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
1
Learning Outcomes
LO1
Discuss the importance of services to the
economy
LO2
Discuss the differences between services and
goods
LO3
Describe the components of service quality and
the gap model of service quality
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Learning Outcomes
LO4
Develop marketing mixes for services
LO5
Discuss relationship marketing in services
LO6
Explain internal marketing in services
LO7
Discuss global issues in services marketing
LO8
Describe nonprofit organization marketing
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The Importance of Services
LO1
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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LO1
Review Learning Outcome
The Importance of Services
Services
Deed
Performance
Effort
Services as a percentage of GDP
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
81%
Services as a percentage of employment
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
81%
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How Services Differ from Goods
LO2
Discuss the differences between
services and goods.
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How Services Differ from Goods
Intangible
Inseparable
Heterogeneous
Perishable
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How Services Differ from Goods
Intangibility
• Search Qualities
• Experience
Qualities
• Credence Qualities
http://www.webmd.com
Online
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Service Quality
LO3
Describe the components
of service quality
and the gap model
of service quality.
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Components of Service Quality
Reliability
The ability to perform dependently,
accurately, and consistently.
Responsiveness
The ability to provide
prompt service.
Assurance
The knowledge and courtesy
of employees.
Empathy
Caring, individualized
attention to customers.
Tangibles
The physical evidence
of a service.
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The Gap Model of Service Quality
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LO3
Review Learning Outcome
Service Quality
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13
Marketing Mixes for Services
LO4
Develop marketing mixes
for services.
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Product Strategies for Services
Process
Core and
Supplementary
Standardization
or
Customization
Service
Mix
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Service as a Process
People
Processing
Possession
Processing
Mental Stimulus
Processing
Information
Processing
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The Service Factory
Possession processing
Mental-stimulus processing
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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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Core and Supplementary Services
for a Luxury Hotel
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Customization/Standardization
Mass Customization –
A strategy that uses technology
to deliver customized services
on a mass basis.
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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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Place (Distribution) Strategy
Convenience
Number of outlets
Direct or indirect
distribution
Location
Scheduling
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Promotion Strategy
Stress tangible cues
Use personal information
sources
Create a strong organizational
image
Engage in postpurchase
communication
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23
Price Strategy
Pricing Challenges for Services
• Define the unit of service consumption
• Determine if multiple elements are “bundled”
or priced separately
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Pricing Objectives
Revenue-Oriented
Pricing
Maximize the surplus of income
over costs
Operations-Oriented
Pricing
Match supply and demand by
varying price
Patronage-Oriented
Pricing
Maximize the number of
customers by varying price
http://www.etrade.com
http://www.tdameritrade.com
http://www.schwab.com
Online
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LO4
Review Learning Outcome
Marketing Mixes for Services
PRODUCT
=
SERVICE
PLACE
PROMOTION
PRICE
Process
Number of
outlets
Tangible
cues
Revenue
oriented
Core and
Supplementary
Direct
Personal
information
Operations
oriented
Mass
Customization
Indirect
Strong image
Patronage
oriented
Location
Post-purchase
communication
Standardization
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Relationship Marketing
LO5
Discuss relationship
marketing in services.
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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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LO5
Review Learning Outcome
Relationship Marketing in Services
3
Creating
Value-added
Services
Structural
Social
Financial
2
Designs Services to
Meet Customer Needs
Social
Financial
1
Pricing Incentives
Financial
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Internal Marketing in Service Firms
LO6
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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LO6
Review Learning Outcome
Internal Marketing in Services
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Global Issues in Services Marketing
LO7
Discuss global issues
in services marketing.
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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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LO7
Review Learning Outcome
Global Issues in Services Marketing
U.S.A.
United States
is world’s largest
exporter of services.
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35
Nonprofit Organization Marketing
LO8
Describe nonprofit
organization marketing.
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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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Nonprofit Organization Marketing
•
Government
•
Museums
•
Theaters
•
Schools
•
Churches
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Nonprofit Organization Marketing
Market intangible products
Shared
Characteristics
with
Service
Organizations
Production requires
customer’s presence
Services vary greatly
Services can not be stored
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Nonprofit Organization Marketing
Identify desired customers
Specify objectives
Develop, manage, eliminate programs and services
Decide on prices
Schedule events or programs
Communicate their availability
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Unique Aspects of Nonprofit
Organization Marketing Strategies
• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
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Objectives
Provide services that respond to the wants of :
 Users
 Appointed officials
 Payers
 Media
 Donors
 General Public
 Politicians
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Target Markets
Apathetic or
strongly opposed
targets
Pressure to adopt
undifferentiated
segmentation
Unique Issues
of Nonprofit
Organizations
Complementary
positioning
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Product Decisions
Distinctions between
Business and Nonprofit Organizations
• Benefit complexity
• Benefit strength
• Low involvement
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Promotion Decisions
Professional volunteers
Sales promotion activities
Public service advertising
Peer-to peer-communications
http://www.adcouncil.com
Online
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Pricing Decisions
Pricing objectives
Nonfinancial prices
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
Indirect payment
Separation between
payers and users
Below-cost pricing
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LO8
Review Learning Outcome
Nonprofit Organization Marketing
Benefit
complexity
PRODUCT
PLACE
Special
facilities
Benefit
strength
TARGET
Involvement
Professional
volunteers
PROMOTION
• Apathetic or
strongly opposed
• Undifferentiated
segmentation
• Complementary
positioning
Sales
Public Service
Advertising
Nonfinancial
Indirect
payment
Separation
PRICE
Below cost
pricing
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47