1. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2007-2008 Services and Nonprofit Organization Marketing 11 CHAPTER

2. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 LO 1 Service The result of applying human or mechanical efforts to people or objects. Service

3. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 REVIEW LEARNING OUTCOME LO 1 The Importance of Services 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

4. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 How Services Differ from Goods LO 2 Intangible Inseparable Heterogeneous Perishable

5. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 How Services Differ from Goods LO 2 Intangibility  Search Qualities  Experience Qualities  Credence Qualities Online http://www.webmd.com

6. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 Components of Service Quality 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.

7. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 The Gap Model of Service Quality LO 3

8. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Biz Flix LO 3 Intolerable Cruelty

9. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 REVIEW LEARNING OUTCOME LO 3 Service Quality

10. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 LO 4 Product Strategies for Services Service Mix Standardization or Customization Core and Supplementary Process

11. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 LO 4 Service as a Process Mental Stimulus Processing People Processing People Processing Possession Processing Information Processing

12. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 LO 4 The Service Factory Possession processing Mental-stimulus processing

13. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 LO 4 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.

14. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 LO 4 Core and Supplementary Services for FedEx Overnight transportation and delivery of packages Problem solving Billing statements Tracing Documentation Order taking Supplies Pickup Advice and information

15. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 LO 4 Customization/Standardization A strategy that uses technology to deliver customized services on a mass basis. Mass Customization

16. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 LO 4 The Service Mix  Determine what new services to introduce  Determine target market  Decide what existing services to maintain and to eliminate

17. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 LO 4 Place (Distribution) Strategy Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience

18. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 LO 4 Promotion Strategy Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication

19. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 LO 4 Price Strategy Pricing Challenges for Services  Define the unit of service consumption  Determine if multiple elements are “bundled” or priced separately

20. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 LO 4 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 http://www.etrade.com http://www.tdameritrade.com http://www.schwab.com Online

21. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 REVIEW LEARNING OUTCOME 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

22. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 REVIEW LEARNING OUTCOME 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

23. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 Internal Marketing LO 6 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs.

24. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 REVIEW LEARNING OUTCOME LO 6 Internal Marketing in Services

25. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 REVIEW LEARNING OUTCOME LO 7 Global Issues in Services Marketing United States is world’s largest exporter of services. U.S.A.

26. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Nonprofit Organization Marketing 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.

27. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 Nonprofit Organization Marketing LO 8  Government  Museums  Theaters  Schools  Churches

28. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Nonprofit Organization Marketing LO 8 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

29. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 Nonprofit Organization Marketing LO 8 Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability

30. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 Unique Aspects of Nonprofit Organization Marketing Strategies LO 8  Setting of marketing objectives  Selection of target markets  Development of marketing mixes

31. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 Objectives LO 8 Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public

32. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 Target Markets LO 8 Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations

33. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 Product Decisions LO 8 Distinctions between Business and Nonprofit Organizations  Benefit complexity  Weak or indirect benefit strength  Low involvement

34. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 Promotion Decisions LO 8 Sales promotion activities Public service advertising Professional volunteers Online http://www.adcouncil.com

35. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 Pricing Decisions LO 8 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

36. Chapter 11Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 REVIEW LEARNING OUTCOME LO 8 Nonprofit Organization Marketing 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