The Application Of Market Concept In Public Sector Marketing Essay

The concept of marketing has penetrated into the public sector. The idea of employing the marketing strategies to promote the public service is a debatable issue in the public sector. According to the public choice theory, competition brings market discipline to public service while reserving the benefits of public sector engagement (Boyne 1998). However, the public service professionals argue that the adoption of marketing concept perceived as commercial purpose in the public sector is inappropriate to organizations regarding with the delivery of public good services (Laing, 2003). This paper intends to assess the arguments in favour of adopting marketing concept in public service. It compares the characteristics of public sector and private sector; and discusses the concepts of marketisation and consumerism applied in the public sector, and also the constraints of marketing solutions in the public sector will be discussed in the end of this paper.

In post-modern western economies the public sector is regarded as including a wide range of various activities; from criminal justice and social welfare at one end of the field through to housing and transport at the other (Lane, 1993). It is important to recognize the characteristics of public sector distinguished from private sector due to the specificity of public sector. The most basic characteristic is that the majority of public goods are actually services which are intangible, but not tangible products; thus public service is endowed with intangibility, inseparability, heterogeneity and perishability (Kotler & Andreassen, 1991).

Going beyond this basic characteristic, the core traits of public sector includes the dominance of political objectives rather than economic ones; the emphasis on the citizen rather than on the consumer; the need to serve diverse multi-dimensional ¿½¿½customers¿½¿½ (Lovelock & Weinberg, 1990). Public services cannot be simply framed in terms of economic terms as it also involves in political considerations of legitimacy, social justice and equity; whereas the private sector mostly give the economic considerations to efficiency and profitability that determine decision making (Graham, 1994).

Further, the emphasis on citizenship in the public sector reflects the need of mutual commitment exchange between citizen and the government. Walsh (1994) states ¿½¿½the fundamental relationship between citizen and government is not one of simple exchange but one of mutual commitment, and public services are not simply a reciprocation of taxes¿½¿½. Customer in the public sector is difficult to be clearly defined as public service provides both individual and social benefits. For example, in the public services of education, health, and social care, multiple customers can be identified as all of who can be benefited from the public services. The core public sector ethos are considered as to be formed on the these three core service characteristics that derived from its primary stress on equality and community which are regarded as straight opposed to the competitive, individualistic nature existing inherently in marketing, especially in private sector (Laing,2003).

Public services are normally provided by government to its citizens, and are non-rivalrous and non-excludable; the benefits of public services are indivisibly allocated among the entire community regardless of individual¿½¿½s desire of purchase the public goods (Denhardt &Dednhardt, 2007). By contrast, private goods can be divided up and delivered separately to different customers without external benefits and costs. Efficient provision of public services relies on the government functions, whereas private goods can be efficiently divided by the markets.

The public sector in European countries firstly started to employ marketing tools and strategies to manage public service, also to regard the public service users as customers (Cousins, 1990).Broadly, the term ¿½¿½marketing¿½¿½ is defined as ¿½¿½the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives¿½¿½ (Boone & Kurtz, 1998). In the context of public service, Proctor (2007, p.213) suggests another definition of marketing which fits better the circumstance of the public sector¿½¿½¿½¿½Marketing is the management process responsible for identifying, anticipating and satisfying stakeholder requirements and in so doing serves to facilitate the achievement of the organization¿½¿½s objectives.¿½¿½

¿½¿½Marketisation¿½¿½ has been employed as one of major means to marketing public services. Marketisation is described as the process by which market forces are embedded in the public services, which have been planned traditionally, delivered and funded by local and central government (Public service, 2006). It means that certain perspectives of public sector activities are treated similarly to the commercial marketing in the private sector by strengthening the competitiveness of products and services to the commercial marketplace (Laing, 2003). Proctor (2007) stresses the core concept of marketing public service is to be customer orientated; he further points out customer orientated marketing strategy is propitious to meet public needs. By providing full-raged of leisure, education, recreation, economic and social service, public will improve their awareness of local authority; thus local authority is reinforced (Proctor, 2007). Kotler and Lee (2007) also point out that using marketing tools can improve public sector organization performance. For example, the four Ps model can effectively influence the desired outcomes of target market in public sector. Four Ps in public service refer to developing popular programs and service, setting motivating prices, Incentives, and disincentives; optimizing distribution channels, communicating effectively with key public segments (Kotler &Lee, 2007). From this point, public sector organizations are required to understand citizen¿½¿½s want, needs, problems and preferences in developing and delivering public services in order to enhance the service quality and performance. Additionally, marketing strategies regarding with marketing research, graphic design, mail-shots and advertising used for commercial purposes in private sector also can be employed in introducing the new services of public sector; besides, to increase the public awareness of the services among the existing and potential users of public services also benefits the marketing management of public sector organisations (Proctor, 2007).

In many post-modern west economies, private-sector based approaches are adopted to the organization of public services carried out by the structural measures, for instance quasi-market mechanisms, competitive tendering procedures, and outsourcing service provision; thus the private sector suppliers are integrated into the public sector, serving for the public sector (Saltman & von Otter, 1995). The private-sector based approach is in favour of lowering the price level and maintaining the standard of quality more to meet service users¿½¿½ demands (Chapman & Cowdell, 1998). To take the airline sector as an example, many publicly owned and operated national flag airlines have been fully or partially privatized over the past fifteen years. Backx et al. (2002) find through their research of the impact of ownership on the performance of international airlines that private sector airlines and airlines with mixed ownership have better performance, higher efficiency and more profit. In the United Kingdom, the provision of public service under government contract by the private sectors is a growing industry with over ¿½¿½80 billion of taxpayers’ money every year (UNISON, 2009). The major sectors financed by private sector include facilities management services such as maintenance and cleaning in schools, hospitals and other facilities built through PFI, Building Schools For the Future or LIFT (UNISON, 2009).

