The problem with the marketing mix paradigm is of the theoretical nature. Many marketing-related phenomena are not included. It is arguable that the 4Ps of the marketing mix are not well able to fit to all the requirements of the marketing concept. The marketing mix and its 4Ps constitute a production-oriented definition of marketing, and not a customer-oriented one (Dixon and Blois, 1983). The 4Ps model was suitable in most cases and was originally developed for FMCG marketing where transaction marketing is most appropriate. But it may be restrictive for the organization, which doesn’t have any tangible product to offer to consumers rather intangible product or service. In this case, marketing mix may be important enough only to support marketing activities.
Kotler and Levy (1969) said that marketing is a pervasive societal activity that goes beyond the selling of toothpaste, soap and steel. They raised a question whether the principles of marketing in traditional product areas are transferable to the marketing of services, persons and ideas. There is a great opportunity to expand the thinking of marketing to an increasing range of societal activity as increasing amount of society’s work being performed by organisations other than business firms. Some authors have defined social marketing as “the use of marketing skills in social causes” or “the study of markets and marketing activities within a total social system” (Bagozzi, 1975). For Bartel, it designates “the application of marketing techniques to nonmarketing fields”. Social marketing also addresses a particular question: Why and how are exchanges created and resolved in social relationships?
2.Government and Public Sector:
Government and public sector include organisations, which may be owned, and run totally by government or may have partial part in that. Even the definition includes the concern is that at what extent it is controlled by the government i.e. how much part it has to play in taking decisions for the organisation and its future. Government and public sector includes organisations such as NHS, Police department, Fire Department, Inland Revenue, A public transport company, Public library, University, and a lot more.
Now onwards, this paper will consider NHS as an example whenever it is required to discuss organisation specific marketing.
2.1 Why do they need marketing?
For commercial organisations, marketing serves to reach the prospect of profitability (Houston, 1986). Generally, the aim of the government and public sector organisations is not profitability. Mostly, they don’t offer any tangible product to the consumers. Rather, their product is a service, information, training, advice, decision and like. But, it is not the case always. Some government and public sector organisations have tangible products to offer to the consumers. For example, ONGC is a public sector company in India, which offers petroleum products and has the aim of profitability. Even in this type of cases, profit gained is invested in other government service ventures. Overall, in this context, a consumer is seen as a citizen and/or a voter (Bagozzi, 1975). So, marketing is considered as citizen oriented rather than customer oriented. . Every country has a different style to market their public sector in their own way.
According to Kotler and Levy (1969), they supply two types of products. First, the product as physicals products or services, that takes part directly to the exchange. Second, the product as the idea of public service, through the quality perceived of the product. Government sells their political action by selling services and ideas to public rather citizens. Literature shows that the product of public service is created from the responsibility of government to satisfy the customer-voter need.
Talking about NHS, the purposes of NHS are:
- Encourage and assist individuals to remain healthy
- Provide equality of entitlement to health services
- Provide a broad range of services of high standard
- Provide equality of access to these services
- Satisfy the reasonable expectation of its users
- Remain a national service responsive to local needs
To serve these purposes, NHS needs marketing. Also, in the past, hospitals began to face falling admissions and low occupancy. In the scramble to pull in new patients, many hospitals turned to marketing. Some began to focus on offering certain specialities while others focused on serving the special needs of certain demographic segments (Kotler and Armstrong, 1993). During January 1999, NHS was criticized by British newspapers that patients who were arriving at hospital accident and emergency departments faced long waits; in some cases, passing their first night in hospital on a trolley because of bed shortage. Hence, NHS decided that they would shape their services around the needs and preferences of individual patients, their families and carers. (Dept. of Health, 2000)
2.2 Marketing in government and public sector:
This chapter deals with market orientation in this sector that includes researching and selecting target markets, planning marketing programs with the marketing mix and organising implementing and controlling the marketing effort, within the public and government sector. The latter part examines the benefits and constraints of such a marketing approach for this sector.
