1. Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 12 Services and Nonprofit Organization Marketing 2012-2013 © Peter Dazeley/Photographer’s Choice/Getty Images

2. 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 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 1 2 34

3. 3 © 2013 by Cengage Learning Inc. All Rights Reserved. Discuss relationship marketing in services Explain internal marketing in services Discuss global issues in services marketing Describe nonprofit organization marketing Learning Outcomes 5 6 78

4. © 2013 by Cengage Learning Inc. All Rights Reserved. 4 Discuss the importance of services to the economy The Importance of Services 1

5. © 2013 by Cengage Learning Inc. All Rights Reserved. 5 The Importance of Services 10 20 30 40 50 60 70 80 90 100 80% Services as a percentage of employment (Projected by 2018) Services Deed Performance Effort Deed Performance Effort 1

6. © 2013 by Cengage Learning Inc. All Rights Reserved. 6 Discuss the differences between services and goods How Services Differ from Goods 2

7. © 2013 by Cengage Learning Inc. All Rights Reserved. 7 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

8. © 2013 by Cengage Learning Inc. All Rights Reserved. 8 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

9. © 2013 by Cengage Learning Inc. All Rights Reserved. 9 Describe the components of service quality and the gap model of service quality Service Quality 3

10. © 2013 by Cengage Learning Inc. All Rights Reserved. 10 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. 3

11. 11 Exhibit 12.1 Gap Model of Service Quality

12. © 2013 by Cengage Learning Inc. All Rights Reserved. 12 Develop marketing mixes for services Marketing Mixes for Services 4

13. © 2013 by Cengage Learning Inc. All Rights Reserved. 13 Product Strategies for Services Service Mix Customization or Standardization Core and Supplementary Process 4

14. © 2013 by Cengage Learning Inc. All Rights Reserved. 14 Service as a Process Mental Stimulus Processing People Processing People Processing Possession Processing Information Processing 4

15. © 2013 by Cengage Learning Inc. All Rights Reserved. 15 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. A group of services that support or enhance the core service. 4

16. © 2013 by Cengage Learning Inc. All Rights Reserved. 16 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

17. © 2013 by Cengage Learning Inc. All Rights Reserved. 17 Customization/Standardization A strategy that uses technology to deliver customized services on a mass basis. Mass Customization 4

18. © 2013 by Cengage Learning Inc. All Rights Reserved. 18 The Service Mix  Determine what new services to introduce  Determine target market  Decide what existing services to maintain and to eliminate 4

19. © 2013 by Cengage Learning Inc. All Rights Reserved. 19 Place (Distribution) Strategy Scheduling Location Direct or indirect distribution Direct or indirect distribution Number of outlets Convenience 4

20. © 2013 by Cengage Learning Inc. All Rights Reserved. 20 Promotion Strategy Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication 4

21. © 2013 by Cengage Learning Inc. All Rights Reserved. 21 Price Strategy Pricing Challenges for Services  Define the unit of service consumption  Determine if multiple elements are “bundled” or priced separately 4

22. © 2013 by Cengage Learning Inc. All Rights Reserved. 22 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 4

23. © 2013 by Cengage Learning Inc. All Rights Reserved. 23 Discuss relationship marketing in services Relationship Marketing in Services 5

24. © 2013 by Cengage Learning Inc. All Rights Reserved. 24 2 Social Financial 1 Financial 3 Structural Social Financial Pricing incentives Design services to meet customer needs Creating value-added services not available elsewhere Relationship Marketing in Services 5

25. © 2013 by Cengage Learning Inc. All Rights Reserved. 25 Explain internal marketing in services Internal Marketing in Service Firms 6

26. © 2013 by Cengage Learning Inc. All Rights Reserved. 26 Internal Marketing Treating employees as customers and developing systems and benefits that satisfy their needs. 6

27. © 2013 by Cengage Learning Inc. All Rights Reserved. 27 Discuss global issues in services marketing Global Issues in Services Marketing 7

28. © 2013 by Cengage Learning Inc. All Rights Reserved. 28 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 7

29. © 2013 by Cengage Learning Inc. All Rights Reserved. 29 Describe nonprofit organization marketing Nonprofit Organization Marketing

30. © 2013 by Cengage Learning Inc. All Rights Reserved. 30 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 8

31. © 2013 by Cengage Learning Inc. All Rights Reserved. 31 Nonprofit Organization Marketing Market intangible products Production requires customer’s presence Production requires customer’s presence Services vary greatly Services cannot be stored Shared Characteristics with Service Organizations Shared Characteristics with Service Organizations 8

32. © 2013 by Cengage Learning Inc. All Rights Reserved. 32 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 8

33. © 2013 by Cengage Learning Inc. All Rights Reserved. 33 Unique Aspects of Nonprofit Organization Marketing Strategies Setting of marketing objectives Selection of target markets Development of marketing mixes 8

34. © 2013 by Cengage Learning Inc. All Rights Reserved. 34 Objectives Provide services that respond to the wants of :  Users  Payers  Donors  Politicians  Appointed officials  Media  General Public 8

35. © 2013 by Cengage Learning Inc. All Rights Reserved. 35 Target Markets Apathetic or strongly opposed targets Apathetic or strongly opposed targets Pressure to adopt undifferentiated segmentation Complementary positioning Unique Issues of Nonprofit Organizations 8

36. © 2013 by Cengage Learning Inc. All Rights Reserved. 36 Product Decisions Distinctions between Business and Nonprofit Organizations  Benefit complexity  Weak or indirect benefit strength  Low involvement 8

37. © 2013 by Cengage Learning Inc. All Rights Reserved. 37 Promotion Decisions Sales promotion activities Public service advertising Professional volunteers 8

38. © 2013 by Cengage Learning Inc. All Rights Reserved. 38 Pricing Decisions 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 8

39. © Cengage Learning Inc. 2013. All Rights Reserved. 39 Chapter 12 Videos Kodak – Services and Nonprofit Organization Marketing Would you describe Kodak’s services as customized or standardized? Why? http://www.cengage.com/marketing/book_conten t/9781133190110_lamb/videos/ch12.html

40. © Cengage Learning Inc. 2013. All Rights Reserved. 40 Part 3 Video Rogue Sheep—Product Decisions This video focuses on Rogue Sheep and their iPhone app Postage. Brad and Chris discuss what goes into developing, marketing, and keeping an iPhone application fresh and new. http://www.cengage.com/marketing/boo k_content/1439039429_lamb/part_videos /part03.html