Marketing Strategy (Level 4)
HULT International Business School, London
561 – Analysis and Decision
Case Study – SPRING
April 2014
British Heart Foundation
Candidate’s brief
Scenario
You are a Marketing Consultant working in the charity sector. You have been asked by the British Heart Foundation (BHF) to undertake a strategic marketing audit to analyse both internal and external factors
that are impacting on the future of BHF.
In particular, you have been asked to evaluate BHF’s current strategic position, assess the potential for strategic uncertainty, prioritise strategic marketing options and analyse financial implications demonstrating
financial benefits to BHF while taking into account organisational constraints and risks, strengths and weaknesses, core competencies and the key issues facing the charity sector.
You have also been asked to assess the relevance and application of customer relationship management as a means for improving efficiency and reducing risks within the context of working in the charity sector.
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Index
Contents Page
Important guidance notes for candidates regarding the pre-prepared analysis 3
Candidate’s brief 5
Introduction 8
British Heart Foundation 9
Overview of UK charity sector – Key characteristics of the sector 20
Key issues in the sector 25
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Appendices
Contents Page
One BHF’s 30 No Smoking Days Later campaign 43
Two British Heart Foundation Group statement of financial activities 44
Three British Heart Foundation Group Balance Sheet 45
Four Total Amounts Donated by Individuals to Charities 46
Five Proportion of Adults Donating to Charity 47
Six Counting the Cuts: Plan for the Worst, Hope for the Best 48
Seven Austerity policies leave small voluntary groups on the brink 49
Eight Payment by results – can it work for charities? 52
Nine Reminding people to leave gifts in wills ‘could raise another £4bn’ 55
Ten When money’s too tight to mention 57
Eleven The good give young 60
Twelve How to market effectively in the not-for-profit sector 63
Thirteen Has the recession knocked charity marketing into shape? 67
Fourteen Charity marketing 69
Fifteen Is charity marketing in better shape than ever? 72
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UK Charity Sector
British Heart Foundation (BHF)
Introduction
Despite Margaret Thatcher’s assertion, when she was the United Kingdom’s Prime Minister, that ‘there is no such thing as society’, it is an innate human characteristic to come together and help those less
fortunate than ourselves. From the almshouses of medieval times to global events such as Live 8 and the ‘Make Poverty History’ campaign, people have always come together to help the poor, the sick and the
disadvantaged.
Although economic conditions in the UK remain tough, the UK is one of the most generous countries in the world, ranked 8th overall in the World Giving Index 2012.
The charity sector in the UK is large and relatively well funded, though it faces considerable challenges in funding its activities in the coming years if economic growth remains weak. It is an increasingly
competitive sector, where it is getting harder and harder to get a charity’s message across and be heard.
The BHF stands as one of the success stories in the sector. One of the largest UK charities, it has achieved a high profile through memorable marketing campaigns and a significant high street presence.
However, with continuing troubles in the economy, it will be increasingly difficult to maintain its success and fulfil its mission of leading the fight against heart disease.
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British Heart Foundation (BHF)
The BHF is the UK’s largest heart health charity and aims to tackle the serious problem the
UK has with cardiovascular disease.
Cardiovascular disease in the UK
The term ‘cardiovascular disease’ is used to cover diseases of the heart and circulation, such as stroke, heart failure and congenital heart disease.
It is a major problem in the UK, responsible for more than a quarter of all deaths – some 159,000 deaths each year. Besides the often devastating personal loss of a loved one, the cost to the UK of premature
death, lost productivity, hospital treatment and prescriptions is estimated to be around £19 billion a year.
Coronary heart disease
One in six men and one in nine women in the UK will die from coronary heart disease, making it the most common cause of death. The disease kills almost 74,000 people each year – an average of 200 a day
– and 2.3 million people in the UK live with heart disease. This costs the UK nearly £2 billion for healthcare treatment each year.
Heart attack
Most deaths from heart disease are a result of a heart attack. There are around 103,000 heart attacks a year in the UK, with one in three people who have a heart attack dying before they reach hospital.
Every seven minutes someone dies of a heart attack in the UK.
