‘putting the Art before the Resource’: How a Relationship Marketing Approach to the Subsidised Performing Arts Could Enhance Success

A major issue regarding marketing within the arts is the fact it is that it is more likely to be seen as a tactical issue rather than a strategic one. One possible cause of this short term, tactical emphasis is the division between resource attraction and resource allocation and a possible solution to this problem is the development and maintenance of relationships with a wide variety of stakeholders. This paper reports on findings from an exploratory study of subsidised theatres. A conceptual model is proposed that displays the key relationships that may need to be considered if a theatre wishes to be ‘successful. 1. Strategy v Tactics in the Subsidised Arts A good deal of the literature on arts marketing tends to reflect the view that there is an overemphasis on tactical marketing (Hill et al, 1997) with the focus being on its promotional role (Permut, 1980; McLean,1994). Such a tactical approach tends to deal with day-to-day operations rather than the consideration of a more long-term strategic direction. A possible cause of this tactical perspective is the division between resource attraction and resource allocation (Birks and Southan, 1991; Conway, 1996). Resources are generated from a contributor market and then reallocated to a separate beneficiary market, and because ‘consumers’ do not always pay directly for the service, there is pressure for marketing to take on a greater ‘selling’ function in order to attract funds (Birks and Southan 1991). The marketing department tends to therefore see its role as confined to tactical, short-term communication which typically occurs after decisions on artistic policy have been taken by others within the organisation. Although some revenue is acquired from the audience i.e. the user, this allocation/attraction division still exists (Bradford,1991; Conway and Wood, 2000). One possibility to overcome this tactical focus is to apply a relationship marketing perspective which aims to develop relationships not just with end users but also with other stakeholders such as employees, funders etc. 2. Relationship Marketing In considering the importance of relationship marketing, Gronroos (1994) actually redefines marketing: “ Marketing is to establish, maintain and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises” If it is accepted that profit need not be of a financial nature but can be any ‘gain’ on the part of various parties, (such as the social and economic value of the Arts), the above could be applied to the subsidised arts. This definition highlights the maintenance and enhancement of relationships for mutual benefit and specifically in the context of this paper, the importance of a consideration of ‘other partners’. Gronroos (1994) sees a relational strategy as focusing on interactive marketing involving internal marketing with the 4P’s of the marketing mix in a supporting role. Christopher, Ballantyne and Payne (1991) note that in addition to customer markets, there is the need to develop and enhance enduring relationships with supplier, recruitment, referral, influence and internal markets. Morgan and Hunt (1994) similarly suggest the need to develop relational exchanges that exist within four types of partnerships: supplier, lateral, internal and buyer partnerships. Within the subsidised arts context, supplier partnerships involve the organisation dealing with goods and service suppliers (for furnishings, catering services, for example, in addition to suppliers of external funding). Lateral partnerships can involve joint activities with competitors, linkages with local schools, dealings with the Arts Council and local authorities. Internal partnerships involve various relationships within the organisation such as between staff, and between different departments within the organisation. Buyer partnerships involve the relationships that the organisation has with both intermediary customers (such as commercial sponsors) and the ultimate customers (the audience). As the arts are about the personal encounter involving an exchange between customer and supplier, relationship marketing has been highlighted as worthy of consideration (Hyde and Lovelock, 1980; Hill et al, 1997). In broader terms, Langeard and Eiglier (1980) see the importance of a system based on the interrelation of physical support, contact personnel and consumers, in addition to the internal organisational system and the other clients of the arts organisation. Similarly McLean (1993) has developed a model which highlights the importance of building relationships with stakeholders. By developing relationships with a variety of customer groupings such as employees and regulators in addition to funders and end users, the gap between resource attraction and resource allocation could be bridged (Conway and Wood, 2000). A broader view of ‘customer’ is therefore more likely to produce a more long-term strategic perspective. This perspective is likely to enhance the arts organisation’s long-term effectiveness and its success by communicating a clear direction for those involved with the organisation both internally and externally. The Sydney Opera House, for example, by changing its mission from cultural centre to tourist attraction increased its prestige and revenue (Kotler and Scheff, 1997). 3. The Research Project In an attempt to ascertain whether subsidised arts organisations that apply a relationship marketing approach are indeed more effective and have a more strategic focus, a pilot study of subsidised theatres in the North West of England was undertaken. The aim was to identify principal themes, patterns and links which could be used as a basis for a more detailed study of the relationships that exist between stakeholders in the ‘successful’ theatre. In the commercial sector, there are a number of criteria that can be used to measure the success or otherwise of such enterprises. Objective measures include sales, gross profit, production, commissioning and services rendered (Dalton et al, 1980), market share (Szymanski et al, 1995), price (Boulding and Staelin,1995), ROA, ROC, share growth, earnings per share growth, percentage change in market share (Varadarajan, 1986 and McKee et al, 1989). Subjective measures include supervisor appraisal and self-perception (Ambler and Kokkinaki, 1997). Some see the importance of applying a number of measures (Doyle,1992, Kaplan and Norton,1992). In Not-for-profit organisations, however, there may be difficulties in establishing specific goals and there may be a lack of knowledge concerning linkages between inputs and outputs. Not-forprofit organisations tend to suffer from goal ambiguity (Fine, 1990; Mokwa, 1990 and Butler and Collins, 1995) with such goals being qualitative and non-financial (Lamb, 1987) and mutually incompatible (McGill and Wooten, 1975). For not-for-profit organisations generally, a financial objective could be ‘survival’(Hatten 1982). Indeed, measurement of revenue may be merely measuring the contribution from donors and may not necessarily be a measure of success. With specific reference to subsidised arts organisations, it seems, that profit is not the main motive for existence. Such organisations have multiple objectives and indeed, some of these may be conflicting. The motives for existence can be very different depending on whose views are being sought: management, artists, audience, funders, regulators, sponsors etc. It would, however, seem to be possible to recognise intuitively, ‘successful’ subsidised arts organisations. If a number of different stakeholder types are asked to identify what they consider to be successful subsidised arts organisations, it is possible for the same organisations to be identified by many of the respondents. Whether each uses the same criteria for measuring ‘success’ may be another matter. The identification of the criteria used by arts organisations to define ‘success’ was therefore the subject of initial empirical research. Such research also aimed to highlight whether ‘successful’ organisations were more strategic in focus and whether such ‘strategic’ organisations were more likely to apply a relationship marketing approach. Six subsidised theatres in the Greater Manchester area were studied and interviews were conducted with senior managers of each. Initially, four ‘successful’ theatres were selected (A,B,C and D) but subsequently, in response to some of the findings, an additional two ‘unsuccessful’ theatres (X and Y) were added to the study. A topic guide was used as an aid to the interviewer, in the form of a check-list (Seale, 1999). The content of the topic guide was informed by the literature search and by issues that may have been relevant to the specific circumstances of the interviewee. Information on each theatre’s organisation and management structure was sought as was its mission or vision, the methods by which the successful achievement of the organisation’s mission was measured and the criteria used for such measurement. Each organisation’s perceived beneficiaries and stakeholders were identified as was whether specific criteria for the measurement of success referred to particular customer/ stakeholder groupings. Respondents were also asked to identify similar organisations in the locality which they considered to be successful or unsuccessful and the reasons why. Interviews were conducted with the most senior employees within the organisations concerned as, in general terms, it is usually those in the most senior of positions that tend to perform strategic roles.