Chapter 12: Services and Nonprofit Organization Marketing 1 Copyright Cengage Learning 2013 All Rights Reserved Introduction to Designed & Prepared by Laura Rush B-books, Ltd.

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 Develop marketing mixes for services 2 Copyright Cengage Learning 2013 All Rights Reserved LO 1 LO 2 LO 3 LO 4

Learning Outcomes Discuss relationship marketing in services Explain internal marketing in services Discuss global issues in services marketing Describe nonprofit organization marketing 3 Copyright Cengage Learning 2013 All Rights Reserved LO 5 LO 6 LO 7 LO 8

How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable 4 Copyright Cengage Learning 2013 All Rights Reserved

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 dependently, accurately, and consistently. The ability to perform dependently, accurately, and consistently. 5 Copyright Cengage Learning 2013 All Rights Reserved

Product Strategies for Services Service Mix Standardization or Customization Core and Supplementary Process 6 Copyright Cengage Learning 2013 All Rights Reserved

Place (Distribution) Strategy Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience 7 Copyright Cengage Learning 2013 All Rights Reserved

Promotion Strategy 8 Copyright Cengage Learning 2013 All Rights Reserved Engage in postpurchase communication Engage in postpurchase communication Create a strong organizational image Create a strong organizational image Use personal information sources Use personal information sources Stress tangible cues

Price Strategy Define the unit of service consumption Determine if multiple elements are “bundled” or priced separately Pricing Challenges for Services 9 Copyright Cengage Learning 2013 All Rights Reserved

Pricing Objectives 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 Online Online Copyright Cengage Learning 2013 All Rights Reserved

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 bonds 11 Copyright Cengage Learning 2013 All Rights Reserved

Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. 12 Copyright Cengage Learning 2013 All Rights Reserved

Global Issues in Services Marketing 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 13 Copyright Cengage Learning 2013 All Rights Reserved

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 14 Copyright Cengage Learning 2013 All Rights Reserved

Nonprofit Organization Marketing Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability 15 Copyright Cengage Learning 2013 All Rights Reserved

Objectives Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public 16 Copyright Cengage Learning 2013 All Rights Reserved

Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning 17 Copyright Cengage Learning 2013 All Rights Reserved

Product Decisions Benefit complexity Benefit strength Low involvement Distinctions between Business and Nonprofit Organizations 18 Copyright Cengage Learning 2013 All Rights Reserved

Promotion Decisions Sales promotion activities Public service advertising Professional volunteers Online Peer-to peer-communications 19 Copyright Cengage Learning 2013 All Rights Reserved

Pricing Decisions Below-cost pricing Separation between payers and users Indirect payment Nonfinancial prices Pricing objectives Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations 20 Copyright Cengage Learning 2013 All Rights Reserved