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1
Lamb, Hair, McDaniel
CHAPTER 12
Services and Nonprofit Organization Marketing
2010-2011
2
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
Learning Outcomes
3
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
Learning Outcomes
4
Discuss the importance of services to the
economy
The Importance of Services
LO1
5
The Importanceof Services
10 20 30 40 50 60 70 80 90 100
81%
Services as a percentage of GDP
Services as a percentage of employment
ServicesDeedPerformanceEffort
DeedPerformanceEffort
~50%
10 20 30 40 50 60 70 80 90 100
LO1
6
Discuss the differences between services and goods
How Services Differ from Goods
LO2
7
How Services Differ from Goods
IntangibleIntangible
InseparableInseparable
HeterogeneousHeterogeneous
PerishablePerishable
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
When Servicesare Assessed
Online
http://www.webmd.com
• Search Quality—applied to goods more often, assessed before purchase
• Experience quality—assessed after purchase
• Credence quality—assessed only with appropriate knowledge.
LO2
9
Describe the components
of service quality and the gap model of service quality
Service Quality
LO3
10
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 the service right the first time.The ability to perform the service right the first time.
LO3
11
The Gap Model of Service Quality
LO3
12
Develop marketing mixes for services
Marketing Mixes for Services
LO4
13
Product Strategies for Services
ServiceMix
Customization or
Standardization
Core andSupplementary
Process
LO4
14
Service as a Process
Mental StimulusProcessing
Mental StimulusProcessing
People Processing
People Processing
PossessionProcessing
PossessionProcessing
InformationProcessing
InformationProcessing
LO4
15
The Service Offering
CoreServiceCore
Service
SupplementaryService
SupplementaryService
The most basic benefit the consumer is buying.
The most basic benefit the consumer is buying.
A group of services that supportor enhance the core service.
A group of services that supportor enhance the core service.
LO4
16
Core and Supplementary Services for FedEx
Overnight transportation and delivery of
packages
Problem solving
Billing statements
TracingDocumentation
Order taking
Supplies
Pickup
Advice andinformation
LO4
17
Customization/Standardization
A strategy that uses
technology to deliver
customized services
on a mass basis.
MassCustomization
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
Place (Distribution) Strategy
SchedulingScheduling
LocationLocation
Direct or indirect distribution
Direct or indirect distribution
Number of outletsNumber of outlets
ConvenienceConvenience
LO4
20
Promotion Strategy
Stress tangible cues
Use personal information sources
Create a strong organizational image
Engage in postpurchase communication
LO4
21
Price Strategy
Pricing Challenges for Services
Define the unit of service consumption
Determine if multiple elements are “bundled” or priced separately
LO4
22
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
http://www.etrade.comhttp://www.tdameritrade.comhttp://www.schwab.comOnline
LO4
23
PLACEPLACEPRODUCT
= SERVICE
PRODUCT =
SERVICE
Core and Supplementary
Core and Supplementary DirectDirect Personal
information
Personalinformation
Operationsoriented
Operationsoriented
Revenueoriented
RevenueorientedProcessProcess Number of
outlets
Number ofoutlets
Tangiblecues
Tangiblecues
Mass Customization
Mass Customization
StandardizationStandardization
PROMOTIONPROMOTION PRICEPRICE
IndirectIndirect
LocationLocation
Strong imageStrong image
Post-purchasecommunication
Post-purchasecommunication
Patronageoriented
Patronageoriented
Marketing Mixes for Services
LO4
24
Discuss relationship marketing in services
Relationship Marketing in Services
LO5
25
2Social
Financial
1Financial
3Structural
SocialFinancial
Pricing incentives
Design services to meet customer needs
Creating value-added services not available elsewhere
RelationshipMarketing in Services
LO5
26
Explain internal marketing in services
Internal Marketing in Service Firms
LO6
27
Internal Marketing
Internal Marketing
Internal Marketing
Treating employees
as customers and
developing systems
and benefits that
satisfy their needs.
LO6
28
Internal Marketing in Services
LO6
29
Discuss global issues
in services marketing
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
Describe nonprofit organization
marketing
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
Nonprofit Organization Marketing
Market intangible productsMarket intangible products
Production requires customer’s presenceProduction requires customer’s presence
Services vary greatlyServices vary greatly
Services cannot be storedServices cannot be stored
Shared Characteristics
with Service
Organizations
Shared Characteristics
with Service
Organizations
LO8
34
Nonprofit Organization Marketing Activities
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
LO8
35
Unique Aspects of Nonprofit Organization Marketing Strategies
• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
LO8
36
Objectives
Provide services that respond to the wants of :
Users Payers Donors Politicians
Appointed officials
Media General Public
LO8
37
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
Unique Issues of Nonprofit
Organizations
LO8
38
Product Decisions
Distinctions between Business and Nonprofit Organizations
Benefit complexity
Weak or indirect benefit strength
Low involvement
LO8
39
Promotion Decisions
Sales promotion activities
Public service advertising
Professional volunteers
Online
http://www.adcouncil.com
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 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
LO8
42
TARGET
PRODUCT
PROMOTION
PLACE
PRICE
Professional
volunteersSales
Public ServiceAdvertising
Involvement
Benefitstrength
Benefitcomplexity
Specialfacilities
Nonfinancial
Indirect payment
Separation
Below costpricing
• Complementary positioning
• Apathetic or strongly opposed
• Undifferentiated segmentation
Nonprofit Organization Marketing
LO8