1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 12 Services and Nonprofit Organization Marketing Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

Copyright ©2009 by Cengage Learning Inc. All rights reserved Learning Outcomes 2 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 LO I LO 2 LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Learning Outcomes 3 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 LO 5 LO 6 LO 7 LO 4 LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Importance of Services 4 Discuss the importance of services to the economy LO I

Copyright ©2009 by Cengage Learning Inc. All rights reserved Service 5 LO I The result of applying human or mechanical efforts to people or objects.

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME The Importance of Services 6 LO I 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 Services Deed Performance Effort Deed Performance Effort

Copyright ©2009 by Cengage Learning Inc. All rights reserved How Services Differ from Goods 7 Discuss the differences between services and goods LO 2

Copyright ©2009 by Cengage Learning Inc. All rights reserved How Services Differ from Goods 8 LO 2 Intangible Inseparable Heterogeneous Perishable

Copyright ©2009 by Cengage Learning Inc. All rights reserved How Services Differ from Goods Search Qualities Experience Qualities Credence Qualities 9 LO 2 Intangibility Online

Copyright ©2009 by Cengage Learning Inc. All rights reserved Service Quality 10 Describe the components of service quality and the gap model of service quality LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Components of Service Quality 11 LO 3 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved 12 LO 3 The Gap Model of Service Quality

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME Service Quality 13 LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mixes for Services 14 Develop marketing mixes for services LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Strategies for Services 15 LO 4 Service Mix Standardization or Customization Core and Supplementary Process

Copyright ©2009 by Cengage Learning Inc. All rights reserved Service as a Process 16 LO 4 Mental Stimulus Processing People Processing People Processing Possession Processing Information Processing

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Service Factory 17 LO 4 Possession processing Mental-stimulus processing

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Service Offering 18 LO 4 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved 19 LO 4 Core and Supplementary Services for a Luxury Hotel

Copyright ©2009 by Cengage Learning Inc. All rights reserved Customization/Standardization 20 LO 4 Mass Customization A strategy that uses technology to deliver customized services on a mass basis.

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Service Mix Determine what new services to introduce Determine target market Decide what existing services to maintain and to eliminate 21 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Place (Distribution) Strategy 22 LO 4 Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience

Copyright ©2009 by Cengage Learning Inc. All rights reserved Promotion Strategy 23 LO 4 Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication

Copyright ©2009 by Cengage Learning Inc. All rights reserved Price Strategy Define the unit of service consumption Determine if multiple elements are “bundled” or priced separately 24 LO 4 Pricing Challenges for Services

Copyright ©2009 by Cengage Learning Inc. All rights reserved Pricing Objectives 25 LO 4 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

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME 26 LO 4 Marketing Mixes for Services 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

Copyright ©2009 by Cengage Learning Inc. All rights reserved Relationship Marketing 27 Discuss relationship marketing in services LO 5

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME 28 LO 5 Relationship Marketing in Services 2 Social Financial 1 Financial 3 Structural Social Financial Pricing incentives Design services to meet customer needs Creating value-added services not available elsewhere

Copyright ©2009 by Cengage Learning Inc. All rights reserved Internal Marketing in Service Firms 29 Explain internal marketing in services LO 6

Copyright ©2009 by Cengage Learning Inc. All rights reserved Internal Marketing 30 LO 6 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs.

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME 31 LO 6 Internal Marketing in Services

Copyright ©2009 by Cengage Learning Inc. All rights reserved Global Issues in Services Marketing 32 Discuss global issues in services marketing LO 7

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME 33 LO 7 Global Issues in Services Marketing United States is world’s largest exporter of services. U.S.A.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Nonprofit Organization Marketing 34 Describe nonprofit organization marketing LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved Nonprofit Organization Marketing 35 LO 8 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Nonprofit Organization Marketing Government Museums Theaters Schools Churches 36 LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved Nonprofit Organization Marketing 37 LO 8 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

Copyright ©2009 by Cengage Learning Inc. All rights reserved Nonprofit Organization Marketing 38 LO 8 Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability

Copyright ©2009 by Cengage Learning Inc. All rights reserved Unique Aspects of Nonprofit Organization Marketing Strategies Setting of marketing objectives Selection of target markets Development of marketing mixes 39 LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved Objectives 40 LO 8 Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public

Copyright ©2009 by Cengage Learning Inc. All rights reserved Target Markets 41 LO 8 Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations

Copyright ©2009 by Cengage Learning Inc. All rights reserved Product Decisions Benefit complexity Benefit strength Low involvement 42 LO 8 Distinctions between Business and Nonprofit Organizations

Copyright ©2009 by Cengage Learning Inc. All rights reserved Promotion Decisions 43 LO 8 Sales promotion activities Public service advertising Professional volunteers Online Peer-to peer-communications

Copyright ©2009 by Cengage Learning Inc. All rights reserved 44 LO 8 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

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME Nonprofit Organization Marketing 45 LO 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