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I.
SUMMARY
This report aims to analyse MyKasih Foundation and strategize its marketing functions within this company and propose strategic marketing solutions. A background of MyKasih is introduced highlighting on the technological breakthrough of using ePetrol payment system. External and internal environments are assessed followed by the proposed strategy. From the research, tax exemptions serve as a motivator for donation, pointing out rules that can assist MyKasih. Segmentation was based on baby boomers and the generation y. The choice to target was generation y because it provides many opportunities to MyKasih to achieve its objectives. Generation y is a potential market that can reap benefits for MyKasih. The positioning strategy is based on psychological and technological traits that serves to be a niche that can be penetrated. Lastly, the benefits and costs of the proposed strategy such as being able to attain objectives of consistent funding and increasing awareness is being elaborated.
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1.0 INTRODUCTION
1.1 Background
MyKasih Foundation is a non-profit organisation or non-governmental organization (NGO) established in 2009 aiming to help the less fortunate Malaysians regardless of race, religion, and descent. The founder and creator of MyKasih is Mr.Ngau, also the CEO of Dialogue Bhd, a public listed company. By tapping on existing resources, Mr. Ngau utilized ePetrols cashless payment system and incorporated it into MyKasihs recent technology breakthrough in helping the poor and needy. ePetrol is a technology and payment solutions provider that has built a Centralised Interchange (Payment Hub) to support multi-applications. By leveraging on the Centralised Interchange, ePetrol is able to lower the cost of cashless transactions and offer Malaysians payment conveniently through the use of the Malaysian Identification Card (MyKad). This approach was to substantiate and differentiate itself from other NGOs in order to acknowledge donors donation and show how the funds are being utilized. Under the system, MyKadsof the selected poor can use it as a payment tool at designated retail outlets where recipients are able to shop, select and pay for what they need without any cash changing hands.
According to United Nations (2011), research shows that only 30% of the donation is delivered to the poor while the remaining 70% is used for administrative or miscellaneous fees. Looking at this issue, Mr. Ngau made the attempt to direct 100% of donations to the poor by incorporating theePetrol system through MyKasih Foundation. MyKasihscurrent vision and mission (respectively) is:To establish loving and caring neighbourhoods all over Malaysia and the world.;&To enable poor and needy families achieve more independence and give their children a chance to break out of the cycle of poverty.
The organisation which began with 25 families in 2008,has tremendously increased to 9000 families over a period of 2 years. In addition it has also
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expanded in terms of its geographic locations serving over 70 locations throughout Malaysia (MyKasih, 2011).
1.2 Purpose
The purpose of the report is to strategically evaluate Mykasih, assess the marketing problems, and offer proposed solutions. The report will provide an in-depth analysis of the attractiveness of the market and appraise Mykasihs current performance. The environmental analysis of Mykasih will be identified, and gauge the effectiveness of the corporate strategy, assessing the level to which it responds to the opportunities and threats in the organisations external environment.
1.3 Scope
The scope of this report involves focusing on analysing the proposed marketing strategy and how the strategy influences the specific target market. It also focuses on identifying trends set by the market, as well as consumers, as these impacts donors.
1.4 Methodology
Data collected for the purpose of this report ranged from journals, books, websites and online documents that were acquired from the Monash library, other available Monash resource databases, as well as websites which discusses world issues and events.
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Malaysia has a stable economic growth of 3.1% with an annual disposable income of RM414,302.50 as of 2010 (Euromonitor International, 2011), where the poorest 10% of households only held 1.2% of the countrys total annual disposable income. According to figure 2, the percentage of households with an annual disposable household income of less than USD 5000 is the highest (Euromonitor International, 2005), proven with the fact thatthe poorest 40% households in Malaysia only earns an average monthly income of RM421.00 (Jabatan Perdana Menteri Malaysia, 2011). Figure 2: Malaysia households by annual disposable household income: 2000, 2004
(Euromonitor International, 2005) Poor families living in urban areas find that cost of living is higher, thus not being able to cope with daily expenses which increase constantly due to inflation rates. Therefore, NGOsthat are more likely to donate food, beverages and household needs will benefit the urban poor, which MyKasihcan fulfillwith theMyKad system.
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One of the main considerations under the socio-cultural environment would be the adults literacy rate. As told by Nobel laureate Gary Becker, Educating the poor is a top social issue for the 21st century. The current literacy rate in Malaysia as of 2010 is 87.4% (UNESCO Institute for Statistics, 2002).However, the remaining 12.6% still need assistance in education. Currently in Malaysia, there are 314 non-profit organizations working in the field of literacy (UNESCO Institute for Statistics, 2002). As such, could favour MyKasih in their education programme, as they collaborated with Kassim Chin Humanity Foundation in providing education to children from elementary to secondary.
