CH 11

Services and Nonprofit Organization Marketing
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chapter
Prepared by Deborah Baker Texas Christian University

2002 South-Western 1
Chapter 11 Version 6e
Learning Objectives
1. Discuss the importance of services to the economy.
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2. Discuss the differences between services and goods. 3. Describe the components of service quality and the gap model of service quality.
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Learning Objectives (continued)

4. Explain why services marketing is important to manufacturers.
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5. Develop marketing mixes for services. 6. Discuss relationship marketing in services. 7. Explain internal marketing in services.
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Learning Objectives (continued)

8. Discuss global issues in services marketing.
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9. Describe nonprofit organization marketing. 10.Explain the unique aspects of nonprofit organization marketing.
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Learning Objective
Discuss the importance of services to the economy.
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Service
The result of applying human or mechanical efforts to people or objects.
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The Importance of Services

79% of workers are in 79% of workers are in service sector service sector Services account for Services account for 76% of U.S. GDP 76% of U.S. GDP Service occupations will be Service occupations will be responsible for all job growth responsible for all job growth through 2005 through 2005
Chapter 11 Version 6e 2002 South-Western
Learning Objective
Discuss the differences between services and goods.
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How Services Differ from Goods

Intangibility Intangibility
Characteris Characteris tics tics That That Distinguish Distinguish Services Services
Inseparability Inseparability Heterogeneity Heterogeneity Perishability Perishability
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Characteristics of Services
Intangibility Intangibility Inseparability Inseparability Heterogeneity Heterogeneity Perishability Perishability
Services that cannot be touched, Services that cannot be touched, seen, tasted, heard, or felt in the seen, tasted, heard, or felt in the same manner as goods. same manner as goods. A characteristic of services that A characteristic of services that allows them to be produced and allows them to be produced and consumed simultaneously. consumed simultaneously. A characteristic of services that A characteristic of services that makes them less standardized makes them less standardized and uniform than goods. and uniform than goods. A characteristics of services that A characteristics of services that prevents them from being stored, prevents them from being stored, warehoused, or inventoried. warehoused, or inventoried.
Learning Objective
Describe the components of service quality and the gap model of service quality.
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Service Quality
Reliability Reliability Component Component s for s for Evaluating Evaluating Service Service Quality Quality Responsiveness Responsiveness Assurance Assurance Empathy Empathy Tangibles Tangibles
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Components of Service Quality

Reliability Reliability Responsiveness Responsiveness Assurance Assurance Empathy Empathy Tangibles Tangibles
The ability to perform the The ability to perform the service right the first time. service right the first time. The ability to provide The ability to provide prompt service prompt service
The knowledge and courtesy The knowledge and courtesy of employees. of employees. Caring, individualized Caring, individualized attention to customers. attention to customers. The physical evidence The physical evidence of a service. 2002 South-Western a service. of
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The Gap Model of Service Quality

Customer
Expected Service Expected Service
GAP 5
Perceived Service Perceived Service
Provider
GAP 1
Service Delivery GAP 4 Communication Service Delivery Communication with Customers with Customers Quality Quality Specifications Specifications
GAP 3 GAP 2
Mgmt perception Mgmt perception 2002 South-Western
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Learning Objective
Explain why services marketing is important to manufacturers.
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Services Marketing in Manufacturing Ser vices of fer Competitive Advanta ge
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Learning Objective
Develop marketing mixes for services.
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Marketing Mixes for Services

People People Processing Processing Product (Service) Strategy Possession Possession Processing Processing Information Information Processing Processing
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Core and Supplementary Services

Core Core Service Service Supplementary Supplementary Service Service
The more basic benefit the The more basic benefit the consumer is buying. consumer is buying. A group of services that support A group of services that support or enhance the core service. or enhance the core service.
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Core and Supplementary Services

Problem solving Advice and information Overnight transportation and delivery of packages Order taking
Billing statements
Supplies
Tracing
Documentation
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Pickup
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Mass Customization
A strategy that uses technology to deliver customized services on a mass basis.
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Cost
Mass Customization
Customization
High
Customized Focus
Technol ogy Mass Customization is the Key
Low
Standardized Focus
High Low
Service Mix Strategy

u Determine what new services to introduce u Determine target market u Decide what existing services to maintain and/or eliminate
Distribution Strategy Issues

Convenience Convenience Number of Outlets Number of Outlets
Focus for Focus for Distributio Distributio n n Strategies Strategies
Direct vs. Indirect Direct vs. Indirect Distribution Distribution Location Location Scheduling Scheduling
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Promotion Strategy Issues

Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication
Service Service Promotion Promotion Strategies Strategies
Price Strategy
Define unit of Define unit of service consumption service consumption
Pricing Pricing Challenges Challenges
Determine if multiple Determine if multiple elements are bundled elements are bundled Trends have Trends have made pricing an made pricing an active component active component
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Pricing Objectives
Categories of Categories of Pricing Pricing Objectives Objectives
Revenue-Oriented Revenue-Oriented Pricing Pricing OperationsOperationsOriented Oriented Pricing Pricing
PatronagePatronageOriented Oriented Pricing Pricing
Learning Objective
Discuss relationship marketing in services.
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Relationship Marketing in Services

Three Levels of Relationship Marketing
Level 3 Financial, Social, Structural Level 2 Financial, Social
Level 1 Financial
Relationship Marketing in Services

