Services and

Nonprofit Organization Marketing

11
chapter

Prepared by
Deborah Baker
Texas Christian University

Chapter 11 Version 6e ©2002 South-Western 1

 Learning Objectives
1. Discuss the importance of services to the
economy.

11 2. Discuss the differences between services

and goods.
chapter

3. Describe the components of service quality

and the gap model of service quality.

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 Learning Objectives (continued)
4. Explain why services marketing is
important to manufacturers.

5. Develop marketing mixes for services.

11
6. Discuss relationship marketing in services.
chapter

7. Explain internal marketing in services.

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 Learning Objectives (continued)
8. Discuss global issues in services
marketing.

9. Describe nonprofit organization marketing.

11
10.Explain the unique aspects of nonprofit
organization marketing.
chapter

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 1
Learning Objective

Discuss the importance of

services to the economy.

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 1
Service

The result of applying human

or mechanical efforts to
people or objects.

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 1
The Importance of Services

79%
79% of
of workers
workers are
are in
in
service
service sector
sector

Services
Services account
account for
for
76%
76% of
of U.S.
U.S. GDP
GDP

Service
Service occupations
occupations willwill be
be
responsible
responsible for
for all
all job
job growth
growth
through
through 2005
2005

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 2
Learning Objective

Discuss the differences

between services and goods.

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 2
How Services Differ from Goods
Intangibility
Intangibility

Characteristics
Characteristics Inseparability
Inseparability
That
That
Distinguish
Distinguish
Services
Services Heterogeneity
Heterogeneity

Perishability
Perishability

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 2
Characteristics of Services
Services
Services that
that cannot
cannot be be touched,
touched,
Intangibility
Intangibility seen,
seen, tasted,
tasted, heard,
heard, or or felt
felt in
in the
the
same
same manner
manner as as goods.
goods.
A
A characteristic
characteristic ofof services
services that
that
Inseparability
Inseparability allows
allows them
them to
to be
be produced
produced and and
consumed
consumed simultaneously.
simultaneously.
A
A characteristic
characteristic ofof services
services that
that
Heterogeneity
Heterogeneity makes
makes them
them less
less standardized
standardized
and
and uniform
uniform than
than goods.
goods.
A
A characteristics
characteristics of of services
services that
that
Perishability
Perishability prevents
prevents them
them from
from being
being stored,
stored,
warehoused,
warehoused, or or inventoried.
inventoried.
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 3
Learning Objective

Describe the components of service quality

and the gap model of service quality.

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 3
Service Quality
Reliability
Reliability

Responsiveness
Responsiveness
Components
Components forfor
Evaluating
Evaluating Assurance
Assurance
Service
Service Quality
Quality
Empathy
Empathy

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

GAP 5
Perceived
Perceived Service
Service

Provider Service Delivery GAP 4 Communication

Service Delivery Communication
GAP 1 with
with Customers
Customers
GAP 3
Quality
Quality Specifications
Specifications
GAP 2
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Mgmt perception
perception
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 4
Learning Objective

Explain why services marketing

is important to manufacturers.

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Services Marketing in 4
Manufacturing

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 5
Learning Objective

Develop marketing mixes for services.

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 5
Marketing Mixes for Services
People
People
Processing
Processing
Product
(Service) Possession
Possession
Strategy Processing
Processing

Information
Information
Processing
Processing

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 5
Core and Supplementary Services

Core
Core The
The more
more basic
basic benefit
benefit the
the
Service
Service consumer
consumer is
is buying.
buying.

Supplementary
Supplementary A
A group
group of
of services
services that
that support
support
Service
Service or
or enhance
enhance the
the core
core service.
service.

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 5
Core and Supplementary Services

Problem solving Advice and

Order taking
information

Overnight
Billing transportation Supplies
statements and delivery
of packages

Tracing Pickup
Documentation

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 5
Mass Customization

A strategy that uses

technology to deliver
customized services on a
mass basis.

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 5
Mass Customization
High
Customization

Customized Mass
Focus Customization

Standardized
Focus
Low

High Low
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 5
Service Mix Strategy

 Determine what new services to

introduce

 Determine target market

 Decide what existing services to

maintain and/or eliminate

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 5
Distribution Strategy Issues
Convenience
Convenience

Number
Number of
of Outlets
Outlets
Focus
Focus for
for
Direct
Direct vs.
vs. Indirect
Indirect
Distribution
Distribution Distribution
Distribution
Strategies
Strategies
Location
Location

Scheduling
Scheduling
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 5
Promotion Strategy Issues
Stress tangible cues

Use personal
Service
Service information sources
Promotion
Promotion
Strategies
Strategies Create a strong
organizational image

Engage in postpurchase
communication
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 5
Price Strategy
Define
Define unit
unit of
of
service
service consumption
consumption

Pricing Determine
Determine ifif multiple
multiple
Challenges elements
elements are
are “bundled”
“bundled”

Trends
Trends have
have
made
made pricing
pricing an
an
active
active component
component

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 5
Pricing Objectives

Categories
Categories of
of
Pricing
Pricing
Objectives
Objectives

Patronage-
Patronage-
Revenue-Oriented
Revenue-Oriented Oriented
Oriented
Pricing
Pricing Pricing
Pricing
Operations-
Operations-
Oriented
Oriented
Pricing
Pricing

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 6
Learning Objective

Discuss relationship marketing

in services.

