Nonprofits stereotyped as less than competent

Nonprofits often are seen as warm but lacking in competence, making it tougher to sell their products, but they also can take steps to appear competent and improve their sales, a new research paper says.

“When consumers perceive high levels of competence and warmth, they feel admiration for the firm – which translates to consumers’ increased desire to buy,” says the paper, ‘Warm’ or ‘Competent’? What Happens When Consumers Stereotype Nonprofit and For-Profit Firms, to be published in the Journal of Consumer Research.

Written by faculty members at the Graduate School of Business at Stanford University, the Carlson School of Management at the University of Minnesota and the Wharton School at the University of Pennsylvania, the paper says people judge companies much as they do other people, with companies billed as nonprofits generally considered high in warmth, and those billed as for-profits viewed as high in competence.

Based on three experiments, the paper found “stereotypes do in fact exist for nonprofit and for-profit organizations and that they predict crucial marketplace behaviors, such as likelihood to visit a website and willingness to buy a product from the organization.”

The researchers, for example, hired Stanford students to take part in what was presented as a product study for new computer carry-all bags marketed by Mozilla, a web-browser company that has both for-profit and nonprofit status.

The students were asked to rate Mozilla as a company, with some questionnaires identifying it as, indicating a for-profit entity, and others identifying it as, indicating a nonprofit.

Participants’ answers indicated they believed the nonprofit was a warmer operation than the for-profit.

But it is the perception of competence that drives action such as a willingness to buy, the researchers say.

They also found, unexpectedly, that participants formed opinions based solely on whether an organization used .org or .com for its web address.

The researchers used another experiment to test whether a nonprofit can improve how its competence is perceived.

Participants were shown a product, eco-friendly laptop carriers from a group that billed itself as an online marketplace for “people-positive” and “eco-positive” products.

Some participants were told the group was a nonprofit, others that it was a for-profit, and everyone was shown a positive review of the company, with some told the review was published in The Wall Street Journal, others that it was from The Detroit Free Press.

The positive reviews increased the impression of competence among participants who thought the group was a nonprofits, and the increase was greatest among those who thought the review was from the national rather than the local publication.

“The insights that nonprofits should gain is [whether] they are hindered by the baseless misperception, perhaps, of incompetence,” Cassie Mogilner, an assistant professor of marketing at Wharton and one of the authors, says in a statement. “With that awareness, they can take measures that will increase their perception of competence and enhance consumers’ admiration and willingness to buy.”

The other authors of the paper were Jennifer Aaker, professor of marketing at Stanford, and Kathleen D. Vohs, associate professor of marketing at the University of Minnesota.

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