Chapter 11 Services and Nonprofit Organization Marketing

‘Product’ Essentials TOTAL MARKETING EFFORTS (tangible) Planning The Offering Idea (ambiguous) Service (intangible)

The Goods/Services Continuum Computer diskette Computer software Computer Computer program Systems design Exercise equipment In-home rental of equipment Use of equipment in hotel Health and fitness clubs Personal trainer Off-the- rack furniture Custom- made furniture Reuphol- stering furniture Cleaning furniture Interior decorator Self-service gasoline Full-service gasoline Trans- mission overhaul Driver ed. (firm’s car) Driver ed. (consumer’s car) Pure goods Pure services Please note: The above continuum should be viewed left to right. Within each row, a consistent pattern moves from pure good to pure service. When comparing different rows, less consistency exists due to the diversity of examples shown.

Character of Services Services Products Performances Objects Intangible Tangible Use Ownership & Use Memory of Transaction Accumulation Storage Reuse Reminder of Transaction

Character of Services Services Products Invisible Visible Costs not Seen Costs Seen

Purchase Behavior for Services Products Experience Attributes Search Attributes (restaurant) (color) Credence Attributes (healthcare) Difficult to Judge Quality Easier to Judge Quality Price More as a Surrogate of Quality Price Less as a Surrogate of Quality

Characteristics of Services Intangibility Inseparability Heterogeneity Perishability 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.

Components of Service Quality Tangibles Empathy Assurance Responsiveness Reliability The physical evidence of a service. Caring, individualized attention to customers. The knowledge and courtesy of employees. The ability to provide prompt service The ability to perform the service right the first time.

Which Components are Most Important to Customers? 1. Reliability - 32% 2. Responsiveness - 22% 3. Assurance - 19% 4. Empathy - 16% 5. Tangibles - 11%

Importance of Service Quality Businesses with high Service Quality have 1. 10% higher prices 2. Grow 6% faster 3. 12% high return on sales

Hard Customer-Defined Service Standards Federal Express # missed pickups Dun & Bradstreet 36 hour turnaround U.S. Healthcare 20-second call answering Lenscrafters glasses in an hour

Soft Customer-Defined Service Standards Land’s End personal attention General Electric summarize actions Nationwide Insurance responsiveness American Express open and honest

Bottom Line for Service Quality 1. Clear and reasonable promises 2. Build staff skills 3. Emphasize ‘Do-It-Right-First’ performance 4. Be great at problem resolution 5. Make it easy for customers to complain

The Importance of Services 1 The Importance of Services 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 2005

Gap Model of Service Quality Expected Service Gap 5 Perceived Service Consumer Provider Service delivery Communication with Customers Gap 1 Gap 4 Gap 3 Service Quality Specifications Gap Legend Knowledge gap Standards gap Delivery gap Communications gap Service gap Gap 2 Mgt. Perceptions of Con. Expectations 9

Core and Supplementary Services Advice and information Problem solving Order taking Overnight transportation and delivery of packages Billing statements Supplies Tracing Pickup Documentation

Promotion Strategy Issues Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication Service Promotion Strategies

Price Strategy Pricing Challenges Define unit of service consumption Determine if multiple elements are “bundled” Trends have made pricing an active component

Internal Marketing Activities Stressing Teamwork Competing for Talent Offering a Vision Training Employees Empowerment Knowing Employees’ Needs Rewarding Performance Internal Marketing Activities

Global Issues in Services Marketing Financial Construction Engineering Insurance Restaurant Chains U.S. is world’s largest exporter of services

Differences Between Nonprofit and Profit-Oriented Marketing Scope Forms of exchange Complexity of objectives Distribution of benefits Market segments served Constituencies Nonprofit Marketing Profit-oriented Marketing

Illustrations of Nonprofit Marketing Examples of Social Marketing: Choose to Save - Am Savings Ed Campaign (see http://www.choosetosave.org Also see www.financenter.com) Road Rage Take folic acid Designated driver International Women’s Rights 164 Fº beef

For-Profit Support of Nonprofits Social Marketing Strategic Philanthropy Charity AMEX’s ‘Charge Against Hunger’ Walker’s ‘Corporate Citizenship’ TOP: Nonprofits, Computer & Food BOTTOM: Government, Insurance, Chemicals & Tobacco

Importance of Social Marketing http://www.social-marketing.org/

Nonprofit Organizations Government Private Museums Theaters Schools Churches Other Non-government Nonprofit Organizations

Nonprofit Organization Marketing Market intangible products Production requires customer’s presence Services vary greatly Services can not be stored Shared Characteristics with Service Organizations

Nonprofit Organization Marketing Activities Identify Desired Customers Specify Objectives Develop, manage, eliminate programs/services Set prices Schedule events Communicate through advertising/PR

Market Objectives Provide Services to: Users Payers Donors Politicians Appointed officials Media General Public

Target Markets Unique Issues of Nonprofit Organizations Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations

Distinctions between Business and Nonprofit Organizations Product Decisions Benefit Complexity Weak Benefit Strength Low Involvement Distinctions between Business and Nonprofit Organizations

Promotion Decisions Nonprofit Organization Promotion Decisions Sales Promotion Activities Public Service Advertising Licensing Professional Volunteers Nonprofit Organization Promotion Decisions

Pricing Decisions Pricing Objectives Nonfinancial Prices Below-Cost Pricing Separation Between Payers and Users Indirect Payment Nonfinancial Prices Pricing Objectives Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations

Boyne USA How do the characteristics of services apply to Boyne’s offerings? Explain the core and supplementary services for Boyne. What about distribution? How does Boyne match supply and demand for their services? http://www.boyne.com/