©2002 South-Western Chapter 11 Version 6e1 chapter Services and Nonprofit Organization Marketing 11 Prepared by Deborah Baker Texas Christian University

©2002 South-Western Chapter 11 Version 6e2 chapter Learning Objectives 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.

©2002 South-Western Chapter 11 Version 6e3 chapter Learning Objectives (continued) 11 4.Explain why services marketing is important to manufacturers. 5.Develop marketing mixes for services. 6.Discuss relationship marketing in services. 7.Explain internal marketing in services.

©2002 South-Western Chapter 11 Version 6e4 chapter Learning Objectives (continued) 11 8.Discuss global issues in services marketing. 9.Describe nonprofit organization marketing. 10.Explain the unique aspects of nonprofit organization marketing.

©2002 South-Western Chapter 11 Version 6e5 Learning Objective 1 1 Discuss the importance of services to the economy.

©2002 South-Western Chapter 11 Version 6e6 Service The result of applying human or mechanical efforts to people or objects. 1 1

©2002 South-Western Chapter 11 Version 6e7 The Importance of Services 79% of workers are in service sector 79% of workers are in service sector Services account for 76% of U.S. GDP Service occupations will be responsible for all job growth through

©2002 South-Western Chapter 11 Version 6e8 Learning Objective 2 2 Discuss the differences between services and goods.

©2002 South-Western Chapter 11 Version 6e9 How Services Differ from Goods 2 2 Intangibility Inseparability Heterogeneity Perishability Characteristics That Distinguish Services Characteristics That Distinguish Services

©2002 South-Western Chapter 11 Version 6e10 Characteristics of Services 2 2IntangibilityIntangibilityInseparabilityInseparability HeterogeneityHeterogeneity PerishabilityPerishability Services that cannot be touched, seen, tasted, heard, or felt in the same manner as goods. A characteristic of services that allows them to be produced and consumed simultaneously. A characteristic of services that makes them less standardized and uniform than goods. A characteristics of services that prevents them from being stored, warehoused, or inventoried.

©2002 South-Western Chapter 11 Version 6e11 Learning Objective Describe the components of service quality and the gap model of service quality. 3 3

©2002 South-Western Chapter 11 Version 6e12 Service Quality Tangibles Empathy Assurance Responsiveness Reliability Components for Evaluating Service Quality 3 3

©2002 South-Western Chapter 11 Version 6e13 Components of Service Quality Tangibles Empathy Assurance Responsiveness Reliability The physical evidence of a service. The physical evidence of a service. Caring, individualized attention to customers. The knowledge and courtesy of employees. The knowledge and courtesy of employees. The ability to provide prompt service The ability to provide prompt service The ability to perform the service right the first time. 3 3

©2002 South-Western Chapter 11 Version 6e14 The Gap Model of Service Quality 3 3 Expected Service Perceived Service Service Delivery Quality Specifications Mgmt perception Communication with Customers CustomerProvider GAP 2 GAP 3 GAP 4 GAP 5 GAP 1

©2002 South-Western Chapter 11 Version 6e15 Learning Objective Explain why services marketing is important to manufacturers. 4 4

©2002 South-Western Chapter 11 Version 6e16 Services Marketing in Manufacturing 4 4

©2002 South-Western Chapter 11 Version 6e17 Learning Objective Develop marketing mixes for services. 5 5

©2002 South-Western Chapter 11 Version 6e18 Marketing Mixes for Services Product(Service)StrategyProduct(Service)Strategy Information Processing PeopleProcessingPeopleProcessing Possession Processing 5 5

©2002 South-Western Chapter 11 Version 6e19 Core and Supplementary Services 5 5 Core Service Supplementary Service Supplementary Service The more 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.

©2002 South-Western Chapter 11 Version 6e20 Core and Supplementary Services Overnight transportation and delivery of packages Problem solving Billing statements Tracing Documentation Order taking Supplies Pickup Advice and information 5 5

©2002 South-Western Chapter 11 Version 6e21 Mass Customization A strategy that uses technology to deliver customized services on a mass basis. 5 5

©2002 South-Western Chapter 11 Version 6e22 Mass Customization Customization Low High Customized Focus Standardized Focus Cost Mass Customization 5 5

©2002 South-Western Chapter 11 Version 6e23 Service Mix Strategy 5 5  Determine what new services to introduce  Determine target market  Decide what existing services to maintain and/or eliminate