2.1.3 Political/ Legal Environment
In the political/legal environment, the board chairman of the non-profit organization would have to be sure that all the board members, staff, and volunteers are well educated about ethical, business, and legal issues that affects the organization (Gardyn, 2004). In Malaysia, most NGOs are supported by the government sector, as they complement and provide help to the government. NGOs receive tax exemptions for donations given under the Income Tax Act (The International Programme of the Charity Commission, 2011). Hence, corporate donors are more willing to cooperate with MyKasih which can also boost their investor preference.
2.1.4 Technology Factor
With current technologies, it is easier for NGOs to collect donations from donors. Donors do not need to donate in terms of cash whereby it is just a click away using the internet. Moreover, it is also easier for NGOs to assess families background to ensure that there are no imposters. Technology could favour nonprofit organizations- for example, with the help of technology, MyKasihs staff and volunteers can spend more time on services like counselling, tuition and training (MyKasih Foundation, 2011). However, this also affects the NGOs unfavourably, as certain NGOs would find it difficult to fund for technology maintenance.
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2.3 Competition
Although demand for non-profit organizations has increased tremendously, not many non-profit organizations could sustain in the market. This is due to the ever competitive market in the industry. According to MyKasih Foundation (2011), non-profit organizations complement each others activities and are not seen as a competitive environment. However, competition over donors still exists at this point, which also adversely affects the stakeholders. Currently, the rivalry among present competition is tight, as most of the non-profit organizations have similar achievable mission, and also similar benefits to donors. Moreover, there are also a few non-profit organizations that cater to the poor families who dominate the market.
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3. Performance review
3.1 Strength -Core Capabilities:
With regards to the organisations core capabilities, innovation developed by ePetrol pioneered the use of MyKad technology secured the distribution of food in a cashless, transparent, seamless exchange of goods and services. With this system developed by ePetrol the whole population of Malaysia can be stored into its database for record keeping wherebyMykasih is currently using a storage capacity of 3 million individuals with no difficulties (MyKasih, 2011). As a result the organisation saved costs as it used its existing resources. In addition, Malaysia was the first country in the world to use identification cards for payment servicesindicating that the Mykasih has an advantage over other NGOs (Mykasih, 2011).
The MyKad has been used to allow the beneficiary to make their own purchasing decision to select and pay for exactly what they need, all with just a swipe of their card. Whereby, the housewife of the recipient family is credited with a bi-monthly allowance deposited in her MyKasih account which is RM40 every fortnight (RM80 a month) which can be used for purchasing essential food items at designated retail outlets by using her MyKad with a PIN number. MyKasih has participation of major retailers such as Giant, and Mydin into MyKasihs programme to facilitate distribution.
Another notable service offered is the online portal which allows donors to access the site to see the flow of donation and receive financial statements via the portal. Other than that, enhancement of program objectives through partnership with organizations such as Ambank Group provides financial training to recipients. Also, MyKasih has strong government support in providing details of potential recipients to MyKasihs programme.
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3.2 Weaknesses:
MyKasih faces a poor brand differentiation because its difficult for donors to differentiate against the other NGOs such as E-Kasih, and Kasih foundation as MyKasih is not clearly defined. The organisation also lacks of monetary and human resourcessuch as donations and volunteers as the organisation is newly established compared to more established NGOs. Hence, insufficient donors confidence in relation to more established NGOs such as the United Nations as less marketing or publicity is involved. Furthermore, MyKasihs portfolio of 9000 families is not easily manageable as there are only 9 permanent members of staff (MyKasih, 2011).Lack of public knowledge and awareness is done in regards to the program.
On the other hand, single mothers undergoing this program cannot be guaranteed of graduating from training sessions provided by MyKasih during the short period of 1-year, whereby their dependency on MyKasih is still strong (MyKasih, 2011). As such, MyKasih is not yet capable of ensuring that after the one-year program these single mothers are capable of managing their own financial problems. Therefore, there is a need to find out the best way to solve the redundancy that will strike these single mothers after the 1-year program, also to equip them to be independent on themselves.
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5 Objectives:
5.1 Sales objectives
To increase the number of contracts between corporate donors by 10% within 1 year. To maintain consistent funding from 30% individual targeted donors within 2 years.
6. Proposed strategy
In order to attain objectives of spreading awareness of MyKasih and having consistent funding, a negotiation can be made to more luxury or prestigious supermarkets such as Jusco and Cold storage other than existing partners like Mydin and Giant. In the negotiation, they can choose the products of their choice for example, Juscos waterbottle, and donate 10% of its sales to MyKasih. On top of that, add on to the product MyKasihs logo, vision and mission onto its packaging. Through this approach, MyKasih can spread awareness to the higher end consumers and obtain consistent funding from the 10% of sales of these products. Positioning into the minds of targeted well-off consumers that MyKasih is highly recognized and good NGO thereby increasing the opportunity for more funds through corporate donors. By doing so, these luxury supermarkets can increase their corporate social responsibility (CSR) and increase in their companys investor preference.
