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Lamb, Hair, McDaniel
Chapter 12
Service and Service and Nonprofit Nonprofit
Organization Organization MarketingMarketing
2014-2015
© Cengage Learning 2015. All Rights Reserved.
© 2015 by Cengage Learning Inc. All Rights Reserved. 2
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
1
4
2
3
© 2015 by Cengage Learning Inc. All Rights Reserved. 3
Discuss relationship marketing in services
Explain internal marketing in services
Describe nonprofit organizational marketing
Discuss global issues in services marketing
5
8
6
7
© 2015 by Cengage Learning Inc. All Rights Reserved.4
Discuss the importance of services to the
economy
The Importance of ServicesThe Importance of Services
1
The Importance of ServicesThe Importance of Services
Service industries accounted for 68 percent of U.S. GDP in 2012.
Services involve:•Deeds•Performances•Efforts
© 2015 by Cengage Learning Inc. All Rights Reserved. 5
1
© 2015 by Cengage Learning Inc. All Rights Reserved.6
Discuss the differences between services and
goods
How Services Differ from GoodsHow Services Differ from Goods
2
© 2015 by Cengage Learning Inc. All Rights Reserved. 7
How Services How Services Differ from GoodsDiffer 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.
2
© 2015 by Cengage Learning Inc. All Rights Reserved. 8
When Services are Assessed When Services are Assessed
• Search quality: More often applied to goods, assessed before purchase
• Experience quality: Assessed after purchase
• Credence quality: Assessed only with appropriate knowledge.
2
© 2015 by Cengage Learning Inc. All Rights Reserved.9
Describe the components
of service quality and the gap model
of service quality
Service QualityService Quality
3
© 2015 by Cengage Learning Inc. All Rights Reserved. 10
Components of Service QualityComponents of Service Quality
TangiblesTangibles The physical evidence of the service.
The physical evidence of the 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.
3
11
Exhibit 12.1Exhibit 12.1Gap Model of Service QualityGap Model of Service Quality
3
© 2015 by Cengage Learning Inc. All Rights Reserved.12
Develop marketing mixes for services
Marketing Mixes for ServicesMarketing Mixes for Services
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 13
Product Strategies Product Strategies for Servicesfor Services
ServiceMix
Customization/Standardization
Core andSupplementary
Service as a Process
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 14
Service as a ProcessService as a Process
Mental StimulusProcessing
Mental StimulusProcessing
People Processing
People Processing
PossessionProcessing
PossessionProcessing
InformationProcessing
InformationProcessing
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 15
The Service OfferingThe 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 support or enhance the
core service.
A group of services that support or enhance the
core service.
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 16
Customization/StandardizationCustomization/Standardization
A strategy that uses
technology to deliver
customized services
on a mass basis.
MassCustomization
MassCustomization
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 17
The Service MixThe Service Mix
Determine which new services to introduce
Determine the target market
Decide which existing services to maintain and which to eliminate
4
© 2015 by Cengage Learning Inc. All Rights Reserved.18
Place (Distribution) StrategyPlace (Distribution) Strategy
SchedulingScheduling
LocationLocation
Direct or indirect distribution
Direct or indirect distribution
Number of outletsNumber of outlets
ConvenienceConvenience
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 19
Promotion StrategyPromotion Strategy
Stress tangible cues
Use personal information sources
Create a strong organizational image
Engage in postpurchase communication
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 20
Price StrategyPrice Strategy
Define the unit of service consumption
Determine if multiple elements are “bundled” or priced separately
Pricing Challenges for Services
4
© 2015 by Cengage Learning Inc. All Rights Reserved. 21
Pricing ObjectivesPricing 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
4
© 2015 by Cengage Learning Inc. All Rights Reserved.22
Discuss relationship marketing in services
Relationship Marketing in ServicesRelationship Marketing in Services
5
© 2015 by Cengage Learning Inc. All Rights Reserved. 23
RelationshipRelationshipMarketing in ServicesMarketing in Services
2Social
Financial
1Financial
3Structural
SocialFinancial
Pricing incentives
Design services to meet customer needs
Creating value-added services not available elsewhere
5
© 2015 by Cengage Learning Inc. All Rights Reserved.24
Explain internal marketing in services
Internal Marketing in Service FirmsInternal Marketing in Service Firms
6
© 2015 by Cengage Learning Inc. All Rights Reserved. 25
Internal MarketingInternal Marketing
Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.
6
© 2015 by Cengage Learning Inc. All Rights Reserved.26
Describe nonprofit organization marketing
Nonprofit Organization MarketingNonprofit Organization Marketing
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 27
Nonprofit Organization Nonprofit Organization
An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment.
• Governments
• Museums
• Theaters
• Schools
• Churches
7
Nonprofit Organization Nonprofit Organization MarketingMarketing
© 2015 by Cengage Learning Inc. All Rights Reserved. 28
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
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 29
Nonprofit Organization Nonprofit Organization Marketing ActivitiesMarketing Activities
Identify desired customersIdentify desired customers
Specify objectivesSpecify objectives
Develop, manage, eliminate programs and services
Develop, manage, eliminate programs and services
Decide on pricesDecide on prices
Schedule events or programsSchedule events or programs
Communicate their availabilityCommunicate their availability
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 30
• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
Unique Aspects of Nonprofit Unique Aspects of Nonprofit Organization Marketing StrategiesOrganization Marketing Strategies
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 31
ObjectivesObjectives
Provide services that respond to the wants of:
Users
Payers
Donors
Politicians
Appointed officials
Media
General Public
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 32
Target MarketsTarget 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 NonprofitOrganizations
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 33
Benefit complexity
Weak or indirect benefit strength
Low involvement
Product DecisionsProduct Decisions
Distinctions between Business and Nonprofit Organizations
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 34
Promotion Decisions
Sales promotion activities
Public service advertising
Professional volunteers
7
© 2015 by Cengage Learning Inc. All Rights Reserved. 35
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
7
© 2015 by Cengage Learning Inc. All Rights Reserved.36
Discuss global issues in services marketing
Global Issues in Services MarketingGlobal Issues in Services Marketing
8
© 2015 by Cengage Learning Inc. All Rights Reserved. 37
Global Issues in Global Issues in Services MarketingServices 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.
8
© Cengage Learning Inc. 2015. All Rights Reserved.38
Chapter 12 VideoChapter 12 VideoPepe’s Pizzeria
Pepe’s is a family owned and operated pizzeria in Connecticut. The original Pepe earned the
nickname “Old Reliable” for his customer service, and his grandchildren carry out that value today.
This video discusses the various ways that Pepe’s Pizzeria works to provide great, consistent service
and why it is important.
CLICK TO PLAY VIDEO
© Cengage Learning Inc. 2015. All Rights Reserved.39
Part 3 VideoPart 3 VideoScripps Networks Interactive
Product Decisions
Scripps Networks Interactive is a media company that operates popular channels such as Food Network, DIY, and other lifestyle channels. In this video, employees discuss how Scripps manages and develop their new cross-platform products, such as social media and apps for mobile devices.
CLICK TO PLAY VIDEO