There are around 900,000 men and 400,000 women who have had a heart attack in the past.
Stroke
There are around 152,000 strokes in the UK each year, resulting in 42,000 deaths each year. The incidence of strokes is around 25% higher in men than in women in England and Scotland. It is estimated that
there are nearly 1.2 million people in the UK who have had a stroke.
Risk factors
Smoking increases the risk of heart disease and a study found that smokers had around a 60% greater chance of dying from heart disease than non-smokers. Around one in five people in England smoke, and
around one in four in Northern Ireland, Scotland and Wales.
Being overweight or obese is also a risk factor, and more than a quarter of adults in England are obese. It is predicted that more and more of the UK population will become obese in the future, and with
around 30% of boys and girls, aged 2 to 15, in England and Scotland being overweight or obese, it is a prediction that looks likely to come true.
High blood pressure is also a risk factor and around one in three adults in England and Scotland have this condition, with nearly half of these not receiving any treatment for it.
History of the BHF
Whilst the statistics on cardiovascular disease make grim reading, they are a marked improvement on the situation in 1961, when the BHF was founded by a group of concerned doctors.
Back then, nearly half of all deaths in the UK were a result of cardiovascular disease, with more than a quarter of all deaths being due to coronary heart disease. With much higher
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smoking levels, perhaps as much as four times the amount of tobacco smoked today, and a diet heavy in saturated fat such as butter, whole milk and red meat, it is not hard to see why this was the case.
Clearly much progress has been made in the fight against heart disease. The fight continues and the last decade has seen the number of deaths from heart attacks fall by a remarkable 50%, thanks in the main to
healthier lifestyles, fewer people smoking, and the more widespread use of cholesterol-lowering medication called statins.
In the early 1960s, heart disease was poorly understood and the chances of survival from a heart attack were slim. By 1963, the BHF had raised enough money to award its first research grants into
understanding heart disease better.
In 1971, the BHF’s now well -recognised logo was created from a doodle by one of the BHF’s volunteers, Sheila Harrison, who was putting together a poster to promote a sponsored swim. At the time, the
volunteer network had to produce their own promotional materials as none were supplied by head office.
In 1976, the BHF ran its first national advertising campaign, ‘It won’t happen to me’, with the hard-hitting image of a happy family with the man crossed out. The advertisement was included as an insert in
national daily newspapers, and the campaign was an outstanding success. The London Press Exchange (a press agency which concentrated on advertising for the government) supported the advertising by
making a low charge for its work.
With so many people surviving heart attacks, in 1985 the BHF began funding its first Heart Support Groups, where heart attack survivors learnt how to look after themselves in their daily lives, share
experiences and enjoy heart-healthy activities together. The groups are run by patients, for patients. There are now more than 300 such groups throughout the UK, and they have made a tremendous
contribution to heart care and the prevention of further heart attacks.
The following year, the BHF trialled BHF shops in Leicester and Newcastle, before opening ten pilot shops in Kent, Sussex and Surrey. These proved very successful, and in 1989 the
BHF’s shops division was created. Today the BHF has more than 725 shops across the UK, making it the UK’s largest charity shop retailer.
In 1998, the BHF launched its website – www.bhf.org.uk – offering heart health information and news. The website is now a main point of contact between the charity and many heart patients, carers and
professionals.
In 1999, political power in the UK was devolved in several areas, including health policy, to the new Welsh and Northern Irish Assemblies and the Scottish Parliament. The BHF recognised the need to work
with these new bodies and based public affairs staff in the capitals of the three countries, Cardiff, Belfast and Edinburgh, to campaign on policy issues and influence policy decisions.
Having become a successful charity shop retailer, the BHF wanted to explore the possibility of expanding its retail success into new areas. In 2001, the BHF trialled its first furniture and electrical shop in
Sittingbourne, Kent. It proved highly successful and the format was rolled out across the UK. The BHF now has 153 such shops and is the UK’s largest second-hand furniture and electrical retailer.