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7. Stakeholder Segmentation
The market is segmented according to consumer markets or industrial market. As for MyKasih, it was previously segmented according to the industrial market, as they aim to receive donations from big corporates with a one year contract. However, given the new strategy for MyKasih, the market segment will focus more on the consumer market.
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Baby boomers are people born between 1946 and 1964 (Euromonitor International, 2007), covering the largest population in the world. With higher personal and combined household incomes, baby boomers have become an important market. According to director of Roy Morgan Research International, Jane Iannello, well off baby boomers in Australasia spend an average of AU$200 to AU$300 per person, per day (Euromonitor International, 2007). Baby boomers spend mostly on mobile phones, groceries, financial services, travel and tourism, etc (Euromonitor International, 2007). Baby boomers focus more on health and beauty, they are more conservative and spends more time at home (Anderson & Kennedy, 2006). Unfortunately, baby boomers are very skeptical in terms of donation, as there have been too many frauds during their young ages.
7.2.2 Generation Y
Generation Y ofage 21-29 years old, are the children of affluent baby boomers. The generation Y population is very outgoing, technology driven, fashion conscious, and keen to spend without fear of credit (Euromonitor International, 2007). They are one of the most diverse generations, when it comes to ethnicity and sense of community (Euromonitor International, 2007). Besides that, they are keener on purchasing ready meals and eating out (Euromonitor International, 2007). They also have a strong sense of social responsibility, which means the generation Y tends to seek products that are environmentalfriendly and ethical, and look for transparency and fair trades in company (Euromonitor International, 2007).
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As mentioned above, the comparison between baby boomers and generation Y made a clear statement. The targeted stakeholder should be the generation Y, as they are more outgoing and are usually keener to be eating out (Euromonitor International, 2007). On the other hand, baby boomers are more conservative and like to stay home. The chances for baby boomers to purchase mineral water are slimmer, as they would rather bring water from home. However, generation Ys spending pattern concluded that they do not mind spending on mineral water, for example, during school hours or working hours, where they are thirsty they will just purchase mineral water. With the added characteristic that generation Y is more community concerned (Euromonitor International, 2007), they tend be more understanding and care more about the community, which includes the poor community, while the baby boomers behavior towards donations are quite skeptical, as donations were misused for a period of time.
Therefore, the targeted stakeholder for MyKasih would be the generation Y, as they are more prone to purchasing the product the bottled mineral water, and would be an added value for them to be able to donate to the poor.
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In this report, MyKasihs positioning is from the perspective of donors particularly the targeted market, exploring into the reasons why they donate and how to position by psychological reasoning to satisfy some of the needs from Maslows hierarchy of needs. According to Wilson (2000), people volunteer or donate because of their values and the perceived net benefits from participation, and obtain occupational prestige as a result. Also, an experiment done by Pavey, Greitemeyer and Sparks (2011) state that relatedness (self-determination theory) allows individuals to donate significantly more to charity than individuals who were given a neutral task. As such, MyKasih can position itself as an NGO which is community based whereby togetherness is emphasized.
On the other hand, MyKasih is the first NGO (in the world for that matter) to have come up with an ePetrol system where exchange of cash between donors and the poor is transparent, cashless and dependable. Thereby, positioning this characteristic, considered as a niche and breakthrough amongst NGOs would be beneficiary to the target market due to the current technology improvements. This core competency can be positioned in the minds of donors to be safe and could satisfy their psychological needs at the same time.
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10.2 Costs
The drawbacks would be that negotiation between MyKasih and these hypermarkets may not be desirable and it has not been negotiated in reality and this report just gives a proposed strategy and no solid feedback from companies. As such, if this proposed strategy is accepted, much time and effort should be spent on the progress of negotiation and marketing.