Level Type of bond Degree of service customization Low Main element of marketing mix Price
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Potential for long-term advantage over competitors Low
One
Financial
Two
Financial and social
Medium
Personal communication
Medium
Three
Financial, social, and structural
Medium to high
Service delivery
High
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Learning Objective
Explain internal marketing in services.
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Internal Marketing
Treating employees as customers and developing systems and benefits that satisfy their needs.
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Internal Marketing Activities

Competing Competing for Talent for Talent Offering Offering a Vision a Vision Training Training Employees Employees
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Stressing Stressing Teamwork Teamwork
Empowerment Empowerment
Rewarding Rewarding Performance Performance

Internal Marketing Activities
Knowing Knowing Employees Employees Needs Needs
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Learning Objective
Discuss global issues in services marketing.
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Global Issues in Services Marketing

Financial Financial Construction Construction Engineering Engineering
U.S. is worlds largest exporter of services

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Insurance Insurance Restaurant Chains Restaurant Chains
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Learning Objective
Describe nonprofit organization marketing.
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Nonprofit Organization Marketing
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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Nonprofit Organizations
Government Government Private Museums Private Museums Theaters Theaters Schools Schools Churches Churches Other NonOther Nongovernment government
Nonprofit Nonprofit Organizations Organizations
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Nonprofit Organization Marketing

Market intangible products Market intangible products Shared Shared Characteristics Characteristics with with Service Service Organizations Organizations Production requires Production requires customers presence customers presence Services vary greatly Services vary greatly Services can not be stored Services can not be stored
Nonprofit Organization Marketing Activities

Identify Desired Customers Identify Desired Customers Specify Objectives Specify Objectives Develop, manage, eliminate Develop, manage, eliminate programs/services programs/services Set prices Set prices Schedule events Schedule events
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Learning Objective
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Explain the unique aspects of nonprofit organization marketing.
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Unique Aspects of Nonprofit Organization Marketing Strategies

Unique Aspects of Unique Aspects of Marketing of Nonprofit Marketing of Nonprofit Organizations Organizations Market Market Objectives Objectives Target Target Markets Markets
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Marketing Marketing Mixes Mixes
Market Objectives
Provide Services Provide Services to: to: u u u u Users Payers Donors Politicians u Appointed officials u Media u General Public
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Target Markets
Apathetic or Apathetic or strongly opposed strongly opposed targets targets Pressure to adopt Pressure to adopt undifferentiated undifferentiated segmentation segmentation
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Unique Issues of Nonprofit Organizations
Complementary Complementary positioning positioning

Product Decisions
Benefit Benefit Complexity Complexity
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Distinctions between Business and Nonprofit Organizations
Weak Weak Benefit Strength Benefit Strength Low Low Involvement Involvement
Promotion Decisions
Professional Volunteers
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Nonprofit Nonprofit Organizatio Organizatio n n Promotion Promotion Decisions Decisions
Sales Promotion Activities Public Service Advertising Licensing
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Pricing Decisions
Pricing Objectives Pricing Objectives Characteristi Characteristi cs cs Distinguishin Distinguishin g g Pricing Pricing Decisions Decisions of Nonprofit of Nonprofit Organization Organization s s
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Nonfinancial Prices Nonfinancial Prices Indirect Payment Indirect Payment Separation Between Separation Between Payers and Users Payers and Users
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Below-Cost Pricing Below-Cost Pricing
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Services and Nonprofit Organization Marketing

Prepared by Deborah Baker Texas Christian University

Learning Objectives (continued)

Learning Objectives (continued)

Discuss the importance of services to the economy.

The result of applying human or mechanical efforts to people or objects.

The Importance of Services

How Services Differ from Goods

Inseparability Inseparability Heterogeneity Heterogeneity Perishability Perishability

Components of Service Quality

The Gap Model of Service Quality

Mgmt perception Mgmt perception 2002 South-Western

Services Marketing in Manufacturing Ser vices of fer Competitive Advanta ge

Marketing Mixes for Services

Core and Supplementary Services

Core and Supplementary Services

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

Technol ogy Mass Customization is the Key

Service Mix Strategy

Distribution Strategy Issues

Focus for Focus for Distributio Distributio n n Strategies Strategies

Promotion Strategy Issues

Service Service Promotion Promotion Strategies Strategies

Pricing Pricing Challenges Challenges

PatronagePatronageOriented Oriented Pricing Pricing

Discuss relationship marketing in services.

Relationship Marketing in Services

Relationship Marketing in Services

Financial and social

Financial, social, and structural

Explain internal marketing in services.

Internal Marketing Activities

Rewarding Rewarding Performance Performance

Knowing Knowing Employees Employees Needs Needs

Discuss global issues in services marketing.

Global Issues in Services Marketing

U.S. is worlds largest exporter of services

Insurance Insurance Restaurant Chains Restaurant Chains

Describe nonprofit organization marketing.

Nonprofit Organization Marketing

Nonprofit Nonprofit Organizations Organizations

Nonprofit Organization Marketing

Nonprofit Organization Marketing Activities

Explain the unique aspects of nonprofit organization marketing.

Unique Aspects of Nonprofit Organization Marketing Strategies

Marketing Marketing Mixes Mixes

Unique Issues of Nonprofit Organizations

Complementary Complementary positioning positioning

Distinctions between Business and Nonprofit Organizations

Nonprofit Nonprofit Organizatio Organizatio n n Promotion Promotion Decisions Decisions

Sales Promotion Activities Public Service Advertising Licensing

Below-Cost Pricing Below-Cost Pricing

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