Lamb Hair Mc Daniel 2010 2011 CHAPTER 12

Lamb, Hair, Mc. Daniel 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 LO 1 4

The Importance of Services Deed Performance Effort 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% LO 1 5

How Services Differ from Goods Discuss the differences between services and goods LO 2 6

How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable LO 2 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 LO 2 Online 8

Service Quality Describe the components of service quality and the gap model of service quality LO 3 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. LO 3 10

The Gap Model of Service Quality LO 3 11

Marketing Mixes for Services Develop marketing mixes for services LO 4 12

Product Strategies for Services LO 4 Process Core and Supplementary Customization or Standardization Service Mix 13

Service as a Process People Processing Possession Processing Mental Stimulus Processing Information Processing LO 4 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. LO 4 15

Core and Supplementary Services for Fed. Ex Problem solving Billing statements Tracing LO 4 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. LO 4 17

The Service Mix u Determine what new services to introduce u Determine target market u Decide what existing services to maintain and to eliminate LO 4 18

Place (Distribution) Strategy Convenience Number of outlets Direct or indirect distribution Location LO 4 Scheduling 19

Promotion Strategy Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication LO 4 20

Price Strategy Pricing Challenges for Services u Define the unit of service consumption LO 4 u Determine if multiple elements are “bundled” or priced separately 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 LO 4 22

LO 4 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 LO 5 24

Relationship Marketing in Services LO 5 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 LO 6 26

Internal Marketing LO 6 Treating employees as customers and developing systems and benefits that satisfy their needs. 27

Internal Marketing in Services LO 6 28

Global Issues in Services Marketing Discuss global issues in services marketing LO 7 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 LO 7 30

Nonprofit Organization Marketing Describe nonprofit organization marketing LO 8 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 LO 8 32

Nonprofit Organization Marketing Market intangible products Shared Characteristics with Service Organizations Production requires customer’s presence Services vary greatly Services cannot be stored LO 8 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 LO 8 34

Unique Aspects of Nonprofit Organization Marketing Strategies • Setting of marketing objectives • Selection of target markets • Development of marketing mixes LO 8 35

Objectives Provide services that respond to the wants of : u Users LO 8 u Payers u Appointed officials u Donors u Media u Politicians u General Public 36

Target Markets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Unique Issues of Nonprofit Organizations Complementary positioning LO 8 37

Product Decisions Distinctions between Business and Nonprofit Organizations u Benefit complexity u Weak or indirect benefit strength u Low involvement LO 8 38

Promotion Decisions Professional volunteers Sales promotion activities Public service advertising http: //www. adcouncil. com LO 8 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? LO 8 40

Pricing Decisions Pricing objectives Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations LO 8 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 LO 8 PLACE Nonfinancial Indirect payment Separation PRICE Below cost pricing 42