Services and Nonprofit Marketing Chapter 12 Services Defined

Services Defined �A service is the. . . of applying human or mechanical efforts

Services Defined �A service is the result of applying human or mechanical efforts to

Services contribute to our economy. GREATLY Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies,

Percent of U. S. Labor Force by Industry 80 70 60 50 40 30

The Service Product Continuum Most offerings lie somewhere in the middle Mc. Graw-Hill/Irwin ©

Services Marketing Differs from Product Marketing Heterogeneous Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill

Implications of Intangibility Services cannot be _________ Services cannot be easily ______ Services cannot

Implications of Heterogeneity Service delivery and customer satisfaction depend on _________ Service quality depends

Implications of Simultaneous Production and Consumption Customers participate in and affect the transaction Customers

Implications of Perishability It is difficult to synchronize supply and demand with services Services

Service Quality is more difficult to determine than goods quality: we need: Reliability Ability

Service Failures What are your experiences of horrible customer service? Mc. Graw-Hill/Irwin © 2006

Service recovery paradox Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights

Gaps Model of Service Quality/Extra Expected Service CUSTOMER Customer Gap COMPANY Perceived Service Delivery

How to Give Horrible Service (Service Gaps) 1. 2. 3. 4. 5. Don’t listen

Expanded Mix for Services -The 7 Ps � Product � Price � Place �

ACSI and Annual Percentage Growth in S&P 500 Earnings Mc. Graw-Hill/Irwin © 2006 The

Services and Profit �Not all services are for profit �Non profit services and organizations

Non-Profit Marketing Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Non-Profit Marketing Non-profits are over 20% of U. S. economic activity Government taxes> housing,

Questions? Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

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Services and Non-profit Marketing Chapter 12

Services Defined �A service is the. . . of applying human or mechanical efforts to. . . . �A service involves a. . , . . . or. . . that can not be physically possessed. Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Services Defined �A service is the result of applying human or mechanical efforts to people or objects. �A service involves a deed, performance or effort that can not be physically possessed. Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Percent of U. S. Labor Force by Industry 80 70 60 50 40 30 20 10 0 1929 1948 1969 1977 1984 1999 Year n Services n Manufacturing n Mining & Agriculture Source: Survey of Current Business, April 1998, Table B. 8, July 1988, Table 6. 6 B, and July 1992, Table 6. 4 C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U. S. Economy, ” Scientific American, 244, 3 (1981): 31 -39. Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Implications of Intangibility Services cannot be _________ Services cannot be easily ______ Services cannot be _________ Pricing is _________ Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Implications of Heterogeneity Service delivery and customer satisfaction depend on _________ Service quality depends on many _________ There is no sure knowledge that the service delivered matches what was planned and promoted Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Implications of Simultaneous Production and Consumption Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential _________ is difficult Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Implications of Perishability It is difficult to synchronize supply and demand with services Services cannot be _________ Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Service Quality is more difficult to determine than goods quality: we need: Reliability Ability to perform the promised service dependably and accurately. A…………. . Knowledge and courtesy of employees and their ability to inspire trust and confidence. Tangibles Physical facilities, equipment, and appearance of personnel. E…………. . Caring, individualized attention the firm provides its customers. R………………… Mc. Graw-Hill/Irwin Willingness to help customers and provide prompt service. © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Gaps Model of Service Quality/Extra Expected Service CUSTOMER Customer Gap COMPANY Perceived Service Delivery Gap 3 Gap 4 External Communications to Customers Customer-Driven Service Designs and Standards Gap 1 Gap 2 Company Perceptions of Consumer Expectations Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

How to Give Horrible Service (Service Gaps) 1. 2. 3. 4. 5. Don’t listen to what your customers want (i. e. , only listen to your CEO or wallet)- customer gap Don’t act on customers’ wants Hire people without skills or a care, and don’t train them Tell the customer whatever they want to hear (i. e. , overpromise and underdeliver) Don’t meet (or barely meet) customers’ expectations (i. e. , ignore people and insult their intelligence)=Customer Gap Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Expanded Mix for Services -The 7 Ps � Product � Price � Place � Promotion � People � All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. � Physical Evidence � The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. � Process � The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Customer Satisfaction and Customer Loyalty Source: James L. Heskett, W. Earl Sasser, Jr. , and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83. Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

How to create relationships (loyalty) in Services Stable pricing Volume and frequency rewards 1. Financial bonds Integrated information systems Excellent service and value 4. Joint Structural investments bonds Shared processes and equipment 3. Customization Bonds Anticipation/ innovation Mc. Graw-Hill/Irwin Bundling and cross selling Mass customization Continuous relationships 2. Social bonds Personal relationships Social bonds among customers Customer intimacy © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Services and Profit �Not all services are for profit �Non profit services and organizations are a large part of society �What nonprofits can you think of? Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Non-Profit Marketing Non-profits are over 20% of U. S. economic activity Government taxes> housing, healthcare, or food costs Hard to service someone who doesn’t want it (e. g. , AA, gambling help) Must complement (vs. compete with) for profit businesses Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.