Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 12 Services and Nonprofit Organization Marketing

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 12

Services and Nonprofit Organization Marketing

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The Importanceof Services

10 20 30 40 50 60 70 80 90 100

80%

Services as a percentage of employment (Projected by 2018)

ServicesDeedPerformanceEffort

DeedPerformanceEffort

LO1


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


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.

LO2


Components 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.

LO3


Service Quality Written Assignment

• Research has shown that customers evaluate service quality based on five components: Reliability, Assurance, Tangibility, Empathy, and Responsiveness.

• The goal of this assignment is for you to rate the quality of a service experience you have recently encountered.

• In this WRITTEN and TYPED assignment, you must do the following:1. Describe the service experience (include location, time, date, and basic

description)

2. Describe the service encounter based on the RATER method.

1. Make sure you define each component.

2. Explain how you evaluate the service experience based on that component. Use examples from your service experience as proof.

3. Be prepared to discuss your findings with the class.


LO3

Exhibit 12.1Exhibit 12.1Gap Model of Gap Model of

Service QualityService Quality


Product Strategies for Services

ServiceMix

Customization or

Standardization

Core andSupplementary

Process

LO4


Service as a Process

Mental StimulusProcessing

Mental StimulusProcessing

People Processing

People Processing

PossessionProcessing

PossessionProcessing

InformationProcessing

InformationProcessing

LO4


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


LO4

Exhibit 12.2Exhibit 12.2Core and Supplementary Services Core and Supplementary Services for a Luxury Hotelfor 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


Customization/Standardization

A strategy that uses

technology to deliver

customized services

on a mass basis.

MassCustomization

MassCustomization

LO4


The Service Mix

Determine what new services to introduce

Determine target market

Decide what existing services to maintain and to eliminate

LO4


Place (Distribution) Strategy

SchedulingScheduling

LocationLocation

Direct or indirect distribution

Direct or indirect distribution

Number of outletsNumber of outlets

ConvenienceConvenience

LO4


Promotion Strategy

Stress tangible cues

Use personal information sources

Create a strong organizational image

Engage in postpurchase communication

LO4


Price Strategy

Pricing Challenges for Services

Define the unit of service consumption

Determine if multiple elements are “bundled” or priced separately

LO4


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

LO4


2Social

Financial

1Financial

3Structural

SocialFinancial

Pricing incentives

Design services to meet customer needs

Creating value-added services not available elsewhere

RelationshipMarketing in Services

LO5


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


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


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


Unique Aspects of Nonprofit Organization Marketing Strategies

• Setting of marketing objectives

• Selection of target markets

• Development of marketing mixes

LO8


Objectives

Provide services that respond to the wants of :

Users

Payers

Donors

Politicians

Appointed officials

Media

General Public

LO8


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


Product Decisions

Distinctions between Business and Nonprofit Organizations

Benefit complexity

Weak or indirect benefit strength

Low involvement

LO8


Promotion Decisions

Sales promotion activities

Public service advertising

Professional volunteers

LO8


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


Assignment• All people know quality when they see it – or do they? Let’s take a look at

some goods and services and then think about assessing their quality.

1. Using the abbreviations in parentheses, place each of the following products and services along the continuum below: a new car (C), designer jeans (J), car oil change (O), dress dry cleaning (D), haircut (H), tax preparation software (T), college education (E).

----------------------------------------------------------------------------------------------100% Physical Good 100% Service

2. Once you have placed the items along the continuum, consider how easy it is to assess the quality of each item.

----------------------------------------------------------------------------------------------Easy to Assess Quality Difficult to Assess Quality

3. What assumptions can you make about the ability to assess the quality of goods compared to services? Is it easier to assess the quality of some goods than others? What about for services?

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Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 12 Services and Nonprofit Organization Marketing