In 2002, Legal & General, the investment and insurance provider, became a fundraising partner of the BHF. Since then the company has supported many heart health initiatives, including sponsoring the
important ‘Health at Work’ programme, which aims to improve the
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heart health of employees and encourage them to lead healthier lives during the working day. Legal & General has also donated over £300,000 to the BHF in the last eight years.
The BHF now has 30 corporate partnerships with a wide range of companies, such as EMAP, the Football Association, HSBC, Lloydspharmacy, Radley, Scottish and Southern Electric and Villeroy & Boch.
In 2008, the BHF launched Heart Matters, a free service for people with heart conditions and those interested in looking after their heart. Members of Heart Matters receive regular issues of the Heart Matters
magazine and online access to a dedicated members’ area with online tools to help them improve their diet and lifestyle. By 2011, the service had 300,000 members, and by 2013 this had risen to 360,000.
Also in 2008, the BHF established four Centres of Research Excellence; academic hubs for the very best in heart research. The centres are to help develop innovative research projects on heart health, and to
help train the very best young doctors and scientists to become heart researchers.
The centres were established at Imperial and King’s Colleges in London, the University of Edinburgh and the University of Oxford. Each was given £1.5 million a year for six years.
Profile of the BHF
According to the Charity Commission, the BHF is ranked 13th in the UK by income as of June 2013, with income of £250 million.
The charity with the highest income – £738 million – is The British Council, although the charity receives a third of its income in the form of grants from the UK government. The highest placed fundraising
charity is Cancer Research UK, with income of £493 million a year, at number four, with Oxfam and Save the Children at eight and nine, with annual income of £385 million and £333 million respectively.
As of 31 March 2012, the BHF had total cash, deposits and investments of £251 million, down slightly on the 2011 figure of £253 million.
The BHF had income of £128.5 million in 2011/2012, up slightly on the figure of
£125.2 million for 2010/2011 – a strong performance given the fall in donations seen more generally across the charity sector.
Legacy income plays a vital role in the BHF’s finances, accounting for 42% of the BHF’s income in 2011/2012. The BHF received £53 million in legacies, down £1.9 million (3%) on 2010/2011. In the current
economic turbulence, where legacy income is particularly volatile, this still represents a good performance.
Fundraising accounted for 31% of the BHF’s income in 2011/12, at £38.4 million, up very slightly from the £38.2 million generated in 2010/2011. Of this, £5 million was raised through the BHF’s ‘Mending
Broken Hearts’ campaign, which raised money through individual and corporate donations, events and the sale of merchandise.
Retail income accounted for 22% of the BHF’s income in 2011/2012, at £28.7 million, up 15% on the previous year – a tremendous achievement given the challenges of the retail environment at the moment.
The BHF is now the largest charity retailer in the UK after opening 45 shops in the period 2011/2012, 30 of which were furniture and electrical shops.
The BHF’s investment income accounts for 5% of income in 2011/2012, at £6.6 million, up 10% on the previous year. The market value of the BHF’s investments now stands at a
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healthy £207 million, though again the performance of investments in the last few years has been volatile.
Excluding the retail figures, the cost of generating funds stood at 21% of income – the same as in 2010/2011.
The BHF’s expenditure for 2011/2012 stood at £124.2 million; of this, 71%, or £88.4 million, was spent on research activities and 29%, or £35.5 million, on prevention and care activities.
The BHF is ranked sixth in the 2012 Charity Brand Index, up one place on its position in 2011. Once again, the top charity in the brand index is Cancer Research UK, with Macmillan Cancer Support moving
up three places to second place in the index. The Royal British
Legion Poppy Appeal remains in third place, with the BBC’s Children in Need and Red Nose Day in fourth and fifth places respectively.
There are no other heart health charities in the top 125 charity brands.
The BHF’s strong brand helps the charity in several ways.
As a leading charity brand, it is well recognised by the public, who are therefore more likely to trust it and so donate money to it than to less well-known charities, where people may feel less sure of what the
charity is trying to achieve or how their donation will be spent.
However, the very fact that the BHF is a large charity can put some potential donors off. Some people feel that the large charities are already well supported and would rather give their money to a lesser-
known national charity or one based in their local community.
