Lamb, Hair, McDaniel

2012-2013

CHAPTER 12

Services and Nonprofit Organization Marketing

Peter Dazeley/Photographers Choice/Getty Images

Chapter 12

Copyright 2012 by Cengage Learning Inc. All rights reserved

The Importance of Services

Services
Deed Performance Effort

Services as a percentage of employment (Projected by 2018)

10 20 30 40 50 60 70 80
80%

90

100

2013 by Cengage Learning Inc. All Rights Reserved.

How Services Differ from Goods

Intangible
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. 2

Inseparable

Heterogeneous

Perishable

2013 by Cengage Learning Inc. All Rights Reserved.

When Services are Assessed

Search Qualitymore often applied to goods, assessed before purchase Experience qualityassessed after purchase Credence qualityassessed only with appropriate knowledge.

2013 by Cengage Learning Inc. All Rights Reserved.

Components of Service Quality

Reliability Responsiveness The ability to perform the service right the first time. The ability to provide prompt service. The knowledge and courtesy of employees. Caring, individualized attention to customers. The physical evidence of the service.
3

Assurance
Empathy

Tangibles

2013 by Cengage Learning Inc. All Rights Reserved.

Exhibit 12.1
Gap Model of Service Quality

Product Strategies for Services

Process

Core and Supplementary

Customization or Standardization

Service Mix

2013 by Cengage Learning Inc. All Rights Reserved.

Service as a Process
People Processing Possession Processing

Mental Stimulus Processing

Information Processing
8
2013 by Cengage Learning Inc. All Rights Reserved.

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.

2013 by Cengage Learning Inc. All Rights Reserved.

Exhibit 12.2
Core and Supplementary Services for a Luxury Hotel

SOURCE: Lovelock, Christopher H.; Wirtz, Jochen, Services Marketing, 6th, 2007. Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey

10

2013 by Cengage Learning Inc. All Rights Reserved.

Customization/Standardization

Mass Customization
A strategy that uses technology to deliver customized services on a mass basis.

11

2013 by Cengage Learning Inc. All Rights Reserved.

The Service Mix

Determine what new services to introduce Determine target market Decide what existing services to maintain and to eliminate
2013 by Cengage Learning Inc. All Rights Reserved.

12

Place (Distribution) Strategy

Convenience

Number of outlets
Direct or indirect distribution Location Scheduling
4
2013 by Cengage Learning Inc. All Rights Reserved.

13

Promotion Strategy
Stress tangible cues

Use personal information sources

Create a strong organizational image

Engage in postpurchase communication
4

14

2013 by Cengage Learning Inc. All Rights Reserved.

Price Strategy
Pricing Challenges for Services

Define the unit of service consumption Determine if multiple elements are bundled or priced separately
15
2013 by Cengage Learning Inc. All Rights Reserved.

Pricing Objectives
Revenue-Oriented Pricing Maximize the surplus of income over costs

Operations-Oriented Pricing
Patronage-Oriented Pricing

Match supply and demand by varying price

Maximize the number of customers by varying price

16

2013 by Cengage Learning Inc. All Rights Reserved.

Relationship Marketing in Services

3 Structural Social Financial
2 Social Financial 1 Financial
17

Creating value-added services not available elsewhere

Design services to meet customer needs Pricing incentives

2013 by Cengage Learning Inc. All Rights Reserved.

Internal Marketing
Internal Marketing

Treating employees as customers and developing systems and benefits that satisfy their needs.
6

18

2013 by Cengage Learning Inc. All Rights Reserved.

Global Issues in Services Marketing

The U.S. is the worlds largest exporter of services

The marketing mix must reflect each countrys cultural, technological, and political environment

19

2013 by Cengage Learning Inc. All Rights Reserved.

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
8

20

2013 by Cengage Learning Inc. All Rights Reserved.

Nonprofit Organization Marketing

Market intangible products

Shared Characteristics with Service Organizations

Production requires customers presence Services vary greatly

Services cannot be stored

21

2013 by Cengage Learning Inc. All Rights Reserved.

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

22

2013 by Cengage Learning Inc. All Rights Reserved.

Unique Aspects of Nonprofit Organization Marketing Strategies

Setting of marketing objectives
Selection of target markets Development of marketing mixes

23

2013 by Cengage Learning Inc. All Rights Reserved.

Objectives
Provide services that respond to the wants of :

Users Payers Donors Politicians

Appointed officials Media General Public

24

2013 by Cengage Learning Inc. All Rights Reserved.

Target Markets
Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning
25
2013 by Cengage Learning Inc. All Rights Reserved.

Unique Issues of Nonprofit Organizations

Product Decisions
Distinctions between Business and Nonprofit Organizations

Benefit complexity
Weak or indirect benefit strength Low involvement

26

2013 by Cengage Learning Inc. All Rights Reserved.

Promotion Decisions
Professional volunteers

Sales promotion activities

Public service advertising

27

2013 by Cengage Learning Inc. All Rights Reserved.

Pricing Decisions
Pricing objectives Nonfinancial prices Indirect payment Separation between payers and users Below-cost pricing
8

Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations

28

2013 by Cengage Learning Inc. All Rights Reserved.