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11. Bibliography
Abosag, I., & Naude, P. (2008). The Role of Interpersonal Liking in Segmenting Existing Business Relationships. Society for Marketing Advances Proceedings , 65-66. Agg, C. (2006). Trends in Government Support for Non-Governmental Organizations. Geneva: United Nations Research Institute for Social Development. Anderson, D., & Kennedy, L. (2006). Baby Boomer Segmentation: Eight is Enough. Consumer Insight , 4-11. Bryson, J. (2004). What to do when stakeholders matter. Public Management Review, 6 (1), 21-53. Chew, C. & Osborne, S., P. (2008). Identifying the Factors That Influence Positioning Strategy in U.K. Charitable Organizations That Provide Public Services Toward an Integrating Model. Sage Publications, 28 (1), 29-50. Easterly, W. (2008). Where Does the Money Go? Best and Worst Practices in Foreign Aid.Brookings Global Economy and Development, 21. Euromonitor International. (2011). Annual Disposable Income. Malaysia: Euromonitor International. Euromonitor International.(2011). Bottled Water in Malaysia. Retrieved August 23rd, 2011, from http://www.portal.euromonitor.com.ezproxy.lib.monash.edu.au/Portal/ResultsList.asp Euromonitor International. (2007). Baby Boomers in Asia. Euromonitor International. Euromonitor International. (2007). Generation Y: Marketing to the Young Ones. Euromonitor International. Euromonitor International. (2005). Malaysia Income and Expenditure Datafile. Euromonitor International. Gardyn, R. (2004). Resources on Legal Issues for Nonprofit Groups. Washington DC: The Chronicle of Philanthropy. Hakansson, H. (1982). International Marketing and Purchasing of Industrial Goods; An Interaction Approach. Chichester: Wiley. Jabatan Perdana Menteri Malaysia. (2011, April 9). Portal Rasmi Unit Perancang Ekonomi. Retrieved August 12, 2011, from EPU: http://www.epu.gov.my Pavey, L., Greitemeyer, T., & Sparks, P. (2011). Highlighting relatedness promotes prosocial motives and behavior. Society for personality and social psychology, 37(7), 905-917.
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Moore, K., & Pareek, N. (2006). Marketing: The Basics (2nd ed.). Abingdon: Routledge. Moore, M. (1995). Creating Public Value. Cambridge: Harvard University Press. MyKasih Foundation. (2011). MyKasih News. Petaling Jaya: MyKasih Foundation. New Straits Times. (2010). Budget 2011 Highlights. Kuala Lumpur: New Straits Times. Scholte, J. A., & Schnabel, A. (2002). Civil Society and Global Finance. London: Routledge. The Brookings Institution Metropolitan Policy Program. (2006). From Poverty, Opportunity: Putting the Market to Work for Lower Income Families. The International Programme of the Charity Commission. (2011). NGO Regulation Network. Retrieved August 25, 2011, from NGO law and regulation in Malaysia: http://www.ngoregnet.org/country_information_by_region/Asia_and_Oceania/NGO_la w_and_regulation_in_Malaysia.asp UNESCO Institute for Statistics. (2002). Malaysia Literacy Policies. UNESCO Institute for Statistics. Union of International Associations. (2005, June). Union of International Associations. Retrieved August 24, 2011, from www.uia.org/statistics/organizations/ytb299.php Waler, O., Gountas, J., Mavondo, F., & Mullins, J. (2010). Marketing Strategy. Sydney: McGraw Hill.
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TABLE OF CONTENTS
I. SUMMARY ................................................................................................................................................... 1
1.0 INTRODUCTION ............................................................................................................................................ 2 1.1 Background .................................................................................................................................................. 2 1.2 Purpose ......................................................................................................................................................... 3 1.3 Scope ............................................................................................................................................................ 3 1.4 Methodology ................................................................................................................................................ 3 1.5 Assumptions and Limitations ....................................................................................................................... 3 2. Current Situation and Trends .............................................................................................................................. 4 2.1 Environmental Scanning .............................................................................................................................. 4 2.1.1 Economic Environment......................................................................................................................... 4 2.1.2 Socio-Cultural Environment ................................................................................................................. 5 2.1.3 Political/ Legal Environment ................................................................................................................ 5 2.1.4 Technology Factor ................................................................................................................................ 5 2.2 Stakeholders Analysis .................................................................................................................................. 6 2.3 Competition .................................................................................................................................................. 6 3. Performance review ............................................................................................................................................ 7 3.1 Strength - Core Capabilities: ........................................................................................................................ 7 3.2 Weaknesses: ................................................................................................................................................. 8 4. Underlying key issues: ........................................................................................................................................ 8 5 Objectives: ........................................................................................................................................................... 9 5.1 Sales objectives ............................................................................................................................................ 9 5.2 Communication objectives ........................................................................................................................... 9 6. Proposed strategy ................................................................................................................................................ 9 7. Stakeholder Segmentation ................................................................................................................................ 10 7.1 Industrial Market ........................................................................................................................................ 10 7.2 Consumer Market ....................................................................................................................................... 11 7.2.1 Baby Boomers ..................................................................................................................................... 11 7.2.2 Generation Y ....................................................................................................................................... 11 8. Choosing the Target Market ............................................................................................................................. 12 9. Strategic positioning for MyKasih .................................................................................................................... 13 10. Costs and Benefits of Proposed Strategy: ....................................................................................................... 14 10.1 Benefits .................................................................................................................................................... 14 10.2 Costs ......................................................................................................................................................... 14 11. Bibliography ................................................................................................................................................... 15
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