1 chapter 12: services and nonprofit organization marketing prepared by amit shah, frostburg state...
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Chapter 12: Services and Nonprofit Organization
Marketing
Prepared by Amit Shah, Frostburg State University
Designed by Eric Brengle, B-books, Ltd.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
2
Learning Outcomes
Discuss the importance of services to the economy
Discuss the differences between services and goods
Describe the components of service quality and the gap model of service quality
LO1
LO2
LO3
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
3
Learning Outcomes
Develop marketing mixes for services
Discuss relationship marketing in services
Explain internal marketing in services
Discuss global issues in services marketing
Describe nonprofit organization marketing
LO5
LO6
LO7
LO4
LO8
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
4
The Importance of Services
Discuss the importance of
services to the economy.
LO1
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5
Service
The result of applying human or
mechanical efforts to
people or objects.
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6
Review Learning OutcomeThe Importance of Services
LO1
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
81%
Services as a percentage of GDP
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
81%
Services as a percentage of employment
ServicesDeedPerformanceEffort
DeedPerformanceEffort
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7
How Services Differ from Goods
Discuss the differences between
services and goods.
LO2
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8
How Services Differ from Goods
IntangibleIntangible
InseparableInseparable
HeterogeneousHeterogeneous
PerishablePerishable
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9
How Services Differ from Goods
• Search Qualities
• Experience Qualities
• Credence Qualities
IntangibilityIntangibility
Online
http://www.webmd.com
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10
Service Quality
Describe the components of service quality
and the gap model of service quality.
LO3
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11
Components of Service Quality
TangiblesTangibles The physical evidence of a service.
The physical evidence of a service.
EmpathyEmpathy Caring, individualized attention to customers.Caring, individualized attention to customers.
AssuranceAssurance The knowledge and courtesyof employees.
The knowledge and courtesyof employees.
ResponsivenessResponsiveness The ability to provideprompt service.
The ability to provideprompt service.
ReliabilityReliability The ability to perform dependently, accurately, and consistently.
The ability to perform dependently, accurately, and consistently.
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12
The Gap Model of Service Quality
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13
Review Learning OutcomeService Quality
LO3
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14
Marketing Mixes for Services
Develop marketing mixes
for services.
LO4
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15
Product Strategies for Services
ServiceMix
Standardizationor
Customization
Core andSupplementary
Process
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16
Service as a Process
Mental StimulusProcessing
Mental StimulusProcessing
People Processing
People Processing
PossessionProcessing
PossessionProcessing
InformationProcessing
InformationProcessing
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17
The Service Factory
Possession processing
Mental-stimulus processing
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18
The Service Offering
Core Service – The most basic
benefit the customer is buying.
Supplementary Service – A
group of services that support
or enhance the core service.
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19
Core and Supplementary Services for a Luxury Hotel
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20
Customization/Standardization
Mass Customization –
A strategy that uses technology
to deliver customized services
on a mass basis.
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21
The Service Mix
• Determine what new services to introduce
• Determine target market
• Decide what existing services to maintain and to eliminate
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22
Place (Distribution) Strategy
SchedulingScheduling
LocationLocation
Direct or indirect distribution
Direct or indirect distribution
Number of outletsNumber of outlets
ConvenienceConvenience
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23
Promotion Strategy
Stress tangible cues
Use personal information sources
Create a strong organizational image
Engage in postpurchase communication
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24
Price Strategy
• Define the unit of service consumption
• Determine if multiple elements are “bundled”or priced separately
Pricing Challenges for Services
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25
Pricing Objectives
Revenue-OrientedPricing
Operations-OrientedPricing
Patronage-OrientedPricing
Maximize the surplus of income over costs
Match supply and demand by varying price
Maximize the number of customers by varying price
Online
http://www.etrade.comhttp://www.tdameritrade.comhttp://www.schwab.com
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
26
Review Learning OutcomeLO4
Marketing Mixes for Services
PLACEPLACE PROMOTIONPROMOTION PRICEPRICEPRODUCT
= SERVICE
PRODUCT =
SERVICE
ProcessProcess
Core and Supplementary
Core and Supplementary
Mass Customization
Mass Customization
StandardizationStandardization
Number ofoutlets
Number ofoutlets
DirectDirect
IndirectIndirect
LocationLocation
Tangiblecues
Tangiblecues
Personalinformation
Personalinformation
Strong imageStrong image
Post-purchasecommunication
Post-purchasecommunication
Revenueoriented
Revenueoriented
Operationsoriented
Operationsoriented
Patronageoriented
Patronageoriented
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
27
Relationship Marketing
Discuss relationship
marketing in services.
