Marketing for a social business

The whole understanding of what constitutes 'The Market' can be more complex for a social business than for others. Generally, business is predicated on the concept of a marketplace in which the consumer is also the purchaser and they make their purchasing decision based on considerations of quality, price and convenience. The range of options and prices at which the product is offered by the supplier is pitched by a calculation of the optimum mix of likely sales volume and profit per item to suit their own capacity and ambition. 

For a social business consumers / clients / beneficiaries may be purchasers but the price is more likely to be based upon some calculation of cost recovery. Additionally, the marketplace may well introduce other kinds of purchasers as well. These could include a mix of any or all of:

  • funding bodies who provide a subsidy or full payment for services delivered to clients recruited and served by the Social Business
  • funding bodies, statutory agencies, charities who purchase services to be delivered to specified beneficiaries 'on their own books'
  • consumers buying services with funding or benefits paid to them with constraints on how that can be spent or a limited approved supplier list
  • commercial customers paying 'full rate' but with an expectation that some of the profits made from serving them will be used to provide subsidised or pro bono services or to subsidise some other charitable or environmental initiative.

The first task then is to research, map out and understand the marketplace in which the particular Social Business is operating. The complexity means that there is work to do here but a good marketing department might be able to sell the same product to a diverse customer base with all the market security benefit that implies. 

Marketing is usually defined as a system of activities designed to plan, price, promote and distribute want-satisfying products and services to present and potential customers, at a profit. The profit concept is just as important for Social Business as any other. Even if the Social Business defines itself as 'not for profit' it means 'not for profit distribution to its owners' – it will still require to make profits to pay off external loans or invest in improved resources and working capital with which to provide its services in future.

Successful marketing means having the right product available in the right place at the right time and making sure that the customer is aware of it. 

Marketing therefore includes:

  • market research (finding out what the customer wants or needs)
  • advertising (making the customer aware of your product)
  • packaging (making your product attractive to the customer)
  • selling (convincing the customer to buy your product) 

A good marketing effort must achieve 2 goals: identify the wants and needs of customers and then satisfy them. Although these goals may seem simple, the ability to reach them may be difficult. 

Successful marketing requires strong research skills, thinking strategies, and creativity. To market a product, you must:

  • identify a target market (who will buy your product?)
  • identify the wants and needs of that target market (what are the requirements of the product?)
  • convince the target market to buy your product (how should the product be promoted?) 

Market Research

Every Social Business needs information upon which to base their marketing decisions. Market research is the systematic gathering, recording and analysing of data relating to the marketing of goods and services. Its purpose is to help make better decisions and avoid committing costly mistakes. The time and money spent on market research will prove valuable, either by highlighting unknown opportunities, or by exposing possible risky situations.

Market research centres round developing sales forecasts, determining market and sales potentials, designing products, evaluating advertising, and determining consumers' motives for purchasing. There are generally 3 areas covered: the customer, the competition and the environment.

Data can be collected either from primary or secondary sources. Gathering information from primary sources involves, as is implied, going directly to the source, whether that is questioning competitors or surveying customers and so on. A first step, however, should be to collect background information by going to secondary sources, such as government publications and trade journals. Specific information for assessing the market should include:

i) The Customer

It is very important to identify the target market – who will actually buy/need is one thing but a Social Business requires demand and desire plus ability to pay. Perhaps the single most important rule in marketing is 'know your customer'.

ii) The Consumer

Competitors must be identified so that they can be monitored. They should be analysed to identify their strengths and weaknesses. Social Businesses can learn a great deal about the possible consequences of their future by studying what others have done and are doing in that particular market. Estimates of competitors' sales volumes and their market shares should be made. Also, the reactions of competitors to new entrants such as you should be judged. Your analysis of the competition should include an analysis of the reasons for their success. You want to know why customers are buying their products or seeking their services.

Obviously, in some product areas the existing businesses are so strong and well established that it would be difficult to even attempt to enter the market, for example competing head-on with a large food store. They would be better advised to offer a somewhat different service – a neighbourhood location and longer hours, which would provide a more convenient service. This choosing of an area of competition is called positioning.

iii) The Environment

The Marketing function of a Social Business should try to budget a little time on a regular basis to consider the PEST - Political, Economic, Social and Technological trends that might change the market place.

Product Potential

An examination of the above 3 factors should give an assessment of the potential market for products or services. The eventual market share would be a large or small proportion of this total, depending upon the strength of the competition and your own marketing efforts.

Target Marketing

Markets consist of segments, which – depending on the product or service provided by the Social Business – might be segmented by geography, age, ethnicity or any number of other factors. Target marketing is just about focusing the conversation towards those most likely to be interested.

Key to the credibility of the financial and social projections will be the quality of the market research undertaken.

In this section:

Developing a Marketing Strategy