As discussed earlier, marketing is a pervasive societal activity that goes considerably beyond the selling of tangible products (Kotler and Levy, 1969). Bartels (1974) defines application of marketing to non-commercial firms as social marketing, being concerned with the exchanges in social relationships. Social marketing is not “the simple quid pro quo” (Bagozzi, 1975) but more complex, as the tangible and intangible features have to be combined and causes are marketed (Kotler and Levy, 1969). Thus, social marketing distinguishes itself from generic marketing only in the idea that social behaviours shall be influenced not for the advantage of the marketing organisation but “to benefit the target audience and/or the general society” (Andreasen and Kotler, 1996). Luck (1974) argues that no exchange takes place in a social relationship as “a person who receives a free service is not a buyer and has conducted no exchange of values with the provider of the service”. But this view is very narrow and neglects factors like psychological benefits. Bagozzi (1975) and Kotler (1972) are convinced that undisputable a transaction i.e. the “exchange of values between two parties” takes place, as not only “goods, services and money” but also “time, energy and feelings” should be regarded as values.
2.3 Market orientation in government and public sector:
According to the marketing theory the first step of the market segmentation of a service is to define of the user of this service. This so-called “STP marketing” (Kotler, 1990), should be considered as the all-important aspect in designing an appropriate marketing strategy for non-profit organisations as well as profit-orientated ones. How does the public sector identify market segment, select and gain information about target markets? Concept of behavioural segmentation comes into the picture here while deciding the customer and the target segment. Behavioural segmentation can group customers in terms of occasions, usage, loyalty and benefits sought. However, usage and benefits are the main concerns in public sector marketing as the public sector market is normally divided between user and non-user and how to deliver the benefits to the overall public. The concept segmentation can be irrelevant. This is true because if government does not segment the market carefully it could lead to the problem of discrimination.
Due to political issues, policies, procedures and hence restricted amount of resources, the organisations in this sector are often not able to serve all possible customer segments with respect to greatest customer value (Kelley and Mahady, 2003) and still they cannot ignore any particular segment. NHS has to provide its services to all the segments of the market rather to say “society of citizens” here. NHS cannot neglect any particular class of the society for providing services. Contradicting this, profit-orientated organisations can more easily ignore unresponsive, unprofitable or unappealing segments of the market.
Here the market orientation enables the public service to get closer to the user by serving the social need of the citizen. It serves also in a larger extend the expectation of the voter. After defining the segment and the targets, the public sector is able to influence and exploit it with the marketing mix.
2.4 Marketing Mix in government and public sector:
Product:
The product strategy is one of the four tools of the marketing mix and enables to make the exchange more valuable. As said earlier, the ‘product’ in the sense of social marketing does not only include physical offerings but also services and ideas. Therefore, Andreasen and Kotler (1996) introduced the term ‘offerings’, which includes all aspects provided by government and public sector. The aim of the sector is to ensure that the citizen gets good service and good value for money. Bagozzi (1975) said “Getting good service and good value for money aims at developing a long term relationship.” NHS has to decide what forms of service delivery are most effective –e.g. which vaccine and outreach programmes give highest immune coverage. They need to make sure that consumers are benefited as societal health increases by buying their product. In short, the product policy in this sector talks about safety, credibility, security and continuity values which belong to the national interest.
Price:
The second element of the marketing-mix is the price policy. According to Zeithaml (1988), from the customer’s perspective, price is what is given up or scarified to obtain a product. The price is related to the achievement of marketing and government policy goals. Pricing is the key to companies’ profitability and survival. But in the public sector the pricing is a dilemma between the covering of the cost and the reaction of the people to the price rising. However, in government sector, the customer has to comply with the price e.g. monopoly. Government agencies such as police forces and taxing bodies are often not responsive to the public because of monopoly status, but even here citizens have shown an increasing readiness to protest (Kotler and Levy, 1969). If NHS raises its charges to cover rising costs and additional services, it may provoke a reaction from community. Also, the price strategy results in a legislative decision in this sector. So there is no price sensitivity and elasticity to the market demand. Moreover the public service sector is very often in a strategic branch for the national economy, e.g. defence force. This makes the acceptation of its price policy inevitable. In order to encourage the ‘purchase’ of an offering, operating bodies in this sector need to ensure that the perceived costs do not outweigh the benefits for the individual, because if the perceived value is rather low, the offering is likely to be ignored (Weinreich, 2003; Kotler and Zaltman 1971). Free or low priced products might be perceived as lacking quality or the beneficiary might not value it or feel patronised as sometimes a recipient of alms without consumer rights (Bruce, 1998). Thus, government and public sector must analyse their market and decide price accordingly like commercial organisations.