LO5
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28
Relationship Marketing
Attracting, developing, and retaining customer relationships to build strong customer
loyalty.
Level 1: Pricing incentives
Level 2: Pricing incentives + social bonds with
customers
Level 3: Pricing incentives + social bonds + structural
bondsCopyright 2010 by Cengage Learning Inc. All Rights Reserved
29
Review Learning OutcomeLO5
Relationship Marketing in Services
2Designs Services to
Meet Customer Needs
1Pricing Incentives
3Creating
Value-addedServices
Financial
SocialFinancial
StructuralSocialFinancial
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30
Internal Marketing in Service Firms
Explain internal
marketing in services.
LO6
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31
Internal Marketing
Treating employees as
customers and developing
systems and benefits that
satisfy their needs.
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32
Review Learning OutcomeLO6
Internal Marketing in Services
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33
Global Issues in Services Marketing
Discuss global issues in services marketing.
LO7
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34
Global Issues in Services Marketing
• The U.S. is the world’s largest exporter of services.– International competition is increasing.
• To be successful, global service firms must determine the nature of the core product.– Additional services– Place– Promotion– Pricing– Distribution
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35
Review Learning OutcomeLO7
Global Issues in Services Marketing
United States is world’s largest exporter of services.
U.S.A.
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36
Nonprofit Organization Marketing
Describe nonprofit
organization marketing.
LO8
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37
Nonprofit Organizations
An organization that exists to
achieve some goal other
than the usual business
goals of profit, market share,
or return on investment.
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38
Nonprofit Organization Marketing
• Government
• Museums
• Theaters
• Schools
• Churches
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39
Nonprofit Organization Marketing
Market intangible productsMarket intangible products
Production requires customer’s presenceProduction requires customer’s presence
Services vary greatlyServices vary greatly
Services can not be storedServices can not be stored
Shared Characteristics
with Service
Organizations
Shared Characteristics
with Service
Organizations
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40
Nonprofit Organization Marketing
Identify desired customersIdentify desired customers
Specify objectivesSpecify objectives
Develop, manage, eliminate programs and servicesDevelop, manage, eliminate programs and services
Decide on pricesDecide on prices
Schedule events or programsSchedule events or programs
Communicate their availabilityCommunicate their availability
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41
Unique Aspects of Nonprofit Organization Marketing
Strategies• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
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42
Objectives
Provide services that respond to the wants of :
Users
Payers
Donors
Politicians
Appointed officials
Media
General Public
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43
Target Markets
Apathetic or strongly opposed
targets
Apathetic or strongly opposed
targets
Pressure to adopt undifferentiated segmentation
Pressure to adopt undifferentiated segmentation
Complementary positioning
Complementary positioning
Unique Issues of Nonprofit
Organizations
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44
Product Decisions
• Benefit complexity
• Benefit strength
• Low involvement
Distinctions between Business and Nonprofit Organizations
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45
Promotion Decisions
Sales promotion activities
Public service advertising
Professional volunteers
Online
http://www.adcouncil.com
Peer-to peer-communicationsPeer-to peer-communications
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46
Pricing Decisions
Below-cost pricingBelow-cost pricing
Separation betweenpayers and users
Separation betweenpayers and users
Indirect paymentIndirect payment
Nonfinancial pricesNonfinancial prices
Pricing objectivesPricing objectives
Characteristics Distinguishing
Pricing Decisionsof Nonprofit
Organizations
Characteristics Distinguishing
Pricing Decisionsof Nonprofit
Organizations
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47
Review Learning OutcomeNonprofit Organization Marketing
LO8
TARGET• Apathetic or
strongly opposed
• Undifferentiated segmentation
• Complementary positioning
PRODUCT
PROMOTION
PLACE
PRICE
Professional volunteers
Sales
Public ServiceAdvertising
Involvement
Benefitstrength
Benefitcomplexity
Specialfacilities
Nonfinancial
Indirect payment
Separation
Below costpricing
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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