Services and
Nonprofit Organization Marketing
Chapter 11
Prepared by
Deborah Baker
Texas Christian University
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives
1. Discuss the importance of services to the
economy.
2. Discuss the differences between services
and goods.
3. Describe the components of service quality
and the gap model of service quality.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives (continued)
4. Develop marketing mixes for services.
5. Discuss relationship marketing in services.
6. Explain internal marketing in services.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives (continued)
7. Discuss global issues in services
marketing.
8. Describe nonprofit organization marketing.
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1
Learning Objective
On Line
http://www.yellowfreight.com
Discuss the
importance of
services to the
economy.
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1
Service
The result of applying
human or mechanical
efforts to people or objects.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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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 net job
growth through 2005
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Service-Producing Industries
and Job Growth
1
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Learning Objective
On Line
http://www.sheraton.com
Discuss the
differences
between services
and goods.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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2
How Services Differ from Goods
On Line
http://www.nationalamusements.com
http://www.amctheatres.com
http://www.movietickets.com
Services
Are Intangible Performances
Services Are Produced and Consumed
Simultaneously
Services Have Greater Variability
Services Are Perishable
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
Learning Objective
Describe the
components of
service quality
and the gap model
of service quality.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
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.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
The Gap Model of Service Quality
Chap. 11 Marketing 7e Lamb Hair McDaniel
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4
Learning Objective
Develop marketing
mixes for services.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Marketing Mixes for Services
People
Processing
Product
(Service)
Strategy
Possession
Processing
Mental Stimulus
Processing
Information
Processing
Chap. 11 Marketing 7e Lamb Hair McDaniel
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Core and Supplementary Services
Core
Service
The most basic benefit the
consumer is buying.
Supplementary
Service
A group of services that support
or enhance the core service.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Core and Supplementary Services
for FedEx
4
Problem
solving
Billing
statements
Tracing
Advice and
information
Overnight
transportation
and delivery
of packages
Documentation
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Order taking
Supplies
Pickup
17
4
Mass Customization
A strategy that uses
technology to deliver
customized services on a
mass basis.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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High
Customized
Focus
Mass
Customization
Standardized
Focus
Low
Customization
Mass Customization
High
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Cost
Low
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4
Service Mix Strategy
 Determine what new services to
introduce
 Determine target market
 Decide what existing services to
maintain and/or eliminate
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Distribution Strategy Issues
Convenience
Number of Outlets
Focus for
Distribution
Strategies
Direct vs. Indirect
Distribution
Location
Scheduling
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Promotion Strategy Issues
Stress tangible cues
Service
Promotion
Strategies
Use personal
information sources
Create a strong
organizational image
Engage in postpurchase
communication
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Price Strategy
Define unit of
service consumption
Pricing
Challenges
Determine if multiple
elements are “bundled”
Trends have
made pricing an
active component
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©2004 South-Western/Thomson Learning
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Pricing Objectives
On Line
http://www.etrade.com
http://www.ameritrade.com
http://www.schwab.com
Categories of
Pricing
Objectives
Revenue-Oriented
Pricing
OperationsOriented
Pricing
PatronageOriented
Pricing
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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5
Learning Objective
Discuss relationship
marketing in services.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Relationship Marketing
in Services
5
Three Levels
of
Relationship
Marketing
Level 3
Financial, Social, Structural
Level 2
Financial, Social
Level 1
Financial
Chap. 11 Marketing 7e Lamb Hair McDaniel
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6
Learning Objective
Explain internal
marketing in
services.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Internal Marketing
Treating employees as
customers and developing
systems and benefits that
satisfy their needs.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Internal Marketing Activities
Competing
for Talent
Offering
a Vision
Empowerment
Training
Employees
Rewarding
Performance
Stressing
Teamwork
Knowing
Employees’
Needs
Internal
Marketing
Activities
Chap. 11 Marketing 7e Lamb Hair McDaniel
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7
Learning Objective
Discuss global
issues in services
marketing.
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Global Issues in
Services Marketing
7
Financial
Construction
Engineering
U.S. is world’s
largest
exporter of services
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Insurance
Hotel Chains
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8
Learning Objective
Describe nonprofit
organization
marketing.
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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.
Chap. 11 Marketing 7e Lamb Hair McDaniel
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Nonprofit Organizations
Government
Private Museums
Theaters
Schools
Nonprofit
Organizations
Churches
Other Non-Government
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Nonprofit Organization Marketing
Market intangible products
Shared
Characteristics
with
Service
Organizations
Production requires
customer’s presence
Services vary greatly
Services can not be stored
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Nonprofit Organization
Marketing Activities
8
Identify Desired Customers
Specify Objectives
Develop, manage, eliminate
programs/services
Set prices
Schedule events
Communicate through advertising/PR
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On Line
http://www.peta.com
Unique Aspects of Nonprofit
Organization Marketing Strategies
Setting of Marketing Objectives
Selection of Target Markets
Development of Marketing Mixes
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Market Objectives
Provide Services
to:
 Users
 Appointed officials
 Payers
 Media
 Donors
 General Public
 Politicians
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Target Markets
Apathetic or
strongly opposed
targets
Unique Issues
of Nonprofit
Organizations
Pressure to adopt
undifferentiated
segmentation
Complementary
positioning
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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8
Product Decisions
Benefit
Complexity
Distinctions between
Business and Nonprofit
Organizations
Weak
Benefit Strength
Low
Involvement
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Promotion Decisions
On Line
http://www.adcouncil.org
Professional
Volunteers
Sales Promotion
Activities
Public Service
Advertising
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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8
Pricing Decisions
Pricing Objectives
Nonfinancial Prices
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
Indirect Payment
Separation Between
Payers and Users
Below-Cost Pricing
Chap. 11 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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