1 How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable 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: More often applied to goods, assessed before purchase Experience quality: Assessed after purchase Credence quality: Assessed only with appropriate knowledge.

3 Components of Service Quality Tangibles The physical evidence of the service. The physical evidence of the service. Empathy Caring, individualized attention to customers. Assurance The knowledge and courtesy of employees. The knowledge and courtesy of employees. Responsiveness The ability to provide prompt service. The ability to provide prompt service. Reliability The ability to perform the service right the first time.

4 Product Strategies for Services Service Mix Customization/ Standardization Core and Supplementary Service as a Process

5 Service as a Process People Processing People Processing Takes place when the service is directed at a customer. Examples include health care and hairstyling, Possession Processing Occurs when the service is directed at customers’ physical possessions. Examples include lawn care and dry cleaning. Mental Stimulus Processing Refers to services directed at people’s minds. Examples include spectator sports events and education. Information Processing Describes services that use technology or brainpower directed at a customer’s assets. Examples include insurance, consulting, and banking.

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

7 Customization/Standardization Mass Customization A strategy that uses technology to deliver customized services on a mass basis. Customized services are more flexible but command a higher price Dell allows customers to configure computers to their needs

8 The Service Mix Determine which new services to introduce Determine the target market Decide which existing services to maintain and which to eliminate

9 Place (Distribution) Strategy Convenience A key factor influencing the selection of a service provider. Number of outlets The intensity of distribution should meet the target market’s needs and preferences. Direct or indirect distribution Direct or indirect distribution Many service firms use direct distribution or franchising. The newest form of direct distribution is the Internet.

10 Place (Distribution) Strategy Location The location of a service reveals the relationship between its target market strategy and distribution strategy. Scheduling The most important factor for time- dependent service providers like airlines, physicians, and dentists.

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

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

13 Pricing Objectives Revenue-Oriented Pricing Operations- Oriented Pricing Patronage- Oriented Pricing Maximize the surplus of income over costs Match supply and demand by varying price Maximize the number of customers by varying price

14 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 Nonprofit Organization

15 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

16 Setting of marketing objectives Selection of target markets Development of marketing mixes Unique Aspects of Nonprofit Organization Marketing Strategies

17 Nonprofits provide services that respond to the wants of: Users Payers Donors Politicians Appointed officials Media General Public Nonprofit organizations focus on generating enough funds to cover expenses. Objectives

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

19  Benefit complexity  Weak or indirect benefit strength  Low involvement Distinctions between Business and Nonprofit Organizations Product Decisions

20 A nonprofit organization’s ability to distribute its service offerings where and when customer groups want them is a key variable in determining success. Place Decisions

21 Sales promotion activities Public service advertising Professional volunteers Promotion Decisions

22 Below-cost pricing Separation between payers and users Indirect payment Nonfinancial prices Pricing objectives Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations Pricing Decisions

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 LEARNING OUTCOMES

Discuss relationship marketing in services Explain internal marketing in services Describe nonprofit organizational marketing Discuss global issues in services marketing Define the key terms listed in chapter prep LEARNING OUTCOMES