The BHF’s strong brand also attracts donations, sponsorship and partnerships from companies, who know that the charity is popular, trusted and well-known across the UK, and therefore attractive to a
significant proportion of their customer base.
The strong brand can also help in attracting high-calibre staff to the organisation.
The charity is governed by a Board of Trustees, which has 14 members, half of whom are medical and half lay members. The Board of Trustees oversees the Directors, who are responsible for managing the
staff who work for the charity and its day-to-day running.
The Board is advised by the BHF Council, which has up to 30 members. The Council is made up of the Board of Trustees and the Chairs of various BHF committees, such as the Programme Grants
Committee and the Retail Committee.
The BHF has 2,700 employees, across six divisions and 2,300 of these work in the Retail Division.
Fundraising
The Fundraising Division’s aim is unsurprisingly to increase income each year and grow long-term legacy income to help fund the BHF’s work.
The division comprises seven teams: Corporate Partnerships, Fundraising Operations, Fundraising Promotions, Major Gifts, National Events, Supporter Development and Volunteer Fundraising.
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Retail
The BHF’s Retail Division is the largest and most successful charity retail chain in the UK.
With 725 shops across the UK and a growth rate of 5% a year, it makes a significant contribution to the BHF’s finances.
With a presence on the high streets of many of the UK’s towns and cities, the BHF’s charity shops also act as a powerful reminder of the charity at a local level throughout the UK. The Retail Division
comprises BHF Shops, Field Management and Support Functions.
Medical
The Medical Division comprises Research Funds and Prevention & Care. It helps develop pioneering research into heart disease and ensures high-quality care and support for people living with heart disease.
Policy and Communications
The BHF’s award-winning Policy and Communications Division incorporates Policy and Public Affairs, Multimedia, and Social Marketing and Brand. The division aims to set and move forward the BHF’s
policy objectives and promote the valuable work that the BHF does. It has won many awards for its hard-hitting campaigns and press coverage.
Finance and Business Management
The Finance and Business Management Division aims to maximise the effectiveness and value of the BHF’s activities. It comprises seven departments: Business Change
Management, Group Finance, Internal Audit, Knowledge and Evaluation Team, Procurement, Programme Management Office and Retail Finance.
Directorate
The Directorate Division helps support staff, technology systems and the premises of the BHF so they are efficient and of high quality, and demonstrate good practice. The Division incorporates Facilities, IT,
Legacies, Legal and Human Resources (which includes Internal Communications, Payroll, Recruitment, and Training and Development).
In addition to its staff, the BHF also has 24,000 volunteers working for it as of June 2013, making it the tenth most popular charity to volunteer for in the UK, behind organisations such as the Scouts (98,000),
Cancer Research UK (40,000), and the Pony Club (30,000).
BHF objectives
The BHF has a clear and simple vision of what it wants to achieve – ‘a world in which people do not die prematurely of heart disease’.
Its mission is to play a leading role in the fight against diseases of the heart and circulation, so that they are no longer a major cause of disability and early death. It is the UK’s leading charity tackling heart
disease in the UK population.
To fulfil its mission it has set itself some clear objectives:
x to pioneer research into the causes of heart disease and improved methods of prevention, diagnosis and treatment
x to provide vital information to help people reduce their heart health risk
x to press for government policies that minimise the risk of heart and circulatory disease
x to help attain the highest possible standards of care and support for heart patients
x to reduce the inequalities in levels of heart disease across the UK.
It is working towards these objectives through a wide range of charitable activities and government lobbying.
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Charitable activities and lobbying
The BHF’s charitable activities are focused on two main areas – research into fighting heart disease and improving treatments, and helping and supporting those that have developed the disease.
In 2011/2012, the BHF spent £88 million on funding world-leading research into the causes of, and treatments for, diseases of the heart and circulation. Grants were made for 149 research projects and
research programmes.
The BHF continued to award ‘Mending Broken Hearts Appeal’ grants to research facilities.
This appeal aims to raise money to fund a major programme of research into the exciting potential of cardiovascular regenerative medicine. By programming stem cells, scientists hope to one day be able to
repair damaged heart tissue in humans after a heart attack, so that the heart heals itself. One of the laboratories that the BHF has helped to fund has already demonstrated that this can be done in mice.
