1 Chapter 12: Services and Nonprofit Organization Marketing Prepared by Amit Shah, Frostburg State...

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Chapter 12: Services and Nonprofit Organization

Marketing

Prepared by Amit Shah, Frostburg State University

Designed by Eric Brengle, B-books, Ltd.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

2

Learning Outcomes

Discuss the importance of services to the economy

Discuss the differences between services and goods

Describe the components of service quality and the gap model of service quality

LO1

LO2

LO3


3

Learning Outcomes

Develop marketing mixes for services

Discuss relationship marketing in services

Explain internal marketing in services

Discuss global issues in services marketing

Describe nonprofit organization marketing

LO5

LO6

LO7

LO4

LO8


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The Importance of Services

Discuss the importance of

services to the economy.

LO1


5

Service

The result of applying human or

mechanical efforts to

people or objects.


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Review Learning OutcomeThe Importance of Services

LO1

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

81%

Services as a percentage of GDP

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

81%

Services as a percentage of employment

ServicesDeedPerformanceEffort

DeedPerformanceEffort


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How Services Differ from Goods

Discuss the differences between

services and goods.

LO2


8


IntangibleIntangible

InseparableInseparable

HeterogeneousHeterogeneous

PerishablePerishable


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• Search Qualities

• Experience Qualities

• Credence Qualities

IntangibilityIntangibility

Online

http://www.webmd.com


http://www.webmd.com/

http://www.webmd.com/

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Service Quality

Describe the components of service quality

and the gap model of service quality.

LO3


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Components of Service Quality

TangiblesTangibles The physical evidence of a service.

The physical evidence of a service.

EmpathyEmpathy Caring, individualized attention to customers.Caring, individualized attention to customers.

AssuranceAssurance The knowledge and courtesyof employees.

The knowledge and courtesyof employees.

ResponsivenessResponsiveness The ability to provideprompt service.

The ability to provideprompt service.

ReliabilityReliability The ability to perform dependently, accurately, and consistently.

The ability to perform dependently, accurately, and consistently.


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The Gap Model of Service Quality


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Review Learning OutcomeService Quality

LO3


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Marketing Mixes for Services

Develop marketing mixes

for services.

LO4


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Product Strategies for Services

ServiceMix

Standardizationor

Customization

Core andSupplementary

Process


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Service as a Process

Mental StimulusProcessing

Mental StimulusProcessing

People Processing

People Processing

PossessionProcessing

PossessionProcessing

InformationProcessing

InformationProcessing


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The Service Factory

Possession processing

Mental-stimulus processing


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The Service Offering

Core Service – The most basic

benefit the customer is buying.

Supplementary Service – A

group of services that support

or enhance the core service.


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Core and Supplementary Services for a Luxury Hotel


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Customization/Standardization

Mass Customization –

A strategy that uses technology

to deliver customized services

on a mass basis.


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The Service Mix

• Determine what new services to introduce

• Determine target market

• Decide what existing services to maintain and to eliminate


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Place (Distribution) Strategy

SchedulingScheduling

LocationLocation

Direct or indirect distribution

Direct or indirect distribution

Number of outletsNumber of outlets

ConvenienceConvenience


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Promotion Strategy

Stress tangible cues

Use personal information sources

Create a strong organizational image

Engage in postpurchase communication


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Price Strategy

• Define the unit of service consumption

• Determine if multiple elements are “bundled”or priced separately

Pricing Challenges for Services


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Pricing Objectives

Revenue-OrientedPricing

Operations-OrientedPricing

Patronage-OrientedPricing

Maximize the surplus of income over costs

Match supply and demand by varying price

Maximize the number of customers by varying price

Online

http://www.etrade.comhttp://www.tdameritrade.comhttp://www.schwab.com


http://www.etrade.com/

http://www.etrade.com/

http://www.tdameritrade.com/

http://www.tdameritrade.com/

http://www.schwab.com/

http://www.schwab.com/

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Review Learning OutcomeLO4

Marketing Mixes for Services

PLACEPLACE PROMOTIONPROMOTION PRICEPRICEPRODUCT

= SERVICE

PRODUCT =

SERVICE

ProcessProcess

Core and Supplementary

Core and Supplementary

Mass Customization

Mass Customization

StandardizationStandardization

Number ofoutlets

Number ofoutlets

DirectDirect

IndirectIndirect

LocationLocation

Tangiblecues

Tangiblecues

Personalinformation

Personalinformation

Strong imageStrong image

Post-purchasecommunication

Post-purchasecommunication

Revenueoriented

Revenueoriented

Operationsoriented

Operationsoriented

Patronageoriented

Patronageoriented


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Relationship Marketing

Discuss relationship

marketing in services.

