The Importance of Proper Positioning for Charities in Today's Economy

Dear Friends:

What follows is an address I made yesterday to a nonprofit coalition. I spoke without Powerpoint, otherwise I just post the slides on Slideshare. What follows is the text of my speech about nonprofit positioning in a time of great need.

Warm regards,

If like me, you believe that charities (or, nonprofits, or causes) have a vital role to play in the American civil society then you have to acknowledge that charities are being pressed from two sides right now and that many face existential crisis.

On the one side because of cutbacks in funding from government and donors, budgets are down and probably going to get worse before they get better. On the other side…especially for causes provide direct services… the needs have never been more pronounced.

Now maybe sometime soon the economy will rebound and we can get back to normal, whatever that means. But I don’t think normal means what it used to mean. Nine years ago a colleague and were speaking to a group of nonprofits gathered in Trento, Italy for a conference.

After our presentation a nonprofit executive from Rome approached us. Like most of his European colleagues his largest source of funding was from the government. Trouble is, his charity had fallen out of favor with government officials and his source of government funding was drying up. He needed a new source of financial support and fast. That was his new normal.

I’m not a futurist but I suspect that even once the economy recovers… and it will… and donations and government funding rebound, things may never be back to normal as we understood it in 2008. Like my Italian friend I suspect we’re all going to have to adjust to this ‘new normal.’

I’m a marketer and not surprisingly I think the principles of marketing can help us better prepared for that uncertain future.

Here’s what were going to discuss this hour. I’m going to provide case studies of famous causes that are well marketed, then do a little exercise. We’re going to talk about the marketing principle called positioning and we’ll do another exercise related to it. And we’ll end with a third exercise that helps put these pieces together into a greater whole and includes a tactical brainstorming session, because everyone likes to dream up tactics. Then I’ll have a few concluding remarks. All with no Powerpoint because I don’t want to risk turning off the lights so soon after breakfast!

So let’s start. I believe that the charities that will thrive in the future will not only be the best performers, but those that can best explain their points of distinction and position themselves best in the minds of their constituencies against their competitors.

I believe that because that has always been the case. Here’s a little exercise for you. By rights, you might think that the 10 diseases and health conditions that kill the most Americans are represented by the 10 biggest charities, wouldn’t you? That makes the most rational sense. We should send the greatest resources to causes engaged in the biggest fights, right?

I’m going to hand you something that’s printed on both sides. On one side is a list of the 10 biggest killers of Americans. On the reverse is the 10 largest health charities in America in terms of funds raised annually, but listed alphabetically. In this first exercise I want you to number the charities from the largest to the smallest in terms of funds raised.

(Refer to my really cheap-looking graphic at the left).

As you can see there’s little relation between the number of Americans killed and the amount of resources Americans spend on health charities.

Why is that so?

I would argue that, to use the vocabulary of marketing, the biggest charities in particular have positioned themselves better than their competitors.

What does ‘positioning’ mean in the context of marketing?

The concept of positioning was invented Jack Trout and Al Ries.

According to Trout and Reis, “positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position (place) the product in the mind of the prospect.”

Positioning is the means by which marketers try to create an image or identity for a product, brand, or company in the perception of the target market. What matters is how potential buyers see the product relative to the position of competitors. The theory behind positioning is that consumers just don’t have that much mental space (or energy) for too many things in one category.

The classic example is the car rental business. Among the full-service agencies you can be either Hertz or Avis. Early on Avis realized that it was number two, so the company positioned itself as the agency that tries harder. Who’s number three among the full service agencies? Who knows? Who cares?

Trout and Ries would argue that’s there’s precious little room for a number three in the mind of the prospect. For that matter there’s precious little shelf space in the store for number three. On the soup aisle there’s room for Campbell’s and Progresso.

Wait a minute, you say, when you go to the airport there’s also Budget, and Alamo and Enterprise and a handful of others. Where do those guys fit in? And when you go to the soup aisle there’s a gajillion choices. How does positioning address that?

Well, the name Budget answers that question for you. Budget is the discounter. And in the soup aisle Progresso positions itself against the much-larger category leader… Campbell’s… by selling only non-condensed soup, which has always been Campbell’s bailiwick. In that way Progresso is like Avis; number two and glad to be there. Everyone else, including the house brands, are there for sloppy seconds.

By contrast, Budget and the other guys have put themselves into a different category… and thereby carved out a different piece of mind space… then the full-service car rental agencies. Most Enterprise locations, for instance, are off airport property, that’s why they promise to ‘pick you up.’

Because of that positioning and smart operations, Enterprise is now the largest and most profitable of the car rental agencies and has been for at least 10 years.

So even if you’re in a business where there’s plenty of competition… hamburger stands, for instance… there’s still opportunity, so long as you position yourself right. That is, so long as you carve out a category in your customer’s mind that isn’t already occupied by someone more dominant.

Think about it. There’s dozens of sub-categories of retail discounters. WalMart’s a discounter. So is Costco, so is Trader Vic’s, and Harbor Freight. But they’ve all positioned themselves differently in the marketplace. And while there’s some overlap, no one would confuse Costco for Harbor Freight, or WalMart for Trader’s Vic’s. Positioning isn’t just brand attributes, although that’s part of it, or features or benefits or solutions. It’s about figuring out what part of the mind of the prospect you can own.

A successful positioning strategy is usually rooted in a company's sustainable competitive advantage. Positioning can be based on several things, including:
Conceptually, three bases of positioning can be distinguished:
  1. Functional positioning (solve problems, provide benefits to customers)
  2. Symbolic positioning (self-image enhancement, ego identification, belongingness and social meaningfulness, affective fulfillment)
  3. Experiential positioning (provide sensory stimulation, provide cognitive stimulation)
Typically, a product positioning process involves the following stages:
In retrospect organizations like Komen or MDA or St. Jude seem so inevitable. Of course Komen is the biggest breast cancer charity, we think, fighting breast cancer is just so vital.

But of course it wasn’t inevitable at all. In 1982 breast cancer was under-funded, under-recognized and under-appreciated as a killer of women. By its actions and by careful application of the principles of positioning Komen made the fight against breast cancer seem inevitable.

They didn’t always get everything right and Komen and MDA both draw fire even today for various reasons. But they got enough right, figured out their positioning and marketing and then persisted long enough that they literally changed the nonprofit landscape. That same opportunity is available to you.

Remember the famous quote from anthropologist Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

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