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Market-driven success.

The verdict is in: Market-directed management is an approach every association can use to enhance its confidence, effectiveness, and performance. A 2 1/2-year study conducted by the Market Driven Task Force of the ASAE Foundation has resulted in the book Market-Driven Management: Lessons Learned From 20 Successful Associations. The publication provides a clear conceptual basis and numerous examples from successful associations that demonstrate how to apply the principles of market-directed management.

What is market-driven management? Let's start with the term, for many association professionals debate whether market driven is the best term to describe associations that use the tools of marketing-directed management. Driven denotes a single-mindedness of purpose and an overwhelming power that does not reflect reality for most associations. In truth, the terms market directed or market focused are more appropriate. Even better, marketing-directed management conveys the proper role of marketing as one of the key instruments that supports the needs of management, rather than being an end in itself.

By definition, associations that are market-driven use all the tools of marketing-directed management: strategic planning, marketing research and assessment (both formal and informal), sales, promotion, membership development, and strict accountability of products and services based on their effectiveness and profitability. Those that use only one or a few of the tools aren't really market driven. The association that relies only on sales and promotion, for example, is sales driven, not market driven.

Associations have aggressively embraced market-driven behavior in response to several sets of problems:

* major changes in the association's environment;

* stagnant or declining membership;

* unsuccessful products and services;

* organizational crises; and

* untapped opportunities.

Many association executives are uncomfortable with the terminology and philosophical basis of marketing. They think market-directed organizations must be totally market driven as well as highly entrepreneurial. This is not true. By applying market-directed techniques to improve their income-generating ability, association leaders also can improve their capacities to decide to subsidize unprofitable activities to meet members' needs or advance their profession, philanthropy, or society at large.

Being market driven does not mean that every single product and service must be profitable. Associations frequency support important but unprofitable products, services, and activities. Their members insist that they do so; advancing societal good through the association is a clearly stated member need. Such associations are strongly market driven, rather than totally market driven.

Active listening

A market-driven association is directed by the needs of its members and other constituents or customers the members wish to serve. Depending on the particular association, it may also be directed by the broader needs of a profession, philanthropy, or society if its members want it to do so.

A market-driven association actively assesses and analyzes its constituents' needs and scans the environment for changes that will affect them. The association's leaders then decide on strategy, products, services, and organizational processes based on constituents' perceptions of their own needs.

The market-driven association is active, not reactive. It engages in marketing research and strategic planning aggressively to define the present and future needs of its membership and other constituencies. It then offers a program of services tailored to meet those needs.

As alluded to previously, associations may be entrepreneurial, but not necessarily market driven unless their products and services are based on member and constituent needs. Sometimes a good intermediate indicator of a market-driven association is not just what it does for its members but how it determines the needs of its members and other constituencies and then decides how best to serve them. Of course, the best ultimate indicator of the successful market-driven association is the financial health and organizational vitality it achieves through effectively serving the needs of its constituents.

Accountability is central to market-driven associations. Such organizations establish rigorous standards for member needs assessment, product development and promotion, and management's performance in fulfilling member needs. Mission and goals are translated into specific, measurable objectives.

The activities of market-driven associations are segmented into product and project centers, and the success of each activity is measured, evaluated, and compared with the organization's expectations. Professional staff are evaluated and rewarded based on their relative success in attaining these measurable objectives. Through this process, the entire organization learns and develops. The market-directed association continually seeks to enhance its performance.

All associations are confronted with a more extensive set of worthy potential activities than they have the energy or financial resources to support. Because of their focused approach to research and planning, however, market-driven associations are better able to identify and assess their opportunities to make choices among many alternatives. They also are able to enhance the profitability of their products and services. As a result, the market-driven association is more vital, financially viable, and confident in its ability to capitalize on emerging opportunities to address member needs.

Success factors

In assessing the impact of market-driven behavior on associations, our project team investigated 20 trade, professional, philanthropic, and federated associations covering international, regional, state, and local jurisdictions. They range from the American Medical Association, Chicago, a 300,000-member national, professional society with a budget of $185 million; to the California Association of Homes for the Aging, Sacramento, a 400-member state-level trade association with a budget of $1 million; to the Diabetes Association of Greater Cleveland, a local philanthropic association with a budget of $650,000.

The 20 groups studied comprised associations in all stages of organizational development and those facing different environmental and competitive conditions. All shared one characteristic: They had made significant progress toward becoming market-driven associations.

The most successful associations studied were those that used market-driven management not just to develop marketing capabilities but to refocus their management culture. Beginning with small steps, many of these associations reshaped their approaches to visioning, strategic planning, membership, product development, sales, public relations, and organizational development. Based on our review of those 20 associations, we defined a set of critical success factors in becoming market driven (see sidebar, "Critical Success Factors").

Market-driven results

All of the associations we studied benefited by becoming more market directed. They cited an impressive stream of bottom-line, quantitative results:

* better designed, more profitable products and services;

* increased memberships and retention rates, and more effective competition with other associations for member loyalty; and

* increased revenues, staff, and resources.