The BHF continues to support its four Centres of Research Excellence, and has awarded 93 personal research fellowships to help develop the leading researchers of the future.
The BHF is also committed to helping those who have heart problems to be better informed and to be more confident in managing their condition. The Heart Matters magazine, now available on the BHF
website, plays a vital role in communicating with this audience. It has an estimated readership of one million, while the Heart Matters service now has 360,000 members.
To help promote a healthier lifestyle that reduces the risks of developing heart disease, the BHF has distributed 3.6 million resources, such as booklets on heart conditions, DVDs and heart health lifestyle
booklets. It has also expanded its Health at Work programme, which provides practical advice to people in the workplace on improving their heart health, to more than 3,000 corporate members.
The BHF also provides practical help and now supports nearly 800 health care professionals, who collectively looked after 150,000 patients in 2011.
Another important element of the BHF’s activities is lobbying the UK government to ensure that heart disease and its treatment are taken into consideration whenever appropriate. As the government
Department of Health develops a new cardiovascular outcomes strategy for the UK, the BHF has been successful in ensuring that it has strong representation in several of the working groups.
One of the many initiatives and campaigns the BHF is working on across the UK is a campaign to get emergency life support skills, including cardiopulmonary resuscitation (CPR), on the national curriculum
across the UK, creating a new generation of lifesavers. The BHF collected over 100,000 signatures in a petition to the Prime Minister, in a campaign that was supported by the UK’s most popular daily
newspaper, The Sun.
Campaigns and fundraising activities
The BHF’s biggest campaign success in 2012 came courtesy of the footballer and sometime actor Vinnie Jones.
The one time ‘hard man’ of football fronted a campaign encouraging ‘hands-only CPR’, which avoids mouth-to-mouth resuscitation, which some people find off- putting. To the soundtrack of the Bee Gees’
song Stayin’ Alive, Vinnie showed viewers how to perform hands-only CPR in a memorable way with the message of ‘hard and fast’.
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The ‘digital first’ campaign, which was launched online before being shown on television, was promoted heavily on Twitter during a 24-hour period, with Facebook posts timed to appear at peak traffic times
to maximise audience exposure. The video went viral, being shared more than 100,000 times in the first ten days, and the BHF became the first UK charity to be featured as a case study on Twitter’s Best
Practices business website.
The video also succeeded in attracting widespread media coverage and millions of people also watched the advert on television. The TV advert has now had 2.9 million views on YouTube.
Anecdotally, the campaign has already helped save lives – over 20 people contacted the BHF to say that they had remembered the advert when confronted with someone who had collapsed and stopped
breathing, and performed hands-only CPR.
One of the most high-profile fundraising events the BHF runs is the London to Brighton Bike Ride. Since it began 37 years ago, nearly three quarters of a million riders have taken part, collectively cycling 40
million miles and raising over £50 million for the charity. Each year in June, around 27,000 cyclists take part, raising around £4 million. The BHF secured sponsorship of the event from the bank Santander for
2012-2014. The ride evolved in 2012 with two new variations – night and off-road rides.
In addition to the London to Brighton Bike Ride, people can take part in 37 other cycle rides and various marathons around the UK and abroad, to raise money for the BHF.
February is National Heart Month and provides an anchor point in the year for lots of fundraising activities for the charity, such as ‘Rock up in Red’, where people wear something red at work on a set day,
and donate money to the BHF for the pleasure. Over £800,000 was raised during February 2013.
Corporate partnerships
The BHF now has 30 corporate partnerships, spanning a wide range of industries. Many of its partnerships are long-term, such as its relationship with Legal & General, which has been running for 11 years.
Corporate partners can help the charity in a number of ways – whether through donations or fundraising initiatives or help with particular projects.
The BHF has worked with the prestigious bag manufacturer Radley for the last five years, raising more than £76,000 for the charity in that time. In 2013, Radley sold exclusively designed red leather ‘Pocket’
bags (£99) and a heart print canvas tote bag (£10), with 15% of the profits from sales of the bags going to the BHF.