Place:
Place or distributive channels is the third element of marketing mix. As Bruce (1998) said, “Place or distribution, is the activity that ensures that products get to customers when and where they want them.” In regard to intangible offerings suitable, adequate and compatible distribution and response channels have to be chosen through which information or ideas are delivered to customers (Weinreich, 2003; Kotler and Zaltman, 1971). Furthermore, government and public sector organisations have to ensure the accessibility of their offerings for their target segment. The market of public and government sector is represented with spatially dispersed consumers. The distribution channel has to respond to the mission of public service. It means finding a balance between service the all citizen without reducing accessibility to isolated citizen. This is especially important concerning individuals who are disabled or have to overcome language barriers (Shapiro, 1973). That is why NHS has adopted intensive distribution. It aims to create maximum citizen convenience by a continuous and mass distribution by interactive methods such as conferences or workshops (Sheaff, 1991).
Promotion:
In order to create and sustain a demand for an offering, the potential benefits have to be communicated to the clients. Communications is the process of transmitting messages with the objective of making the organisations products or services attractive to target customer. The communication of the image of public service has an impact on the consumer perceived values of the government policy. The principles and methods of communicating promotions to consumers are also in essence the same as in commercial markets although the message content is likely to differ. Buyers’ promotional decisions mainly concern social marketing in health promotion and health education. NHS Management Executive guidance also suggests that buyers should stipulate, in broad terms, what information providers make available to patients and public (NHS management executive, 1990). Also, NHS promotional activities include both external and internal communication. External promotions are primarily for operational purposes: attracting patients, carers and donors, explaining to them what services are available and how to use them. Internal communication include recruiting staff, motivating and training them, etc. (Sheaff, 1991)
2.5 Planning and budgeting the marketing mix in government/public sector:
The critical marketing strategic planning task is choosing and developing cost effective marketing programmes as these types of organisations have limited resources. For example, police department is trying to decide between a campaign to educate people against pickpockets or adding a few more permanent policemen to the force.
Generally, an organisation faces following three issues in its marketing programmes to be cost effective (Kotler and Andreasen, 1991).
1.How can the organisation choose among competing marketing programs?
2.How much should the organisation spend on marketing?
3.How can the organisation determine the best mix of marketing tactics?
For choosing between alternative programs, organisation can carry out cost-benefit analysis. Here, they have to identify both types of benefits that is:
Monetary-whose total value can be expressed in currency
Nonmonetary- such as “lives saved” or “happiness created” (Rothschild, 1973).
2.6 Marketing Model for NHS:
Overall, the marketing model followed by the NHS can be derived as follows:
(Some of the factors and phases of the model have not been discussed in this report)
Structural Analysis
Nature of NHS
Incentives facing organisation
Organisation’s general objectives
Situation Analysis
Users: demand profile (personal motivation, segmentation, influence
from outside health sector)
Users: need profile (technology available)
Substitutes for formal care: Competing health care providers
Marketing audit
Marketing Objectives and Strategy
Needs analysis
SWOT analysis
Marketing Plan
Marketing Mix (4Ps)
Service Provision
Tracking (data collection, reporting, remedy)
Figure 2: Marketing model for NHS
Ref: Sheaff, R. (2002) “Responsive Healthcare Marketing for a Public Service, Open University Press
3. Benefits and Constraints
3.1 Benefits:
Government, like all other businesses, has to market its products or services. Consequently, both the government and the public tend to gain from it. Since the government provides a lot of services, the benefits of each service would probably be different. According to official NHS website, they have recently set up a website which is user friendly. Users can access this website and get any information relating to health issues. This marketing campaign would save the NHS thousands of pounds and help put resources elsewhere. Another benefit of marketing NHS service would be to know the perception of different people from different location, gender and ethnic backgrounds in respect of the above issue. This is very important feedback. If citizens don’t trust the NHS or have a negative perception, the health system would do more harm than good. This is why they market their products or services to let people know that the NHS is around to benefit the public. Another example of benefit in the sector would be the transportation service. Public transport marketing promotes local transport services by working with bus operators and large companies to develop effective marketing of the transportation system. The public benefits because of the fact that the government has made an attempt to make transportation easier by advertising the services available. On the other hand, people would use public transportation more often leading to new services and developing existing ones to be more efficient (Jobbes, 1998).
