Chapter 12: Services and Nonprofit Organization

Marketing

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Introduction to

Designed & Prepared by Laura RushB-books, Ltd.

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

Develop marketing mixes for services

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LO1

LO2

LO3

LO4

Learning Outcomes

Discuss relationship marketing in services

Explain internal marketing in services

Discuss global issues in services marketing

Describe nonprofit organization marketing

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LO5

LO6

LO7

LO8

How Services Differ from Goods

IntangibleIntangible

InseparableInseparable

HeterogeneousHeterogeneous

PerishablePerishable

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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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Product Strategies for Services

ServiceMix

Standardizationor

Customization

Core andSupplementary

Process

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Place (Distribution) Strategy

SchedulingScheduling

LocationLocation

Direct or indirect distribution

Direct or indirect distribution

Number of outletsNumber of outlets

ConvenienceConvenience

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Promotion Strategy

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Engage in postpurchase communication

Engage in postpurchase communication

Create a strong organizational image

Create a strong organizational image

Use personal informationsources

Use personal informationsources

Stress tangible cuesStress tangible cues

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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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

10

Online

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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 bonds

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Internal Marketing

Treating employees as

customers and developing

systems and benefits that

satisfy their needs.

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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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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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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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Objectives

Provide services that respond to the wants of :

Users

Payers

Donors

Politicians

Appointed officials

Media

General Public

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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

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Product Decisions

• Benefit complexity

• Benefit strength

• Low involvement

Distinctions between Business and Nonprofit Organizations

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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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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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