Lamb, Hair, McDaniel
2012-2013
CHAPTER 12
Services and Nonprofit
Organization Marketing
Copyright ©2012 by Cengage Learning Inc. All rights reserved
1
© Peter Dazeley/Photographer’s Choice/Getty Images
Chapter 12
Learning Outcomes
1
Discuss the importance of services to the
economy
2
Discuss the differences between services and
goods
3
Describe the components of service quality
and the gap model of service quality
4
Develop marketing mixes for services
2
Learning Outcomes
5
Discuss relationship marketing in services
6
Explain internal marketing in services
7
Discuss global issues in services marketing
8
Describe nonprofit organization marketing
3
The Importance of Services
Discuss the
importance of
services to the
economy
1
4
The Importance of Services
Deed
Performance
Effort
Services
Services as a percentage of employment
(Projected by 2018)
10
20
30
40
50
60
70
80
90
100
80%
5
1
How Services Differ from Goods
Discuss the
differences between
services and goods
2
6
How Services Differ from Goods
Intangible
Inseparable
Heterogeneous
Perishable
7
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
When Services are Assessed
• Search Quality:
Assessed before
purchase (often applied to goods)
• Experience Quality: Assessed after
purchase (ex. How was the meal?)
• Credence Quality: Assessed only with
appropriate knowledge
• Vidal Sassoon-If you don’t look good…
http://www.youtube.com/watch?v=m7SqJY5rIv4
8
2
Service Quality
Describe the
components of
service quality
and the gap model
(how services are
assessed)
3
9
How Services are Assessed
10
Reliability
The ability to perform the
service right the first time.
Responsiveness
The ability to provide
prompt service.
Assurance
The knowledge and courtesy
of employees. (Marriott)
Empathy
Caring, individualized
attention to customers.
Tangibles
The physical evidence
of the service.
http://www.youtube.com/watch?v=wdi43UA2ofE
3
Exhibit 12.1
Gap Model of Service Quality
11
Marketing Mixes for Services
Develop marketing
mixes for services
4
12
Product Strategies
for Services
13
Process
Core and
Supplementary
Customization
or
Standardization
Service
Mix
4
Service as a Process
People
Processing
Possession
Processing
Mental Stimulus
Processing
Information
Processing
14
4
The Service Offering
15
Core
Service
The most basic benefit the
consumer is buying.
Supplementary
Service
A group of services that support
or enhance the core service.
4
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
16
Customization/Standardization
Mass
Customization
A strategy that uses
technology to deliver
customized services
on a mass basis.
17
4
The Service Mix
 Determine what new services to
introduce
 Determine target market
 Decide what existing services to
maintain and to eliminate
18
4
Place (Distribution) Strategy
Convenience
Number of outlets
Direct or indirect
distribution
Location
Scheduling
19
4
Promotion Strategy
Stress tangible cues
Use personal information
sources
Create a strong
organizational image
Engage in postpurchase
communication
20
4
Price Strategy
Pricing Challenges for Services
 Define the unit of service
consumption
 Determine if multiple elements
are “bundled” or priced
separately
21
4
Pricing Objectives
22
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
4
Relationship Marketing in Services
Discuss relationship
marketing in services
5
23
Relationship
Marketing in Services
24
3
Structural
Social
Financial
Creating value-added
services not available
elsewhere
2
Social
Financial
Design services to
meet customer needs
1
Financial
Pricing incentives
5
Internal Marketing in Service Firms
Explain internal
marketing in services
6
25
Internal Marketing
Internal
Marketing
Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.
26
6
Global Issues in Services Marketing
Discuss global
issues
in services
marketing
7
27
Global Issues in
Services Marketing
• The U.S. is the world’s largest
exporter of services
• The marketing mix must reflect each
country’s cultural, technological, and
political environment
28
7
Nonprofit Organization Marketing
Describe nonprofit
organization
marketing
29
Nonprofit Organizations
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
 Religious Organizations
30
8
Nonprofit Organization
Marketing
Market intangible products
Shared
Characteristics
with
Service
Organizations
Production requires
customer’s presence
Services vary greatly
Services cannot be stored
31
8
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
32
8
Unique Aspects of Nonprofit
Organization Marketing Strategies
 Setting of marketing objectives
 Selection of target markets
 Development of marketing mixes
33
8
Objectives
Provide services that respond to the wants of :
 Users
34
 Payers
 Appointed
officials
 Donors
 Media
 Politicians
 General Public
8
Target Markets
Apathetic or
strongly opposed
targets
Pressure to adopt
undifferentiated
segmentation
Unique Issues
of Nonprofit
Organizations
Complementary
positioning
35
8
Product Decisions
Distinctions between
Business and Nonprofit Organizations
 Benefit complexity
 Weak or indirect benefit strength
 Low involvement
36
8
Promotion Decisions
Professional volunteers
Sales promotion activities
Public service advertising
37
8
Pricing Decisions
Pricing objectives
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
Nonfinancial prices
Indirect payment
Separation between
payers and users
Below-cost pricing
38
8