Chapter 11 Services andNonprofit Organization Marketing

‘‘Product’ EssentialsProduct’ Essentials

TOTALMARKETINGEFFORTS

TOTALMARKETINGEFFORTS

Idea(ambiguous)

Idea(ambiguous)

Product(tangible)

Product(tangible)

Service(intangible) Service(intangible)

ProductPlanning ProductPlanning

TheOffering

TheOffering

The Goods/Services ContinuumThe Goods/Services Continuum

Computerdiskette

Computersoftware Computer Computer

programSystemsdesign

Please note: The above continuum should be viewed left to right. Within each row,a consistent pattern moves from pure good to pure service. When comparing differentrows, less consistency exists due to the diversity of examples shown.

Exerciseequipment

Off-the-rack

furniture

Self-servicegasoline

In-homerental of

equipment

Custom-made

furniture

Full-servicegasoline

Use ofequipment

in hotel

Pure goods Pure services

Health andfitnessclubs

Cleaningfurniture

Driver ed.(firm’s car)

Personaltrainer

Interiordecorator

Driver ed.(consumer’s

car)

Reuphol-stering

furniture

Trans-missionoverhaul

AccumulationStorageReuse

Reminder ofTransaction

AccumulationStorageReuse

Reminder ofTransaction

IntangibleIntangible

Character of ServicesCharacter of ServicesCharacter of ServicesCharacter of Services

ProductsProductsProductsProducts

ObjectsObjects

TangibleTangible

Ownership & UseOwnership & Use

ServicesServicesServicesServices

Memory ofTransactionMemory of

Transaction

PerformancesPerformances

UseUse

Character of ServicesCharacter of Services

ProductsProductsProductsProducts

Costs SeenCosts Seen

ServicesServicesServicesServices

Costs not SeenCosts not Seen

InvisibleInvisible VisibleVisible

Purchase Behavior for ServicesPurchase Behavior for Services

ProductsProductsProductsProductsServicesServicesServicesServices

ExperienceAttributes

ExperienceAttributes

CredenceAttributesCredenceAttributes

Price More as aSurrogate of Quality

Price More as aSurrogate of Quality

Price Less as aSurrogate of Quality

Price Less as aSurrogate of Quality

Difficult toJudge Quality

Difficult toJudge Quality

SearchAttributesSearch

Attributes

Easier toJudge Quality

Easier toJudge Quality

(restaurant)

(healthcare)

(color)

Characteristics of ServicesCharacteristics of Services

IntangibilityIntangibilityIntangibilityIntangibility

InseparabilityInseparabilityInseparabilityInseparability

HeterogeneityHeterogeneityHeterogeneityHeterogeneity

PerishabilityPerishabilityPerishabilityPerishability

Services that cannot be touched, seen, tasted, heard, or felt in the

same manner as goods.

Services that cannot be touched, seen, tasted, heard, or felt in the

same manner as goods.

A characteristic of services that allows them to be produced and

consumed simultaneously.

A characteristic of services that allows them to be produced and

consumed simultaneously.

A characteristic of services that makes them less standardized

and uniform than goods.

A characteristic of services that makes them less standardized

and uniform than goods.

A characteristics of services that prevents them from being stored,

warehoused, or inventoried.

A characteristics of services that prevents them from being stored,

warehoused, or inventoried.

Components of Service QualityComponents of Service Quality

TangiblesTangibles

EmpathyEmpathy

AssuranceAssurance

ResponsivenessResponsiveness

ReliabilityReliability

The physical evidence of a service.

The physical evidence of a service.

Caring, individualized attention to customers.Caring, individualized attention to customers.

The knowledge and courtesyof employees.

The knowledge and courtesyof employees.

The ability to provideprompt service

The ability to provideprompt service

The ability to perform the service right the first time.The ability to perform the service right the first time.

Which Components are Most Which Components are Most Important to Customers?Important to Customers?