The trend of marketisation in public sector has been inevitably proceeding. One major change has been identified in this process, that mainly due to the nature of public sector and the uniqueness of service products. The change is the relationship between citizen and government. This conversion of relationship is from being a citizenship with tremendous mutual commitments and obligations to a consumerism with priority placed on the primacy of the rights of service users, both individually and collectively (Laing, 2003). The shift from a citizenship to a consumerism has been regarded as the core of new public management ethos in the public sector. Consumerism is described as the market is formed by the choice of the consumers; it structures the fundamental rights of the consumers including (Fotaki, 2009). This concept has significantly influence the new public management ethos advocating applying the business philosophy to elevate the efficiency and performance of public sector organizations (Fotaki, 2009). In this context, consumer holding the decision-making power of purchase is advantageous to enhance the quality and efficiency of services offered (Fotaki, 2009). Therefore, a consumer-oriented model of public service marketing has emerged. This model enables citizens to freely choose their public service provider and enables citizen¿½¿½s voice to be listened. The main objective of this model is to increase services¿½¿½ responsiveness to citizen¿½¿½s views, needs and desires, otherwise public service providers are in the risks of losing the users. For instance, the UK Education Reform Act 1988 in primary and secondary school aims to completely open enrolment and provide a broader choice of schools for families outside their catchment areas. This reform integrated the concept of public choice that gives parents an opportunity to select schools with better academic outcomes (Fotaki, 2009).

However, the appropriateness of consumerism in public sector has long been debated. Some scholars consider the propositions of consumerism are opposite to the mission of public service and are incompatible with the circumstances of the public sector. Brown (1992, pp. 204) argues ¿½¿½a (consumer) model of service where quality becomes a response to highly individualized needs is likely to conflict with and undermine some important objectives of public service delivery, namely the equity objective and the effective treatment of social problems¿½¿½. The case of National Health Service in the UK is regarded as strong evidence on this point. The NHS is reformed to a mode of more business-like management, including patient choice policy, repositioning patients as consumers, market-based funding approach. Since then, patients¿½¿½ role shift to a consumer perspective in which the right of choice of service provider and the power of exit is thoroughly recognized (Greener, 2009). Under this new management, NHS users now have higher expectations, more information and wider choices to exit, by choosing optional service providers or by moving to the private sector. However, threatening by the user exits, the health service system is in risk of being damaged by weakening the quality of responsiveness (Greener, 2009).

More arguments focus on the issue of customer-oriented approach in public service. To respect customer¿½¿½s wishes and to meet their wants are the fundamental points of marketing concept. In private sector, marketing managers regard customer¿½¿½s needs and wants are the priorities while setting the marketing strategies. Nevertheless, these principles are unlikely to be successful in the public sector. Essentially, the public sector organizations must utilize the best professional practice for public management regardless of the citizen¿½¿½s agreement or disagreement (Proctor, 2007). Some public services are constrained due to the requirements of legislation, politics and the deficiency of resources (Bean and Hussey, 1997); thus lead to the obligation of providing the service. Apparently, public service to this extent can be hardly customer-oriented. Differing from the private sector, the public sector does not exist because of the needs of individual users; but due to the legislation, government policies, etc. These issues exactly reflect the specialities of public sector. The specialities of public service exist when the service provider is monopoly that customer have to accept the service without alternatives, even if it does not fully meet its requirements (e.g. social services); or the organizations providing free service, especially when the customer cannot afford to pay for a similar service (e.g. basic education services); or providing a service to customers which they must have even if they do not want (Proctor, 2007). Liang (2007) further stresses that public service provider must provide the equality of all citizens so that leads to the equal rights of access to services regardless of the ability to pay. From this point, customer-oriented approach cannot be thoroughly adopted in the public sector.

Furthermore, marketing management in public service should place high emphasis on the actual service and servicing processes. Private sector may measure the efficiency of marketing strategy by analyzing the revenues and profits, user awareness of service provision; yet the success of marking public service should be central to increase usage, demonstrate value for money, educate users, raise profile, demonstrate quality and gain a positive image to the citizens (Proctor, 2007). In particular, Bean and Hussey (1997) explain that educating the public is the essence of marketing public service with respect of the availability of service, the factors that govern how certain services have to be delivered, the reasons for being a limited number of options, the public interest, the difference between needs and wants and the reasons for reduced or inadequate service provision.

To conclude, the difference between public sector and private sector, and the nature of public sector determine the circumstance that public services cannot be marketed as the same to the goods in private sector. Although the advantages of marketing concepts have been recognized, and also can be utilized for reference in improving public service performance, the application of marketisation should be implemented according to the characteristics of certain public services. Public services have certain unique and common traits that distinguish the services from private sector services. The diversity of public services determines the disharmony with the public sector. In respect of the application of marketing concepts in the delivery of public services, it is vital to recognize this diversity. Liang (2007) suggests developing a framework for the categorization of public services based on the core dimensions of consumer-service interaction. The long-term challenge for marketing is to achieve a certain conceptualization that interprets the specific traits of public services and meets the needs of public sector organizations without distorting the core principles of the marketing concept (Graham, 1994).