Internal Assignment 4 Unit 4 Q1.

. Elaborate the basic differences between non profit and profit oriented marketing with examples. Ans. 1 Marketing theory has undergone several changes since the birth of capitalism. There are several marketing terms that describe the primary focus of a company's energy and theories behind a certain type of business model. Marketing orientation and production orientation are two of these terms. Definition

Profit-oriented, or "profit margin," pricing strategies rely on setting a product or service's price to attain a specific, predetermined net profit percentage. In other words, the price is set to attain a set profit amount after all production and marketing costs are deducted. For example, a product that costs $100 and is sold for $200 would generate $100 per unit or 50 percent net profit. Generally, a profit-oriented pricing strategy means the price is set to maximize profit, pricing the product at whatever top limit the market will bear.

Types

A profit-oriented pricing strategy is one of three dominant pricing approaches, according to the Special Libraries Association literature on pricing strategy. It often seeks to maximize profit. Other approaches include sales-oriented pricing and competition matching. Sales-oriented pricing strives to increase units sold and therefore generate profit based on volume. Competition matching seeks to keep the price consistent with similar products and services in the market, neither undercutting nor placing a premium price on the product in question.

Example 1: Apple

Apple is a good example of a company using profit-oriented price. Apple products are almost always the most expensive in their category. These products are also typically considered innovative and high quality. The company does not typically price to match the competition. It very rarely uses sales or discounts to encourage volume pricing. Instead, Apple relies on its reputation and strong fan base to accept and purchase its products at a price it sets internally to generate desired profits.

Example 2: Harley Davidson

Another example of a company that uses primarily profit-oriented pricing is Harley-Davidson, the famous motorcycle manufacturer. The Harley brand is world-renowned. Its customers are fiercely loyal and its products have a reputation for quality. This allows the company to set pricing based on desired profit margin, rather than relying on sales designed to increase volume or matching its competitors' pricing. By setting itself apart from the competition as a brand, this company paved the way for a premium pricing strategy that works.

As the nonprofit sector moves into a more competitive environment it is being required by the community to become more efficient and effective. One response is for nonprofit organisations to become market oriented, which is the familiar response in the for-profit sector. Two components of market orientation, that is market segmentation and customer oriented products, fit well within the peculiarities of a nonprofit organisation. This is usually accompanied by the desire to obtain a competitive advantage causes problems for various stakeholders within the organisation. This paper contends that three factors, management, scarcity of resources, and conflict between organisational objectives and market orientation, are major influences on the adoption of a market oriented culture for a nonprofit organization.

Some basic differences include:

Combination of goals, ie, raise $250,000 from government grants, increase client usage, find cure for disease, change public attitudes, and raise $750,000 from private investors. Goals also include number of clients to be served, amount of service rendered and quality of service provided.

Social marketing Pricing may be fixed (zoo) or variable (fundraising), also significant is the opportunity cost of volunteers May rely on infrequent fundraising efforts to generate funds as opposed to day to day revenue stream Successful program may lose money if goods are provided at less than cost Objectives can be complex since success or failure cannot be measured in financial terms Usually 3 constituents (3 distinct target markets)-Clients, Donors and Volunteers, need to develop a marketing mix for each target market Many times, beneficiaries are not the contributors and vis a versa. The owner is not the beneficiary, as in business marketing May need to serve target market that is unprofitable to serve, Amtrack, Postal service Legal advantages, tax deductible contributions, exemptions from sales and real estate taxes, reduced postal rates. Primarily ideas and services as opposed to goods. Need to define what is being provided, ie., Peace Corpse, vocational training, health services, nutritional assistance and community development, also international cooperation and US foreign policy.

Very flat channels, non-business marketer to client. Rely on personal selling (volunteer recruiting) and advertising, sponsor ship, Public service announcements

Examples:

Handout...Buy a Brand New Pumper Truck: Ideas to generate revenue in order to afford a new truck....need to be very innovative since there are many non-profit organizations competing for donors' contributions.

Handout...These Cards List Stats: Marketing to the improve image of the police in the local community by offering baseball type police cards.