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Relationship Marketing 6
in Services

Level 3
Three Levels Financial, Social, Structural
of
Relationship Level 2
Marketing Financial, Social

Level 1
Financial

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 Relationship Marketing 6
in Services
Level Type of Degree of Main element Potential for
bond service of marketing long-term
customization mix advantage
over competitors
One Financial Low Price Low

Two Financial Medium Personal Medium

and social communication

Three Financial, Medium to Service High

social, and high delivery
structural

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 7
Learning Objective

Explain internal marketing

in services.

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 7
Internal Marketing

Treating employees as
customers and developing
systems and benefits that
satisfy their needs.

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 7
Internal Marketing Activities
Competing
Competing Offering
Offering Training
Training Stressing
Stressing
for
for Talent
Talent aa Vision
Vision Employees
Employees Teamwork
Teamwork

Knowing
Knowing
Empowerment Rewarding
Rewarding
Empowerment Employees’
Employees’
Performance
Performance Needs
Needs
Internal
Marketing
Activities

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 8
Learning Objective

Discuss global issues

in services marketing.

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 Global Issues in 8
Services Marketing
Financial
Financial

Construction
Construction

Engineering
Engineering

Insurance
Insurance
U.S. is world’s
largest Restaurant
Restaurant Chains
Chains
exporter of services

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 9
Learning Objective

Describe nonprofit
organization marketing.

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 9
Nonprofit Organization Marketing

An organization that exists to

achieve some goal other than
the usual business goals of
profit, market share, or return
on investment.

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 9
Nonprofit Organizations
Government
Government

Private
PrivateMuseums
Museums

Theaters
Theaters

Schools
Schools
Nonprofit
Nonprofit
Organizations
Organizations Churches
Churches

Other
Other Non-government
Non-government
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 9
Nonprofit Organization Marketing
Market
Market intangible
intangible products
products

Shared Production
Production requires
requires
Shared
Characteristics customer’s
customer’s presence
presence
Characteristics
with
with
Service
Service
Organizations Services
Services vary
vary greatly
greatly
Organizations

Services
Services can
can not
not be
be stored
stored

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Nonprofit Organization 9
Marketing Activities
Identify
Identify Desired
Desired Customers
Customers

Specify
Specify Objectives
Objectives

Develop,
Develop, manage,
manage, eliminate
eliminate
programs/services
programs/services

Set
Set prices
prices

Schedule
Schedule events
events

Communicate
Communicate
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 10
Learning Objective

Explain the unique aspects of

nonprofit organization marketing.

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Unique Aspects of Nonprofit 10
Organization Marketing Strategies

Unique
UniqueAspects
Aspectsof
of
Marketing
MarketingofofNonprofit
Nonprofit
Organizations
Organizations

Market
Market Marketing
Marketing
Objectives
Objectives Mixes
Mixes

Target
Target
Markets
Markets

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 10
Market Objectives
Provide
Provide Services
Services
to:
to:
 Users  Appointed
 Payers officials
 Donors  Media

 Politicians  General Public

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 10
Target Markets
Apathetic
Apathetic or
or
strongly
strongly opposed
opposed
targets
targets

Pressure
Pressure to
to adopt
adopt Unique Issues
undifferentiated
undifferentiated of Nonprofit
segmentation
segmentation Organizations

Complementary
Complementary
positioning
positioning
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 10
Product Decisions
Benefit
Benefit Distinctions between
Complexity
Complexity Business and Nonprofit
Organizations

Weak
Weak
Benefit
Benefit Strength
Strength

Low
Low
Involvement
Involvement
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 10
Promotion Decisions
Professional
Volunteers

Nonprofit Sales Promotion

Organization Activities
Promotion
Decisions Public Service
Advertising

Licensing
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 10
Pricing Decisions
Pricing
Pricing Objectives
Objectives

Nonfinancial
Nonfinancial Prices
Prices
Characteristics
Characteristics
Distinguishing
Distinguishing
Pricing
Pricing Decisions
Decisions Indirect
Indirect Payment
Payment
of
of Nonprofit
Nonprofit
Organizations
Organizations
Separation
Separation Between
Between
Payers
Payers and
and Users
Users

Below-Cost
Below-Cost Pricing
Pricing
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