1. Reliability - 32%1. Reliability - 32%

2. Responsiveness - 22%2. Responsiveness - 22%

3. Assurance - 19%3. Assurance - 19%

4. Empathy - 16%4. Empathy - 16%

5. Tangibles - 11%5. Tangibles - 11%

Importance of Service QualityImportance of Service Quality

Businesses with high Service Quality Businesses with high Service Quality havehave

1. 10% higher prices1. 10% higher prices

2. Grow 6% faster2. Grow 6% faster

3. 12% high return on sales3. 12% high return on sales

Hard Customer-Defined Hard Customer-Defined Service StandardsService Standards

• Federal Express # missed pickupsFederal Express # missed pickups

• Dun & Bradstreet 36 hour turnaroundDun & Bradstreet 36 hour turnaround

• U.S. Healthcare 20-second call answeringU.S. Healthcare 20-second call answering

• Lenscrafters glasses in an hourLenscrafters glasses in an hour

Soft Customer-Defined Soft Customer-Defined Service StandardsService Standards

• Land’s End personal attentionLand’s End personal attention

• General Electric summarize actionsGeneral Electric summarize actions

• Nationwide Insurance responsivenessNationwide Insurance responsiveness

• American Express open and honestAmerican Express open and honest

Bottom Line for Bottom Line for Service QualityService Quality

1. Clear and reasonable promises1. Clear and reasonable promises

2. Build staff skills2. Build staff skills

3. Emphasize ‘Do-It-Right-First’ 3. Emphasize ‘Do-It-Right-First’ performanceperformance

4. Be great at problem resolution4. Be great at problem resolution

5. Make it easy for customers to 5. Make it easy for customers to complaincomplain

The Importance of Services

79% of workers are inservice sector

79% of workers are inservice sector

Services account for 76% of U.S. GDP

Services account for 76% of U.S. GDP

Service occupations will be responsible for all job growth

through 2005

Service occupations will be responsible for all job growth

through 2005

11

Gap Model of Service QualityGap Model of Service QualityExpectedService

PerceivedService

Servicedelivery

Service QualitySpecifications

Mgt. Perceptions ofCon. Expectations

Communicationwith Customers

Provider

Gap 1

Consumer

Gap 5

Gap 4

Gap 3

Gap 2

Gap Legend Knowledge gap Standards gap Delivery gap Communications gap Service gap

Core and Supplementary ServicesCore and Supplementary Services

Overnight Overnight transportation transportation and delivery and delivery of packagesof packages

Problem solving

Billing statements

TracingDocumentation

Order taking

Supplies

Pickup

Advice andinformation

Promotion Strategy IssuesPromotion Strategy Issues

Stress tangible cues

Use personal information sources

Create a strongorganizational image

Engage in postpurchase communication

ServiceServicePromotion Promotion StrategiesStrategies

ServiceServicePromotion Promotion StrategiesStrategies

Price StrategyPrice Strategy

Pricing Pricing ChallengesChallenges

Pricing Pricing ChallengesChallenges

Trends have Trends have made pricing an made pricing an

active component active component

Trends have Trends have made pricing an made pricing an

active component active component

Define unit of Define unit of service consumptionservice consumption

Define unit of Define unit of service consumptionservice consumption

Determine if multiple Determine if multiple elements are “bundled”elements are “bundled”Determine if multiple Determine if multiple

elements are “bundled”elements are “bundled”

Internal Marketing ActivitiesInternal Marketing Activities

StressingTeamworkStressingTeamwork

Competing for Talent

Competing for Talent

Offeringa VisionOfferinga Vision

TrainingEmployeesTraining

Employees

EmpowermentEmpowermentKnowing

Employees’ Needs

KnowingEmployees’

NeedsRewarding

PerformanceRewarding

Performance

InternalInternalMarketingMarketingActivitiesActivities

Global Issues in Global Issues in Services MarketingServices Marketing

FinancialFinancial

ConstructionConstruction

EngineeringEngineering

InsuranceInsurance

Restaurant ChainsRestaurant Chains

U.S. is world’s U.S. is world’s largest largest

exporter of servicesexporter of services

Differences Between Nonprofit andDifferences Between Nonprofit andProfit-Oriented MarketingProfit-Oriented Marketing

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ScopeScopeForms of exchangeForms of exchangeComplexity of objectivesComplexity of objectivesDistribution of benefitsDistribution of benefitsMarket segments servedMarket segments servedConstituenciesConstituencies

ScopeScopeForms of exchangeForms of exchangeComplexity of objectivesComplexity of objectivesDistribution of benefitsDistribution of benefitsMarket segments servedMarket segments servedConstituenciesConstituencies

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DifferencesDifferences

Illustrations of Nonprofit MarketingIllustrations of Nonprofit Marketing

Examples of Social Marketing:Examples of Social Marketing:

Choose to Save - Am Savings Ed CampaignChoose to Save - Am Savings Ed Campaign(see http://www.choosetosave.org(see http://www.choosetosave.org Also see www.financenter.com)Also see www.financenter.com)

Road RageRoad Rage

Take folic acidTake folic acid

Designated driverDesignated driver

International Women’s RightsInternational Women’s Rights

164 Fº beef164 Fº beef

Examples of Social Marketing:Examples of Social Marketing:

