Lamb, Hair, McDaniel

1. Lamb, Hair, McDaniel 2010-2011 CHAPTER 12 Services and Nonprofit Organization Marketing

2. Learning Outcomes LO 1 Discuss the importance of services to the economy LO 2 Discuss the differences between services and goods LO 3 Describe the components of service quality and the gap model of service quality

3. Learning Outcomes LO 4 Develop marketing mixes for services LO 5 Discuss relationship marketing in services LO 6 Explain internal marketing in services LO 7 Discuss global issues in services marketing LO 8 Describe nonprofit organization marketing

4. The Importance of Services Discuss the importance of services to the economy LO1

5. Deed Performance Effort Services 10 20 30 40 50 60 70 80 90 100 81% 10 20 30 40 50 60 70 80 90 100 ~50% The Importance of Services Services as a percentage of GDP Services as a percentage of employment LO1

6. How Services Differ from Goods Discuss the differences between services and goods LO2

7. Intangible Inseparable Heterogeneous Perishable How Services Differ from Goods 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. LO2

8. http://www.webmd.com Online When Servicesare Assessed • Search Quality—applied to goods more often, assessed before purchase • Experience quality—assessed after purchase • Credence quality—assessed only with appropriate knowledge. LO2

9. Service Quality Describe the components of service quality and the gap model of service quality LO3

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. Empathy Caring, individualized attention to customers. Tangibles The physical evidence of a service. Components of Service Quality LO3

11. The Gap Model of Service Quality LO3

12. Marketing Mixes for Services Develop marketing mixes for services LO4

13. Process Core andSupplementary Customization or Standardization Service Mix Product Strategies for Services LO4

14. People Processing PossessionProcessing Mental StimulusProcessing InformationProcessing Service as a Process LO4

15. CoreService The most basic benefit the consumer is buying. Supplementary Service A group of services that support or enhance the core service. The Service Offering LO4

16. Problem solving Advice and information Order taking Overnight transportation and delivery of packages Billing statements Supplies Tracing Pickup Documentation Core and Supplementary Services for FedEx LO4

17. A strategy that uses technology to deliver customized services on a mass basis. Customization/Standardization MassCustomization LO4

18. The Service Mix • Determine what new services to introduce • Determine target market • Decide what existing services to maintain and to eliminate LO4

19. Convenience Number of outlets Direct or indirect distribution Location Scheduling Place (Distribution) Strategy LO4

20. Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication Promotion Strategy LO4

21. Price Strategy • Define the unit of service consumption • Determine if multiple elements are “bundled” or priced separately Pricing Challenges for Services LO4

22. Revenue-OrientedPricing Maximize the surplus of income over costs Operations-OrientedPricing Match supply and demand by varying price Patronage-OrientedPricing Maximize the number of customers by varying price http://www.etrade.com http://www.tdameritrade.com http://www.schwab.com Online Pricing Objectives LO4

23. LO4 PLACE PROMOTION PRICE Process Number ofoutlets Tangiblecues Revenueoriented Core and Supplementary Direct Personalinformation Operations oriented Indirect Strong image Patronageoriented Mass Customization Standardization Location Post-purchasecommunication Marketing Mixes for Services PRODUCT = SERVICE

24. Relationship Marketing in Services Discuss relationship marketing in services LO5

25. Creating value-added services not available elsewhere 3 Structural Social Financial 2 Social Financial Design services to meet customer needs 1 Financial Pricing incentives RelationshipMarketing in Services LO5

26. Internal Marketing in Service Firms Explain internal marketing in services LO6

27. Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. Internal Marketing LO6

28. Internal Marketing in Services LO6

29. Global Issues in Services Marketing Discuss global issues in services marketing LO7

30. 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 LO7

31. Nonprofit Organization Marketing Describe nonprofit organization marketing LO8

32. 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 LO8

33. Market intangible products Shared Characteristics with Service Organizations Production requires customer’s presence Services vary greatly Services cannot be stored Nonprofit Organization Marketing LO8

34. Identify desired customers Specify objectives Develop, manage, eliminate programs and services Decide on prices Schedule events or programs Communicate their availability Nonprofit Organization Marketing Activities LO8

35. Unique Aspects of Nonprofit Organization Marketing Strategies • Setting of marketing objectives • Selection of target markets • Development of marketing mixes LO8

36. Provide services that respond to the wants of : • Users • Payers • Donors • Politicians • Appointed officials • Media • General Public Objectives LO8

37. Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Target Markets Unique Issues of Nonprofit Organizations LO8

38. Product Decisions • Benefit complexity • Weak or indirect benefit strength • Low involvement Distinctions between Business and Nonprofit Organizations LO8

39. Professional volunteers Sales promotion activities Public service advertising http://www.adcouncil.com Online Promotion Decisions LO8

40. Public Service Announcements PSAs take many forms, but many organizations are using television and the internet to spread awareness. • iava.org (Irag and Afghanistan Veterans of America) asks visitors to “become a fan” on Facebook to see their latest PSA • Senior Citizens League PSA • NCAA PSA • What messages are these PSAs sending? Are they effective? LO8

41. Pricing objectives Nonfinancial prices Characteristics Distinguishing Pricing Decisionsof Nonprofit Organizations Indirect payment Separation betweenpayers and users Below-cost pricing Pricing Decisions LO8

42. Nonprofit Organization Marketing Benefitcomplexity PRODUCT PLACE Special facilities Benefitstrength TARGET • Apathetic or strongly opposed Involvement • Undifferentiated segmentation Nonfinancial Professional volunteers • Complementary positioning Indirect payment Sales Separation PROMOTION PRICE Below costpricing Public Service Advertising LO8