Chapter 11 Services and
Nonprofit Organization Marketing
‘Product’ Essentials
TOTAL
MARKETING
EFFORTS
Product
Planning
Product
(tangible)
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-therack
furniture
Custommade
furniture
Reupholstering
furniture
Cleaning
furniture
Interior
decorator
Self-service
Full-service
gasoline
Transmission
overhaul
Driver ed.
(firm’s car)
Driver ed.
gasoline
Pure goods
(consumer’s
car)
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
Services
Products
(restaurant)
Experience
Attributes
Search
Attributes
(healthcare)
Credence
Attributes
Difficult to
Judge Quality
Price More as a
Surrogate of Quality
(color)
Easier to
Judge 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
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.
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
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
Gap 1
Service
delivery
Gap 4
Communication
with Customers
Gap 3
Service Quality
Specifications
Gap 2
Mgt. Perceptions of
Con. Expectations
Gap Legend
 Knowledge gap
 Standards gap
 Delivery gap
 Communications gap
 Service gap
Core and Supplementary Services
Problem solving
Billing
statements
Tracing
Advice and
information
Overnight
transportation
and delivery
of packages
Documentation
Order taking
Supplies
Pickup
Promotion Strategy Issues
Stress tangible cues
Service
Promotion
Strategies
Use personal
information sources
Create a strong
organizational image
Engage in postpurchase
communication
Price Strategy
Define unit of
service consumption
Pricing
Challenges
Determine if multiple
elements are “bundled”
Trends have
made pricing an
active component
Internal Marketing Activities
Competing
for Talent
Offering
a Vision
Empowerment
Training
Employees
Rewarding
Performance
Internal
Marketing
Activities
Stressing
Teamwork
Knowing
Employees’
Needs
Global Issues in
Services Marketing
Financial
Construction
Engineering
U.S. is world’s
largest
exporter of services
Insurance
Restaurant Chains
Differences Between Nonprofit and
Profit-Oriented Marketing
Scope
Forms of exchange
Complexity of objectives
Distribution of benefits
Market segments served
Constituencies
Profit-oriented Marketing
Nonprofit Marketing
Differences
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
Nonprofit
Organizations
Churches
Other Non-government
Nonprofit Organization Marketing
Market intangible products
Shared
Characteristics
with
Service
Organizations
Production requires
customer’s presence
Services vary greatly
Services can not be stored
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
• Appointed officials
• Payers
• Media
• Donors
• General Public
• Politicians
Target Markets
Apathetic or
strongly opposed
targets
Pressure to adopt
undifferentiated
segmentation
Unique Issues
of Nonprofit
Organizations
Complementary
positioning
Product Decisions
Benefit
Complexity
Distinctions between
Business and Nonprofit
Organizations
Weak
Benefit Strength
Low
Involvement
Promotion Decisions
Professional
Volunteers
Nonprofit
Organization
Promotion
Decisions
Sales Promotion
Activities
Public Service
Advertising
Licensing
Pricing Decisions
Pricing Objectives
Nonfinancial Prices
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
Indirect Payment
Separation Between
Payers and Users
Below-Cost Pricing
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/