1. 1 Chapter 12: Services and Nonprofit Organization Marketing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

2. 2 Learning Outcomes 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 1 LO 2 LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

3. 3 Learning Outcomes 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 2010 by Cengage Learning Inc. All Rights Reserved

4. 4 The Importance of Services Discuss the importance of services to the economy. LO 1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

5. 5 Service The result of applying human or mechanical efforts to people or objects. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

6. 6 Review Learning Outcome The Importance of Services LO 1 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 2010 by Cengage Learning Inc. All Rights Reserved

7. 7 How Services Differ from Goods Discuss the differences between services and goods. LO 2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

8. 8 How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable Copyright 2010 by Cengage Learning Inc. All Rights Reserved

9. 9 How Services Differ from Goods Search Qualities Experience Qualities Credence Qualities Intangibility Online http://www.webmd.com Copyright 2010 by Cengage Learning Inc. All Rights Reserved

10. 10 Service Quality Describe the components of service quality and the gap model of service quality. LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

11. 11 Components of Service Quality 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 dependently, accurately, and consistently. The ability to perform dependently, accurately, and consistently. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

12. 12 The Gap Model of Service Quality Copyright 2010 by Cengage Learning Inc. All Rights Reserved

13. 13 Review Learning Outcome Service Quality LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

14. 14 Marketing Mixes for Services Develop marketing mixes for services. LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

15. 15 Product Strategies for Services Service Mix Standardization or Customization Core and Supplementary Process Copyright 2010 by Cengage Learning Inc. All Rights Reserved

16. 16 Service as a Process Mental Stimulus Processing People Processing People Processing Possession Processing Information Processing Copyright 2010 by Cengage Learning Inc. All Rights Reserved

17. 17 The Service Factory Possession processing Mental-stimulus processing Copyright 2010 by Cengage Learning Inc. All Rights Reserved

18. 18 The Service Offering Core Service – The most basic benefit the customer is buying. Supplementary Service – A group of services that support or enhance the core service. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

19. 19 Core and Supplementary Services for a Luxury Hotel Copyright 2010 by Cengage Learning Inc. All Rights Reserved

20. 20 Customization/Standardization Mass Customization – A strategy that uses technology to deliver customized services on a mass basis. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

21. 21 The Service Mix Determine what new services to introduce Determine target market Decide what existing services to maintain and to eliminate Copyright 2010 by Cengage Learning Inc. All Rights Reserved

22. 22 Place (Distribution) Strategy Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience Copyright 2010 by Cengage Learning Inc. All Rights Reserved

23. 23 Promotion Strategy Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication Copyright 2010 by Cengage Learning Inc. All Rights Reserved

24. 24 Price Strategy Define the unit of service consumption Determine if multiple elements are “bundled” or priced separately Pricing Challenges for Services Copyright 2010 by Cengage Learning Inc. All Rights Reserved

25. 25 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 Online http://www.etrade.com http://www.tdameritrade.com http://www.schwab.com Copyright 2010 by Cengage Learning Inc. All Rights Reserved

26. 26 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

27. 27 Relationship Marketing Discuss relationship marketing in services. LO 5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

28. 28 Relationship Marketing Attracting, developing, and retaining customer relationships to build strong customer loyalty. Level 1: Pricing incentives Level 2: Pricing incentives + social bonds with customers Level 3: Pricing incentives + social bonds + structural bonds Copyright 2010 by Cengage Learning Inc. All Rights Reserved

29. 29 Review Learning Outcome LO 5 Relationship Marketing in Services 2 Designs Services to Meet Customer Needs 1 Pricing Incentives 3 Creating Value-added Services Financial Social Financial Structural Social Financial Copyright 2010 by Cengage Learning Inc. All Rights Reserved

30. 30 Internal Marketing in Service Firms Explain internal marketing in services. LO 6 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

31. 31 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

32. 32 Review Learning Outcome LO 6 Internal Marketing in Services Copyright 2010 by Cengage Learning Inc. All Rights Reserved

33. 33 Global Issues in Services Marketing Discuss global issues in services marketing. LO 7 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

34. 34 Global Issues in Services Marketing The U.S. is the world’s largest exporter of services. – International competition is increasing. To be successful, global service firms must determine the nature of the core product. – Additional services – Place – Promotion – Pricing – Distribution Copyright 2010 by Cengage Learning Inc. All Rights Reserved

35. 35 Review Learning Outcome LO 7 Global Issues in Services Marketing United States is world’s largest exporter of services. U.S.A. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

36. 36 Nonprofit Organization Marketing Describe nonprofit organization marketing. LO 8 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

37. 37 Nonprofit Organizations An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

38. 38 Nonprofit Organization Marketing Government Museums Theaters Schools Churches Copyright 2010 by Cengage Learning Inc. All Rights Reserved

39. 39 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

40. 40 Nonprofit Organization Marketing Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability Copyright 2010 by Cengage Learning Inc. All Rights Reserved

41. 41 Unique Aspects of Nonprofit Organization Marketing Strategies Setting of marketing objectives Selection of target markets Development of marketing mixes Copyright 2010 by Cengage Learning Inc. All Rights Reserved

42. 42 Objectives Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public Copyright 2010 by Cengage Learning Inc. All Rights Reserved

43. 43 Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations Copyright 2010 by Cengage Learning Inc. All Rights Reserved

44. 44 Product Decisions Benefit complexity Benefit strength Low involvement Distinctions between Business and Nonprofit Organizations Copyright 2010 by Cengage Learning Inc. All Rights Reserved

45. 45 Promotion Decisions Sales promotion activities Public service advertising Professional volunteers Online http://www.adcouncil.com Peer-to peer-communications Copyright 2010 by Cengage Learning Inc. All Rights Reserved

46. 46 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 2010 by Cengage Learning Inc. All Rights Reserved

47. 47 Review Learning Outcome Nonprofit Organization Marketing 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved