequently referred to as social marketing.

Kotler and Zaltman (1971) suggest that social marketing is:

‘The design, implementation and control of programs calculated to influence the acceptability of social ideas and involving considerations of product, planning, pricing, communication, distribution and marketing research.’

Social marketing aims to bring about specific behavioral goals relevant to social good.

For example the prevention of anti-social behavior such as vandalism or alcohol abuse in the community.

However, it is only one of a number of possible intervention strategies and its limitations or suitability for particular purposes does have to be well understood.

Example

The U.S. Employment Training Administration (ETA) retained Yankelovich Partners, a consulting firm, to determine what customers of the employment service thought about the agency. A series of meetings was organized in which groups of customers—blue collar, white collar, and small business owners who use the service—talked candidly about their recent experiences with ETA. The feedback stunned civil servants. They could not believe how angry their customers were about their treatment at the unemployment offices. A customer declared, “I hate this place and if you gave me a chance, the first thing I would do is privatize it!” Another complained that government workers “talked down to him and they acted as if they know better. I want to be treated as a customer.” The experience of listening first-hand to their customers changed the managers’ views of their own services. Subsequently, these managers required some of the other agency employees to view a videotape of the experience

Activity

Q What questions need to be asked for tackling customer service

improvement?

A

1. Why do I want to do this? 2. Where do I start? 3. Who should be involved? 4. What do I have to find out? 5. How do I commence the improvement process?

E Government and Role of Exchange

Electronic Government (or e-Government) essentially refers to "The utilization of Information

Technology (IT), Information and Communication Technologies (ICTs), and other web-based

telecommunication technologies to improve and/or enhance on the efficiency and effectiveness of

service delivery in the public sector." (Jeong, 2007). E-Government promotes and improves broad

stakeholders contribution to national and community development, as well as deepen the

governance process

What is e government

Most e-government projects fail (Heeks, 2006: 3)

Some are total failures, in which the system is never implemented or is implemented

o but immediately abandoned;

Some partial failures, in which major goals for the system are not attained and/or there

o are significant undesirable outcomes.

Only a minority of e-government projects can be properly called successes (Heeks and

Bhatnagar, 2001; Fulton, 2003; UNDESA, 2003a).

Estimates of the proportion falling into the failure categories range from 60 percent (Gartner, 2002) through 60–80 percent (UNDESA, 2003b) up to 85 percent (Symonds, 2000).

Thus, there is a huge gulf between the hype about information technology’s (IT) role in the public sector, and the actual reality.

The overall result is a massive wastage of financial, human and political resources, and an inability to deliver the potential gains from e-government to its beneficiaries.

This, despite an estimated global spend on IT by government (excluding public sector health, education and utilities) of some US$3 trillion during the decade of the 2000s (Gubbins, 2004)

These problems are the result of poor management.

If the processes and projects and systems of e-government were managed better, failure and waste would be much rarer (Brown, 2000; Gupta et al.,2004).

Example

The election of Barack Obama as President of the United States became associated with the effective use of Internet technologies during his campaign, and in the implementation of his new administration in 2009. On January 21, 2009, the President signed one of his first memorandums – the Memorandum for the Heads of Executive Departments and Agencies on Transparency and Open Government. The memo called for an unprecedented level of openness in Government, asking agencies to "ensure the public trust and establish a system of transparency, public participation, and collaboration. The memo further "directs the Chief Technology Officer, in coordination with the Director of the Office of Management and Budget (OMB) and the Administrator of General Services (GSA), to coordinate the development by appropriate executive departments and agencies [and] to take specific actions implementing the principles set forth in the memorandum.

Activity

Q What are the main functions of Government?

A

Government is made is make sure that the natural rights of man are protected and to make sure that men can live in safety and without undue stress. Government takes care of the roads, education, local police departmentstrade, making of money, postal services, local fire services, state, local and federal parks, prisons, local garbage collection, welfare services,

pensions, police services, military, and much more. Without it, there would be chaos.

Role of Exchange

EGovernment is the use of IT by public sector organisations.

EGovernment is therefore not just about the Internet.

And e-government has been with us for many decades: long before the terminology of

‘e-government’ was invented.

EGovernment means office automation and internal management information systems and expert systems, as well as client-facing web sites.

To understand e-government, one must therefore understand IT, which handles data to produce information.

The next step to understanding e-government, then, is to understand that e-government systems are information systems (refer Figure 3).

At their heart lie data and information (the latter being defined as data that has been processed to make it useful to a recipient).

These are handled by digital (and sometimes non-digital) information technologies.

A system is a collection of elements that works and has a purpose

To understand e-government as an information system, we must add in some notion of activity and purpose.

For e-government to be a working information system, it must be seen as much more than just the technical elements of IT.

Instead, it must be seen to consist of technology plus information plus people who give the system purpose and meaning plus work processes that are undertaken.

E-government systems can be described as ‘socio-technical systems’ because they combine both the social – that is, people – and the technical (Avison and Fitzgerald, 2003).

This is a first indication that, when managing e-government, both social and technical (otherwise known as soft and hard) issues will have to be dealt with.

Shortcomings in managing the soft aspects are more often a cause of failure than problems with the technology.

Most eGovernment systems are embedded within public sector organisations that provide, for example, the management systems and the organisational resources that support e-government.

These organisations also provide things like the political and cultural milieu within which e-government operates.

Many e-government systems also reach out to other groups (citizens, businesses);

A few involve other public agencies.

In turn, all these groups and organisations are themselves embedded in institutional environments: a broader context of laws and values, economic systems and technological innovations that affects both the agencies/groups and the systems – including e-government. Systems – that serve them.

Full model of e-government systems

Example

Singapore eCitizen Portal (http://www.ecitizen.gov.sg/) The Singapore eCitizen portal is a particularly good example of a "one-stop shop" eGovernment website, providing citizens with access to a very wide range of fully online services. Access to the services is provided primarily via option lists labelled "I want to." or "How Do I.": a sign of the adoption of a strongly user-centred approach to the information architecture. The information is also listed by subject, and the site is linked to from most other governmental websites. The Singapore eCitizen portal represents an example of best practice in e-government web services, its only weakness being perhaps the apparent lack of implementation of measures to make the site fully accessible to the disabled.

Activity

Q What are the advantages & disadvantages of e-Government?

A

Advantages: Democratization, Environmental bonuses, Speed, efficiency, convenience and Public approval

Disadvantages: Hyper-surveillance, Cost, Inaccessibility, False sense of transparency and accountability