Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 12 Services and Nonprofit Organization Marketing © iStockphoto.com/Rafael Ramirez Lee

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Discuss the importance of services to the economy The Importance of Services LO 1

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 The Importance of Services % Services as a percentage of employment (Projected by 2018) Services Deed Performance Effort Deed Performance Effort LO 1

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Discuss the differences between services and goods How Services Differ from Goods LO 2

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable No physical object makes it hard to communicate benefits. Production and consumption are simultaneous, meaning the consumer takes part in production. Services depend on their employees for quality, which makes consistency difficult to achieve. Services cannot be saved, and it is challenging to synchronize supply and demand. LO 2

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 When Services are Assessed Search Quality—more often applied to goods, assessed before purchase Experience quality—assessed after purchase Credence quality—assessed only with appropriate knowledge. LO 2

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Describe the components of service quality and the gap model of service quality Service Quality LO 3

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Components of Service Quality Tangibles The physical evidence of the service. The physical evidence of the 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. LO 3

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 LO 3 Exhibit 12.1 Gap Model of Service Quality

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Develop marketing mixes for services Marketing Mixes for Services LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Product Strategies for Services Service Mix Customization or Standardization Core and Supplementary Process LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Service as a Process Mental Stimulus Processing People Processing People Processing Possession Processing Information Processing LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 The Service Offering 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. LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 LO 4 Exhibit 12.2 Core and Supplementary Services for a Luxury Hotel SOURCE: Lovelock, Christopher H.; Wirtz, Jochen, Services Marketing, 6th, ©2007. Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Customization/Standardization A strategy that uses technology to deliver customized services on a mass basis. Mass Customization LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 The Service Mix  Determine what new services to introduce  Determine target market  Decide what existing services to maintain and to eliminate LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Place (Distribution) Strategy Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Promotion Strategy Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Price Strategy Pricing Challenges for Services  Define the unit of service consumption  Determine if multiple elements are “bundled” or priced separately LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 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 LO 4

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Discuss relationship marketing in services Relationship Marketing in Services LO 5

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 2 Social Financial 1 Financial 3 Structural Social Financial Pricing incentives Design services to meet customer needs Creating value-added services not available elsewhere Relationship Marketing in Services LO 5

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Explain internal marketing in services Internal Marketing in Service Firms LO 6

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. LO 6

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Discuss global issues in services marketing Global Issues in Services Marketing LO 7

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Global Issues in Services Marketing The U.S. is the world’s largest exporter of services The marketing mix must reflect each country’s cultural, technological, and political environment LO 7

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Describe nonprofit organization marketing Nonprofit Organization Marketing LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Nonprofit Organization An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. Government Museums Theaters Schools Churches LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Nonprofit Organization Marketing Market intangible products Production requires customer’s presence Production requires customer’s presence Services vary greatly Services cannot be stored Shared Characteristics with Service Organizations Shared Characteristics with Service Organizations LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Nonprofit Organization Marketing Activities Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 Unique Aspects of Nonprofit Organization Marketing Strategies Setting of marketing objectives Selection of target markets Development of marketing mixes LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Objectives Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Product Decisions Distinctions between Business and Nonprofit Organizations  Benefit complexity  Weak or indirect benefit strength  Low involvement LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 Promotion Decisions Sales promotion activities Public service advertising Professional volunteers LO 8

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 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 LO 8