LO5


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Relationship Marketing

Attracting, developing, and retaining customer relationships to build strong customer

loyalty.

Level 1: Pricing incentives

Level 2: Pricing incentives + social bonds with

customers

Level 3: Pricing incentives + social bonds + structural

bondsCopyright 2010 by Cengage Learning Inc. All Rights Reserved

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Relationship Marketing in Services

2Designs Services to

Meet Customer Needs

1Pricing Incentives

3Creating

Value-addedServices

Financial

SocialFinancial

StructuralSocialFinancial


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Internal Marketing in Service Firms

Explain internal

marketing in services.

LO6


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Internal Marketing

Treating employees as

customers and developing

systems and benefits that

satisfy their needs.


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Internal Marketing in Services


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Global Issues in Services Marketing

Discuss global issues in services marketing.

LO7


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• The U.S. is the world’s largest exporter of services.– International competition is increasing.

• To be successful, global service firms must determine the nature of the core product.– Additional services– Place– Promotion– Pricing– Distribution


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United States is world’s largest exporter of services.

U.S.A.


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Nonprofit Organization Marketing

Describe nonprofit

organization marketing.

LO8


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Nonprofit Organizations

An organization that exists to

achieve some goal other

than the usual business

goals of profit, market share,

or return on investment.


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• Government

• Museums

• Theaters

• Schools

• Churches


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Market intangible productsMarket intangible products

Production requires customer’s presenceProduction requires customer’s presence

Services vary greatlyServices vary greatly

Services can not be storedServices can not be stored

Shared Characteristics

with Service

Organizations

Shared Characteristics

with Service

Organizations


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Identify desired customersIdentify desired customers

Specify objectivesSpecify objectives

Develop, manage, eliminate programs and servicesDevelop, manage, eliminate programs and services

Decide on pricesDecide on prices

Schedule events or programsSchedule events or programs

Communicate their availabilityCommunicate their availability


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Unique Aspects of Nonprofit Organization Marketing

Strategies• Setting of marketing objectives

• Selection of target markets

• Development of marketing mixes


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Objectives

Provide services that respond to the wants of :

Users

Payers

Donors

Politicians

Appointed officials

Media

General Public


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Target Markets

Apathetic or strongly opposed

targets

Apathetic or strongly opposed

targets

Pressure to adopt undifferentiated segmentation

Pressure to adopt undifferentiated segmentation

Complementary positioning

Complementary positioning

Unique Issues of Nonprofit

Organizations


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Product Decisions

• Benefit complexity

• Benefit strength

• Low involvement

Distinctions between Business and Nonprofit Organizations


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Promotion Decisions

Sales promotion activities

Public service advertising

Professional volunteers

Online

http://www.adcouncil.com

Peer-to peer-communicationsPeer-to peer-communications


http://www.adcouncil.com/

http://www.adcouncil.com/

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Pricing Decisions

Below-cost pricingBelow-cost pricing

Separation betweenpayers and users

Separation betweenpayers and users

Indirect paymentIndirect payment

Nonfinancial pricesNonfinancial prices

Pricing objectivesPricing objectives

Characteristics Distinguishing

Pricing Decisionsof Nonprofit

Organizations

Characteristics Distinguishing

Pricing Decisionsof Nonprofit

Organizations


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Review Learning OutcomeNonprofit Organization Marketing

LO8

TARGET• Apathetic or

strongly opposed

• Undifferentiated segmentation

• Complementary positioning

PRODUCT

PROMOTION

PLACE

PRICE

Professional volunteers

Sales

Public ServiceAdvertising

Involvement

Benefitstrength

Benefitcomplexity

Specialfacilities

Nonfinancial

Indirect payment

Separation

Below costpricing


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