Lamb, Hair, McDaniel
2010-2011
CHAPTER 12
Services and Nonprofit
Organization Marketing
1
Learning Outcomes
LO 1 Discuss the importance of services to the
economy
LO 2 Discuss the differences between services
and goods
LO 3 Describe the components of service quality
and the gap model of service quality
2
Learning Outcomes
LO 4 Develop marketing mixes for services
LO 5 Discuss relationship marketing in services
LO 6 Explain internal marketing in services
LO 7 Discuss global issues in services marketing
LO 8 Describe nonprofit organization marketing
3
The Importance of Services
Discuss the
importance of
services to the
economy
LO1
4
The Importance
of Services
Deed
Performance
Effort
Services
Services as a percentage of GDP
10
20
30
40
50
60
70
80
90
100
81%
Services as a percentage of employment
10
20
30
40
50
60
70
80
90
100
~50%
LO1
5
How Services Differ from Goods
Discuss the
differences between
services and goods
LO2
6
How Services
Differ from Goods
Intangible
Inseparable
Heterogeneous
Perishable
LO2
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.
7
When Services
are Assessed
• Search Quality—applied to goods
more often, assessed before purchase
• Experience quality—assessed after
purchase
• Credence quality—assessed only with
appropriate knowledge.
http://www.webmd.com
LO2
Online
8
Service Quality
Describe the
components
of service quality
and the gap model
of service quality
LO3
9
Components
of Service Quality
Reliability
The ability to perform the
service right the first time.
Responsiveness
The ability to provide
prompt service.
Assurance
The knowledge and courtesy
of employees.
Empathy
Caring, individualized
attention to customers.
Tangibles
The physical evidence
of a service.
LO3
10
The Gap Model of Service
Quality
LO3
11
Marketing Mixes for Services
Develop marketing
mixes for services
LO4
12
Product Strategies
for Services
LO4
Process
Core and
Supplementary
Customization
or
Standardization
Service
Mix
13
Service as a Process
People
Processing
Possession
Processing
Mental Stimulus
Processing
Information
Processing
LO4
14
The Service Offering
Core
Service
The most basic benefit the
consumer is buying.
Supplementary
Service
A group of services that support
or enhance the core service.
LO4
15
Core and Supplementary
Services for FedEx
Problem
solving
Billing
statements
Tracing
LO4
Advice and
information
Overnight
transportation
and delivery of
packages
Documentation
Order taking
Supplies
Pickup
16
Customization/Standardization
Mass
Customization
A strategy that uses
technology to deliver
customized services
on a mass basis.
LO4
17
The Service Mix
 Determine what new services to
introduce
 Determine target market
 Decide what existing services to
maintain and to eliminate
LO4
18
Place (Distribution) Strategy
Convenience
Number of outlets
Direct or indirect
distribution
Location
LO4
Scheduling
19
Promotion Strategy
Stress tangible cues
Use personal information
sources
Create a strong
organizational image
Engage in postpurchase
communication
LO4
20
Price Strategy
Pricing Challenges for Services
 Define the unit of service
consumption
 Determine if multiple elements
are “bundled” or priced
separately
LO4
21
Pricing Objectives
Revenue-Oriented
Pricing
Maximize the surplus of income
over costs
Operations-Oriented
Pricing
Match supply and demand by
varying price
Patronage-Oriented
Pricing
Maximize the number of
customers by varying price
http://www.etrade.com
http://www.tdameritrade.com
http://www.schwab.com
Online
LO4
22
LO4
Marketing
Mixes for Services
PRODUCT
=
SERVICE
PLACE
PROMOTION
PRICE
Process
Number of
outlets
Tangible
cues
Revenue
oriented
Core and
Supplementary
Direct
Personal
information
Operations
oriented
Mass
Customization
Indirect
Strong image
Patronage
oriented
Standardization
Location
Post-purchase
communication
23
Relationship Marketing in
Services
Discuss relationship
marketing in services
LO5
24
Relationship
Marketing in Services
LO5
3
Structural
Social
Financial
Creating value-added
services not available
elsewhere
2
Social
Financial
Design services to
meet customer needs
1
Financial
Pricing incentives
25
Internal Marketing in
Service Firms
Explain internal
marketing in services
LO6
26
Internal Marketing
Internal
Marketing
LO6
Treating employees
as customers and
developing systems
and benefits that
satisfy their needs.
27
Internal Marketing in
Services
LO6
28
Global Issues in
Services Marketing
Discuss global
issues
in services
marketing
LO7
29
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
LO7
30
Nonprofit Organization
Marketing
Describe nonprofit
organization
marketing
LO8
31
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
LO8
32
Nonprofit Organization
Marketing
Market intangible products
Shared
Characteristics
with
Service
Organizations
Production requires
customer’s presence
Services vary greatly
Services cannot be stored
LO8
33
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
LO8
34
Unique Aspects of Nonprofit
Organization Marketing Strategies
• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
LO8
35
Objectives
Provide services that respond to the wants of :
 Users
LO8
 Payers
 Appointed
officials
 Donors
 Media
 Politicians
 General Public
36
Target Markets
Apathetic or
strongly opposed
targets
Pressure to adopt
undifferentiated
segmentation
Unique Issues
of Nonprofit
Organizations
Complementary
positioning
LO8
37
Product Decisions
Distinctions between
Business and Nonprofit Organizations
 Benefit complexity
 Weak or indirect benefit strength
 Low involvement
LO8
38
Promotion Decisions
Professional volunteers
Sales promotion activities
Public service advertising
http://www.adcouncil.com
LO8
Online
39
Public Service Announcements
PSAs take many forms, but many
organizations are using television and the
internet to spread awareness.
• iava.org (Irag and Afghanistan Veterans of
America) asks visitors to “become a fan” on
Facebook to see their latest PSA
• Senior Citizens League PSA
• NCAA PSA
– What messages are these PSAs sending? Are they
effective?
LO8
40
Pricing Decisions
Pricing objectives
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
LO8
Nonfinancial prices
Indirect payment
Separation between
payers and users
Below-cost pricing
41
Nonprofit
Organization Marketing
Benefit
complexity
PRODUCT
Benefit
strength
Involvement
Professional
volunteers
PROMOTION
Special
facilities
TARGET
• Apathetic or
strongly opposed
• Undifferentiated
segmentation
• Complementary
positioning
Sales
Public Service
Advertising
LO8
PLACE
Nonfinancial
Indirect
payment
Separation
PRICE
Below cost
pricing
42