Of even greater long-term importance, however, was the sense of institutional empowerment and vitality a strongly market-driven orientation has given these associations. The tools of marketing-directed management provided these associations with the financial health, organizational skills, and confidence they needed to address new challenges, new product and service opportunities, and potential new clienteles. Four classes of benefits emerged.

1. Enhanced organizational vitality and strategic positioning. Becoming more market driven has increased the vitality and organizational health of the associations we studied. Beyond their numerical achievements, many of these associations have added new capabilities in marketing research, product development, membership development, promotion, public relations, fulfillment, and management information systems. They have improved staff quality and professionalism. They have also created an atmosphere conducive to skillful, honest assessment of the potential of products and services, environmental changes and challenges, and new opportunities. These associations are more willing to take risks and consider new initiatives.

2. Enhanced capabilities to develop products and services. The key operational instruments for applying the principles of marketing-directed management are the planning, design, development, and marketing of efforts and services that match members' needs. Most of the associations we studied used marketing-directed management to develop a stronger mix of products and services and to put in place a philosophy and system for rigorous product development.

The results have been better, more financially successful products managed by project- or profit-center managers who have the accounting and analytical tools to measure their success. Successful products are more frequent, and decisions can be made more rapidly to modify, cancel, or subsidize unsuccessful or unprofitable products.

3. Improved membership development capabilities. Almost all of the associations we investigated have enhanced their memberships, improved membership retention, and achieved a more satisfied membership and customer clientele. In many cases, these gains came after years of plateauing or even declining membership. As these associations developed specific skills in marketing-directed management, they came to appreciate that membership development is far more complex than they had previously thought. All of the skills of marketing-directed management - strategic planning, marketing research, product development, public relations, marketing, sales, and information development - are critical components of membership development.

4. Increased revenues and greater financial vitality. Enhanced strategic thinking, insightful product and service development, and improved membership development result in greater financial health. Strongly market-driven associations can point to clear increases in revenues and relative profitability.

Most associations today face increasing competition and have more potential projects to support member needs than they could ever have the resources or organizational energy to undertake. The enhanced financial vitality provided by a market-driven orientation enables associations to consider more aggressive and ambitious ways to serve members.

The challenge

Even experienced association executives and marketing managers have underestimated the time, effort, and investment necessary for an association to become strongly market driven. Many associations have taken 5-10 years to develop the organizational capacity, infrastructure, and professional team necessary to be strongly market driven. In the process, they have encountered the need to enhance the association's management information systems and analytical capabilities, develop new accounting and fulfillment services, and link all functions of the organization in ways

Too often, organizations assume their future is determined by external forces to which they can only respond. While many environmental factors are beyond any association's control, most associations have a far greater ability to shape their future - and the futures of their members - than they understand.

The major beneficiary of marketing-directed management is the quality of the association's strategic thinking about its future. The association that is given confidence and empowered by successful application of the tools of marketing-directed management can envision and create a successful future.

Donald M. Norris is president of Strategic Initiatives, Inc., Herndon, Virginia.


Providing energetic leadership and appropriate governance

* The executive director provides effective and forward-looking leadership.

* The board supports market-driven approaches and strategic vision.

* Changes in governance are often necessary to be more in tune with constituencies and to consider alternative futures.

* Engaging in sound strategic thinking

* Sound strategic thinking is the initial catalyst to becoming more market driven.

* Development of the tools of marketing-directed management supports better strategic thinking.

* Market-driven associations use enhanced strategic thinking to position the association to better serve existing and new constituencies.

Developing the association's marketing capabilities

* Hire marketing staff.

* Develop marketing research, promotion, sales, and public relations capabilities.

* Build grass-roots acceptance of these capabilities.

* Build a marketing organization - achieve functional integration.

Bringing marketing-directed management to product and membership development

* Apply the tools of marketing-directed management to product and membership development.

* Institute a profit center-product center approach with strict accountability for and measurement of results.

Building the association's infrastructure

* Come to understand the full range of infrastructure needs to be market-directed.

* Enhance management information systems, personnel policies, accounting systems, and fulfillment capabilities, and link to support decision making and member services.

Changing the association's corporate culture

* Understand the sorts of resistance that can be expected from board, staff, and member leaders.

* Develop strategies and tactics for demonstrating how market-directed management can improve the quality of the organization's decisions.

* Use those strategies to build consensus around a new corporate culture.

* Make certain that decision making at all levels of the association uses the tools of marketing-directed management.


Market-Driven Management: Lessons Learned From 20 Successful Associations provides numerous examples and anecdotes. It also provides evaluation frameworks that association leaders can use to assess their market-driven orientation and chart a course for their organization tailored to its particular needs. Remember: Every association can be market directed.

The publication is available from ASAE Publications. Member price is $30; nonmember price is $45. Call (202) 626-2748, or write ASAE Publications, 1575 Eye St., N.W., Washington, DC 20005. Please include the appropriate postage: United States, $5.25; Canada, $12; international, 25 percent of order price. Washington, D.C., residents add 6 percent sales tax.
COPYRIGHT 1991 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:includes related articles; market-directed management of associations
Author:Norris, Donald M.
Publication:Association Management
Article Type:Cover Story
Date:Nov 1, 1991
Previous Article:A matter of fax.
Next Article:An interface of interest.

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