1 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Services and 10 Nonprofit Organization Marketing Canadian Adaptation prepared by Don Hill, Langara College

2 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objectives 1. 1.Discuss the importance of services to the economy 2.Discuss the differences between services and goods 3.Describe the components of service quality and the gap model of service quality

3 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objectives (continued) 4.Develop marketing mixes for services 5.Discuss relationship marketing in services 6.Explain internal marketing in services

4 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objectives (continued) 7.Discuss global issues in services marketing 8.Describe nonprofit organization marketing

5 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Discuss the importance of services to the economy Online

6 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10Service 1 Service The result of applying human or mechanical efforts to people or objects.

7 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 The Importance of Services 1 Service sector accounts fo 70% of Canadian GDP. 75.8% of workers are in service sector. Service occupations will be responsible for nearly all net job growth through In 2006, 53.8% of household spending on services.

8 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 The Importance of Services 1

9 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Discuss the differences between services and goods Online

10 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Intangible Inseparable Heterogeneous Perishable How Services Differ from Goods Online 2

11 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Describe the components of service quality and the gap model of service quality 3 3 3

12 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Components of Service Quality Tangibles The physical evidence of a service. The physical evidence of a service. Empathy Caring, individualized attention to customers. Assurance The knowledge and courtesy of employees. The knowledge and courtesy of employees. Responsiveness The ability to provide prompt service. The ability to provide prompt service. Reliability The ability to perform the service right the first time. 3

13 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 The Gap Model of Service Quality 3

14 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Develop marketing mixes for services 4 4 4

15 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Product Strategies for Services 4 Service Mix Service Mix Standardization or Customization Core and Supplementary Process

16 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Service Processing Service Processing Categories Mental Stimulus Processing PeopleProcessingPeopleProcessing Possession Processing Information Processing 4

17 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Core and Supplementary Services Core Service Supplementary Service Supplementary Service The most basic benefit the consumer is buying. A group of services that support or enhance the core service. A group of services that support or enhance the core service. 4

18 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Mass Customization 4 A strategy that uses technology to deliver customized services on a mass basis.

19 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Mass Customization Customization Low High Customized Focus Standardized Focus Cost Mass Customization 4

20 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Service Mix Strategy Determine what new services to introduce Determine target market Decide what existing services to maintain and eliminate 4

21 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Distribution Strategy Issues Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience 4

22 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Promotion Strategy Issues Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication 4

23 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Price Strategy 4 Pricing Challenges Base price on completion of service task Determine if multiple elements are “bundled”

24 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Pricing Objectives Online Revenue-Oriented Pricing Operations-Oriented Pricing Patronage-Oriented Pricing Maximize the surplus of income over costs Match supply and demand by varying price Maximize the number of customers by varying price

25 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Marketing Mixes for Services 4 PLACE PROMOTION PRICE PRODUCT = SERVICE Process Core and Supplementary Mass Customization Standardization Number of outlets Direct Indirect Location Tangible cues Personal information Strong image Post-purchase communication Revenue oriented Operations oriented Operations oriented Patronage oriented

26 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Discuss relationship marketing in services 5 5 5

27 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Relationship Marketing in Services 5

28 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Explain internal marketing in services 6 6 6

29 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Internal Marketing 6 Treating employees as customers and developing systems and benefits that satisfy their needs.

30 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Internal Marketing Connections 6

31 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Internal Marketing Activities Competing for Talent Competing for Talent Offering a Vision Stressing Teamwork Training Employees Empowerment Knowing Employees’ Needs Rewarding Performance 6

32 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Discuss global issues in services marketing 7 7 7

33 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Global Issues in Services Marketing 7

34 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Learning Objective Describe nonprofit organization marketing 8 8 8

35 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Nonprofit Organization Marketing 8 Nonprofit Organization Marketing Nonprofit Organization Marketing An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment.

36 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Nonprofit Organizations Government Private Museums Theaters Schools Churches Other Non-Government Nonprofit Organizations 8

37 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Nonprofit Organization Marketing Market intangible products Production requires customer’s presence Production requires customer’s presence Services vary greatly Services can not be stored Shared Characteristics with Service Organizations Shared Characteristics with Service Organizations 8

38 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Nonprofit Organization Marketing Activities Identify desired customers Specify objectives Develop, manage, eliminate programs and services Set prices Schedule events Communicate their availability 8

39 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Unique Aspects of Nonprofit Organization Marketing Strategies Setting of Marketing Objectives Selection of Target Markets Development of Marketing Mixes Online 8

40 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Provide Services to: Market Objectives Users Payers Donors Politicians Appointed officials Media General Public 8

41 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations 8

42 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Distinctions between Business and Nonprofit Organizations Product Decisions Benefit complexity Weak benefit strength Low involvement 8

43 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Online Promotion Decisions Sales promotion activities Public service advertising Professional volunteers 8

44 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Pricing Decisions Below-cost pricing Separation between payers and users Indirect payment Nonfinancial prices Pricing objectives CharacteristicsDistinguishing Pricing Decisions of Nonprofit Organizations CharacteristicsDistinguishing 8

45 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10 Nonprofit Organization Marketing 8 TARGET Apathetic or strongly opposed Undifferentiated segmentation Complementary positioning PRODUCT PROMOTION PLACE PRICE Professional volunteers Sales Public Service Advertising Involvement Benefit strength Benefit complexity Special facilities Nonfinancial Indirect payment Separation Below cost pricing