MARKETING THE ASSOCIATION
Marketing efforts should be motivated by two principles:
- Meeting member needs, and
- Providing products or services superior to that offered by the competition.
Through sound member analysis, one can discover what members' needs are, which product or service attributes satisfy those needs, and how members will search for, evaluate, and consume it. But even if one has developed a product or service that meets your membership needs, success may not be forthcoming if competitors gain the upper hand. Analysis of the competition is as an important as study of the member. The goal is to meet member needs with a product or service that achieves a measurable advantage over your competition. The advantage might be quality, a lower price, greater availability, better service, or a unique image.
To overcome competitive threats, one of three approaches can be taken: product differentiation, overall cost leadership, or special market focus.
Product Differentiation - Differentiation must be based on what your membership perceives to be real benefits, or else there will be little effect on sales. It should be noted that it can be expensive to differentiate, and that the effort can eventually be imitated by competitors. Therefore, more than other marketing strategies, differentiation demands constant injections of new ideas.
Overall Cost Leadership - The purpose here is to keep production, material, and other costs to a minimum, and thus increase demand through the resulting lower prices. The increased volume, in turn, leads to economies of scale, meaning that the average cost per unit of an item drops as output increases. The hoped-for result is a large market share. Special Market Focus. Many small to medium-sized and regional associations find this strategy is the only way to survive against larger rivals. These smaller organizations find it essential to go after market niches. In these cases the association may employ product differentiation and/or overall cost leadership approach in their promotion.
RESPONDING TO YOUR MARKET
To a certain extent, as the industry goes, so goes your association, the coattail effect. There are forces underlying every industry, including trade associations, that more or less affect us equally; economic and technological considerations, personnel situations, and other forces. These forces may either constrain or facilitate your operation, but they do not, by themselves, determine its performance. Rather, it is the "bootstrap" effort, the actions taken by your association in the face of competitive threats that controls its destiny. Here are the kind of threats associations face from the competition:
1. New Entrants. From a marketing perspective, any association must consider how strong the threat of another's entry (including a member who recognizes an opportunity and becomes your competition) is and what actions to take, if any. Some associations may want to try to increase the barriers to entry, or on occasion might welcome the entry (as, for instance, when the competitive product or service is obviously inferior). In any case, the threat of a new entry should cause existing associations to reassess their pricing, product quality, advertising, and marketing tactics, as well as their capital requirements and economics of scale.
2. Threats of Substitute. Members buy our products because of the needs that the products satisfy, but needs are not always obvious. What this means for a association is that it must identify and take into account the larger competitive network. By studying the competition (in addition to its own members) an association can discover new uses for its products and services.
3. Bargaining Power of Suppliers. To ensure success, a association must overcome any dependence on its suppliers. Because suppliers to a certain extent control the price and quality of your goods and services, they indirectly influence the associations' performance.
THE PRODUCT PORTFOLIO
Nearly every trade associations markets a number of products or services, but seldom do all these perform equally well. One way to manage an analysis of all the products is to view them together in what I call the "product portfolio." We will classify an association's products or services according to market growth and relative market share.
An association should strive to create an internal balance of products. But important as such an analysis provides only a partial picture of the health of a association's products. Market growth and market share considerations may be less important than other factors for a association. Government regulations or any of the many threats to competition might still be the dominant factor.
Deciding on the market to serve is perhaps the most crucial decision faced by an association. Not only do all other marketing decisions follow from this choice, but the ultimate success of the association depends on the acceptance of its products in the chosen market.
A key activity in market selection is the analysis of member behavior. The dominant consideration is how members process information, how they think. But it is also important to understand the emotional reactions of members to our products--how they feel. Social processes shape consumption, too, such as norms, and peer pressure among others.
Changes which take place in member needs or evolving economic and competitive conditions make product innovation a necessity for maintaining a healthy association regardless of the high costs and high failure rates of new product development.
Many activities must be coordinated to bring a product or service successfully to market. The most important fall within three stages:
1. New ideas are generated in the creative phase. Ideas may stem from secondary sources, member research, R&D, board of directors, members suggestions or complaints, employees, and even the competition. Some associations use separate creative groups or executive brainstorming sessions for input. Criteria considered at this early stage include estimates of the cost of development, potential receptivity of members, ease and cost of production and marketing, profitability, degree of probable competition, and likelihood of success at each of the remaining stages.
2. The design and development stage is, in many ways, the most critical. In this stage, the product or service takes shape conceptually, marketing plans are formulated and costs, expected sales, and profits are projected. This is a particularly sensitive stage and is filled with considerable uncertainty. Association managers have vested interests and the association wants to avoid both the rejection of potentially fruitful products or the approval of losers. Yet considerable uncertainty persists in this stage.
3. Testing is the actual market should reduce uncertainty and provide more feedback. Usually the product, or service, is given to a handful of members. Test marketing is expensive (sometimes dangerous), yet the information that it yields is more valid than that from most protest.
Test marketing for associations is difficult and expensive, but if properly completed the information it yields is more valid than that of most pretests. One drawback of test marketing is that roll-out and introduction to the full membership are delayed. This permits the competition to learn at the your associations expense and to catch up. Some organizations even sabotage the marketing of their competitors by changing their own pricing and promotion programs in your test market.
4. In the product launch, the product is introduced to the public, either nationally or on a market-by-market basis to coordinate with production, promotion, or other constraints.
5 Finally, the new product development process "ends" with ongoing management that is, managing the product through its life cycle.
LIFE CYCLE MANAGEMENT
All products pass through cycles with periods of ups and downs. A sequence of sales might be represented as follows: introduction...rapid growth...slow growth...leveling off...decline. Whatever the pattern of sales, each stage requires a different balance between the various marketing approaches. Resources must be allocated to promotion, sales, distribution, attendance and pricing. During the introduction phase, profits are nonexistent and the objective typically is to increase members' awareness and purchases. Promotion will be heavy and used to motivate members and prospective members. The offering will concentrate on building distribution or attendance. The price may be set low to forestall competition, or it may be set high to reap early rewards. During periods of rapid grow, promotions will shift from information presentations to persuasion and may be reduced somewhat from the initially high levels during introduction. Promotions, too, will be reduced and shifted from trial-inducing tactics (such as sampling) to repeat purchase discounts.
During slow growth and leveling-off periods a change in product design may be required to interest people who have put off trying the product or to compete effectively with a new entrant. Ads in the association's media and promotions maybe changed again to be combat wear-out (a decline in ad effectiveness over time) or to meet the competition. Prices may have to be lowered still further. Market segmentation takes on a special urgency as a means of survival.
As the decline phase approaches the association must decide whether to harvest, disinvest, or reinvest. An outcome to avoid is the self-fulfilling prophecy whereby an "apparent" decline is accelerated by a withdraw of marketing support and a potentially viable product is killed off prematurely.
If the association decides to harvest, then most marketing expenditures will be reduced and the product will be left to die on its own. If the association reinvests it may have to do so across the board with more product design, innovations, and renewed expenditures on advertising, promotions, selling, and distribution.
We in the association business have been much too myopic and ethnocentric in our approach to marketing. We have been myopic in focusing on the surface aspects of our member's buying behavior and must look deeper into the psyches of our customers. We have been ethnocentric in the sense that our promotional programs are axiomatically successful marketing programs. If we are to survive we must give more weight to target marketing. This will allow us to fulfill goals for return on investment, cash generation, and other objectives. How is your association meeting the challenges?