Following on from the sudden cardiac arrest of Fabrice Muamba whilst playing in a UK Premier League football match in March 2012, the BHF teamed up with the Football Association (FA) to help provide
football clubs across the UK with 900 defibrillators to help save lives. The FA is donating £400,000 towards the purchase of the defibrillators, which the BHF is matching, leaving the final £400,000 to be
raised by those eligible clubs that want them.
The BHF worked with Villeroy & Boch, the luxury ceramics manufacturing company, to produce an exclusive range of limited edition mugs using original works of art by contemporary British artists, to raise
money for the BHF’s ‘Mending Broken Hearts’ appeal.
The company will donate £5 for every mug sold, and hopes to raise £20,000 for the charity.
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Leading fundraising charities in the UK
The BHF’s competitors are hard to define, as although competition in the charity sector is fierce, it is of a very different nature to the commercial world.
In its broadest sense, competition encompasses everything else that the UK government or public choose to spend their money on instead – they do not have to give money to charity. They could just as easily
spend the money on meals out, pubs and clubs, or holidays for example.
There is no end of good causes in the world and charities devoted to them, so the public have an endless choice of charities they can choose to give to. Competition in the sector focuses on persuading people
of the primary importance of a charity’s cause and that the money devoted will be spent most effectively through that charity: it would be highly unusual for a major charity to attack another major charity and
cast it in a negative light.
The most successful fundraising charities tend to be ones that are devoted to issues that affect a large proportion of the population, either directly or through someone they know. Many people have favourite
charities that they like to donate to, occasionally or regularly – though such preferences would rarely preclude them giving to other charities.
As we have seen, heart disease affects a very large number of people in the UK, either directly or indirectly, and as the only major UK charity devoted to tackling heart disease, the BHF is in a very strong
position to harness the donations of those who care passionately about tackling heart disease.
However, there are many other charitable causes that also have widespread public appeal, and the charities that exist to tackle these causes are, in essence, the BHF’s main competitors for donations from the
public. Competition for those donations is only going to intensify in the coming years as people have less disposable income and every penny spent is increasingly scrutinised.
Cancer Research UK
The UK’s leading fundraising charity is Cancer Research UK, with income of £493 million, the fourth largest charity by income as of June 2013.
For the last two years Cancer Research UK has topped the UK Charity Brand Index, and spends more on advertising than any other UK charity: £8.1 million in 2011, more than double the amount spent by
the BHF that year (£3.8 million).
Cancer Research UK was formed in 2002 from the merger of the Imperial Cancer Research Fund (founded in 1902) and The Cancer Research Campaign (founded in the 1920s).
Every two minutes someone in the UK is diagnosed with cancer (around 325,000 people each year) and more than one in three people will develop some form of cancer at some point in their lives. Cancer
Research UK’s long-term vision is for a world where all cancers are cured, and the charity works hard to save lives by preventing, controlling and ultimately curing all cancers.
Like the BHF, it devotes considerable expenditure to medical research (£332 million in
2011/12). Cancer Research UK funds more than half of the UK’s cancer research, including the life-saving work of over 4,000 scientists, doctors and nurses fighting cancer, and is the world’s leading charity
devoted to saving lives through research.
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The charity pioneered the use of radiotherapy to treat cancer and was instrumental in bringing in the smoking ban in public places in England in 2007 – a move that is predicted to have helped prevent 40,000
deaths by 2018.
Besides its medical research, Cancer Research UK helps millions of people in the UK get the information they need to understand more about cancer, raising awareness of cancer risks and symptoms, and
influencing health policies.
In 2012, the charity generated £432 million of its £493 million income through fundraising – almost identical to the figure for 2011 (£433 million). A significant proportion of this came from legacies, which were
the largest source of income, at £137 million. This was followed by direct giving, which contributed £101 million, whilst fundraising events such as its highly successful ‘Race for Life’ brought in £69 million, and
its 500+ shops generated income of £66 million for the charity.
The charity relies almost exclusively on donations from the public and nine out of ten donations to t
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