Choose to Save - Am Savings Ed CampaignChoose to Save - Am Savings Ed Campaign(see http://www.choosetosave.org(see http://www.choosetosave.org Also see www.financenter.com)Also see www.financenter.com)

Road RageRoad Rage

Take folic acidTake folic acid

Designated driverDesignated driver

International Women’s RightsInternational Women’s Rights

164 Fº beef164 Fº beef

For-Profit Support of NonprofitsFor-Profit Support of Nonprofits

Social MarketingSocial Marketing

Strategic PhilanthropyStrategic Philanthropy

CharityCharity

AMEX’s ‘Charge Against Hunger’AMEX’s ‘Charge Against Hunger’

Walker’s ‘Corporate Citizenship’Walker’s ‘Corporate Citizenship’TOP: Nonprofits, Computer & FoodTOP: Nonprofits, Computer & FoodBOTTOM: Government, Insurance, BOTTOM: Government, Insurance, Chemicals & TobaccoChemicals & Tobacco

Social MarketingSocial Marketing

Strategic PhilanthropyStrategic Philanthropy

CharityCharity

AMEX’s ‘Charge Against Hunger’AMEX’s ‘Charge Against Hunger’

Walker’s ‘Corporate Citizenship’Walker’s ‘Corporate Citizenship’TOP: Nonprofits, Computer & FoodTOP: Nonprofits, Computer & FoodBOTTOM: Government, Insurance, BOTTOM: Government, Insurance, Chemicals & TobaccoChemicals & Tobacco

Importance of Social MarketingImportance of Social Marketing

http://www.social-marketing.org/

Nonprofit OrganizationsNonprofit Organizations

GovernmentGovernment

Private MuseumsPrivate Museums

TheatersTheaters

SchoolsSchools

ChurchesChurches

Other Non-governmentOther Non-government

Nonprofit Organizations

Nonprofit Organizations

Nonprofit Organization MarketingNonprofit Organization Marketing

Market intangible productsMarket intangible products

Production requires customer’s presenceProduction requires customer’s presence

Services vary greatlyServices vary greatly

Services can not be storedServices can not be stored

Shared Shared Characteristics Characteristics

with with Service Service

OrganizationsOrganizations

Shared Shared Characteristics Characteristics

with with Service Service

OrganizationsOrganizations

Nonprofit Organization Nonprofit Organization Marketing ActivitiesMarketing Activities

Identify Desired CustomersIdentify Desired Customers

Specify ObjectivesSpecify Objectives

Develop, manage, eliminate programs/services

Develop, manage, eliminate programs/services

Set pricesSet prices

Schedule eventsSchedule events

Communicate through advertising/PRCommunicate through advertising/PR

Market ObjectivesMarket Objectives

• Users

• Payers

• Donors

• Politicians

• Appointed officials

• Media

• General Public

Provide Services to:

Provide Services to:

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 Unique Issues of Nonprofitof Nonprofit

OrganizationsOrganizations

Product DecisionsProduct Decisions

BenefitComplexity

BenefitComplexity

WeakBenefit Strength

WeakBenefit Strength

Low Involvement

Low Involvement

Distinctions betweenDistinctions betweenBusiness and NonprofitBusiness and Nonprofit

OrganizationsOrganizations

Promotion DecisionsPromotion Decisions

Sales PromotionActivities

Public ServiceAdvertising

Licensing

ProfessionalVolunteers

NonprofitNonprofitOrganizationOrganizationPromotion Promotion DecisionsDecisions

NonprofitNonprofitOrganizationOrganizationPromotion Promotion DecisionsDecisions

Pricing DecisionsPricing Decisions

Below-Cost PricingBelow-Cost Pricing

Separation BetweenPayers and Users

Separation BetweenPayers and Users

Indirect PaymentIndirect Payment

Nonfinancial PricesNonfinancial Prices

Pricing ObjectivesPricing Objectives

Characteristics Characteristics DistinguishingDistinguishing

Pricing DecisionsPricing Decisionsof Nonprofit of Nonprofit

OrganizationsOrganizations

Characteristics Characteristics DistinguishingDistinguishing

Pricing DecisionsPricing Decisionsof Nonprofit of Nonprofit

OrganizationsOrganizations

• How do the characteristics of services apply to Boyne’s offerings?

• Explain the core and supplementary services for Boyne.

• What about distribution?• How does Boyne match supply and demand for their

services?

Boyne USABoyne USA

http://www.boyne.com/