©2002 South-Western Chapter 11 Version 6e24 Distribution Strategy Issues 5 5 Scheduling Location Direct vs. Indirect Distribution Direct vs. Indirect Distribution Number of Outlets Convenience Focus for Distribution Strategies

©2002 South-Western Chapter 11 Version 6e25 Promotion Strategy Issues 5 5 Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication ServicePromotionStrategiesServicePromotionStrategies

©2002 South-Western Chapter 11 Version 6e26 Price Strategy Pricing Challenges Trends have made pricing an active component Trends have made pricing an active component Define unit of service consumption Define unit of service consumption Determine if multiple elements are “bundled” 5 5

©2002 South-Western Chapter 11 Version 6e27 Pricing Objectives Revenue-Oriented Pricing Operations- Oriented Pricing Patronage- Oriented Pricing Categories of Pricing Objectives 5 5

©2002 South-Western Chapter 11 Version 6e28 Learning Objective 6 6 Discuss relationship marketing in services.

©2002 South-Western Chapter 11 Version 6e29 Relationship Marketing in Services Level 1 Financial Level 2 Financial, Social Level 3 Financial, Social, Structural Three Levels of Relationship Marketing 6 6

©2002 South-Western Chapter 11 Version 6e30 One Two Three Financial LevelType of bond Potential for long-term advantage over competitors Degree of service customization Main element of marketing mix Financial and social Financial, social, and structural Low Medium Medium to high Price Personal communication Service delivery Low Medium High Relationship Marketing in Services 6 6

©2002 South-Western Chapter 11 Version 6e31 Learning Objective Explain internal marketing in services. 7 7

©2002 South-Western Chapter 11 Version 6e32 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. 7 7

©2002 South-Western Chapter 11 Version 6e33 Internal Marketing Activities 7 7 Stressing Teamwork Competing for Talent Competing for Talent Offering a Vision Training Employees Empowerment Knowing Employees’ Needs Rewarding Performance Internal Marketing Activities

©2002 South-Western Chapter 11 Version 6e34 Learning Objective Discuss global issues in services marketing. 8 8

©2002 South-Western Chapter 11 Version 6e35 Global Issues in Services Marketing Financial Construction Engineering Insurance Restaurant Chains U.S. is world’s largest exporter of services 8 8

©2002 South-Western Chapter 11 Version 6e36 Learning Objective Describe nonprofit organization marketing. 9 9

©2002 South-Western Chapter 11 Version 6e37 Nonprofit Organization Marketing 9 9 An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment.

©2002 South-Western Chapter 11 Version 6e38 Nonprofit Organizations Government Private Museums Theaters Schools Churches Other Non-government Nonprofit Organizations 9 9

©2002 South-Western Chapter 11 Version 6e39 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 9 9

©2002 South-Western Chapter 11 Version 6e40 Nonprofit Organization Marketing Activities Identify Desired Customers Specify Objectives Develop, manage, eliminate programs/services Set prices Schedule events Communicate through advertising/PR 9 9

©2002 South-Western Chapter 11 Version 6e41 Learning Objective Explain the unique aspects of nonprofit organization marketing. 10

©2002 South-Western Chapter 11 Version 6e42 Unique Aspects of Nonprofit Organization Marketing Strategies Market Objectives Target Markets Marketing Mixes Unique Aspects of Marketing of Nonprofit Organizations 10

©2002 South-Western Chapter 11 Version 6e43 Market Objectives  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public Provide Services to: 10

©2002 South-Western Chapter 11 Version 6e44 Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning 10 Unique Issues of Nonprofit Organizations

©2002 South-Western Chapter 11 Version 6e45 Product Decisions Benefit Complexity Benefit Complexity Weak Benefit Strength Weak Benefit Strength Low Involvement Distinctions between Business and Nonprofit Organizations 10

©2002 South-Western Chapter 11 Version 6e46 Promotion Decisions 10 Sales Promotion Activities Public Service Advertising Licensing Professional Volunteers NonprofitOrganizationPromotionDecisionsNonprofitOrganizationPromotionDecisions

©2002 South-Western Chapter 11 Version 6e47 Pricing Decisions Below-Cost Pricing Separation Between Payers and Users Indirect Payment Nonfinancial Prices Pricing Objectives CharacteristicsDistinguishing Pricing Decisions of Nonprofit Organizations CharacteristicsDistinguishing 10