In general, marketing in this sector enables to see the customers as citizens. If one is more satisfied as a person, one will feel more listened as citizen. Marketing can improve the responsiveness to citizen claims. It develops trust and long-term relationship between the consumers (citizens) and the government.
3.2 Constraints:
In the government and public sector, as the offerings is spread very widely across the nation, segmentation has to be applied with care. For many services the public expectation of fairness may imply that people should receive the same quality of service whoever and wherever they are. Most government spend too much to provide a particular service. Because of inability to know how much to invest in a particular service or product, other public services suffer. Government should not compete in commercial market but its supplier includes commercial market. As a result one of the barrier- high cost solutions emerges. The second barrier government and public sector face in terms of constraints and barriers to marketing is personal ambition It can hinder the progress of marketing in the sector (Jobbes, 1998). The third barrier is the reward system. According to Stanton and others (1991), behaviour is influenced by the reward system. They believed that a person would do a better job if paid well. Webster (1988) claimed that developing the market and customer oriented business lies in how managers are rewarded. Another barrier on marketing for the sector would be the gap between what managers say and what they do.
Figure 3: Barriers to implementing the marketing concept
Ref: Jobbes, D. (1998) “Principles & Practice Of Marketing” 2nd Edition McGraw Hill
Government will never find themselves under pressure in making profits or being extra competitive. Although it could be argued that government “does not seek product improvement due to the low competitiveness” (Porter, 1998) but their responsibility is much greater than those of the private sector which means a reasonable level of standard is required in the public sector which is usually above average. In the public sector, it is a constraint as a low return on investment because selling is not necessarily associated with buying, as recipient does not always have to pay for the product. Due to the lack of return and competition, government might not produce all products at a quality level that can meet customers’ satisfaction.
Government and public sector organisations typically have not integrated their marketing activities. Also, their administration includes a variety of marketing positions, which becomes the cause for poor coordination. These types of organisations are more casual about collecting information on how they are doing and what is happening in the market place (Kotler and Levy, 1969).
4.Conclusion:
From the details presented above, it is very clear that the concept of marketing has been broadened from product oriented to customer oriented. It might be agreed that the marketing concept is transferable from commercial sector to the public sector in its present form. The ease with which marketing can be transferred is dependent upon the nature of the exchange process. It is almost unarguable that no organisation can avoid marketing. The choice for government and public sector organisations is not whether to market or not but the choice is whether to do it well or poorly.
Numerous authors such as Kotler and Levy (1969) and Shapiro (1988), to name a few, put forward the need of tailored marketing strategies, supporting the corporate strategies and argued that an open-minded use of the marketing tools and techniques and strategies are a lever for superior performance (Levitt, 1960; Becker, 1993).
In private sector, exchange takes place whenever a transaction in made in between cash and products. But, in the public sector the exchange is not always the same thing. In the case of a free or low price service, the government and public sector do not attempt to gain advantage at the expense of the customer. Marketing is a tool for the modernisation of the sector and the society. By identifying the lack of profit motivation and social objectives of the public sector marketing has a direct impact on the social change. Therefore marketing in its quest of improving relation between public sector and society, and improve its image is become relevant. But the relevance of the issue has limits. Marketing implementation has to follow the political decision because of the political nature of the public service.
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