MKTG8

Service and
Nonprofit
Organizatio
n Marketing
Chapter
12McDaniel
Lamb, Hair,
2014-2015
Cengage Learning 2015. 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

2015 by Cengage Learning Inc. All Rights Reserved.
Discuss relationship marketing in services
Explain internal marketing in services
Describe nonprofit organizational

marketing
Discuss global issues in services

marketing
The Importance of Services
Discuss the
importance of
services to the
economy
1
The Importance of
Services
Service industries
accounted for 68 percent
of U.S. GDP in 2012.
Services involve:
Deeds
Performances
Efforts
1
How Services Differ from Goods
Discuss the
differences
between services
and goods
2
How Services
Differ from Goods
Intangible
Intangible
Inseparable
Inseparable
Heterogeneous
Heterogeneous
Perishable
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.
2
Service Quality
Describe the
components
of service
quality
and the gap
model
of service
quality
9
3
Components of Service
Quality
Reliability
Reliability
The
The ability
ability to
to perform
perform the
the
service
service right
right the
the first
first time.
time.
Responsiveness
Responsiveness
The
The ability
ability to
to provide
provide
prompt
prompt service.
service.
Assurance
Assurance
The
The knowledge
knowledge and
and courtesy
courtesy
of
of employees.
employees.
Empathy
Empathy
Caring,
Caring, individualized
individualized
attention
attention to
to customers.
customers.
Tangibles
Tangibles
The
The physical
physical evidence
evidence
of
of the
the service.
service.
3
10
Exhibit 12.1
Gap Model of Service Quality
3
11
Marketing Mixes for Services
Develop marketing
mixes for services
12
4
Product Strategies
for Services
Service as a
Process
Core and
Supplementary
Customization/
Standardization
Service
Mix
4
13
Service as a Process
People
People
Processing
Processing
Possession
Possession
Processing
Processing
Mental
MentalStimulus
Stimulus
Processing
Processing
Information
Information
Processing
Processing
4
14
The Service Offering

Core
Core
Service
Service
The
The most
most basic
basic benefit
benefit
the
the
consumer
consumer is
is buying.
buying.
Supplementary
Supplementary
Service
Service
A
A group
group of
of services
services that
that
support
support or
or enhance
enhance the
the
core
core service.
service.
4
15
Customization/Standardiza
tion
Mass
Mass
Customization
Customization
A strategy that uses

technology to deliver
customized services
on a mass basis.
4
16
The Service Mix

Determine which new services to
introduce
Determine the target market
Decide which existing services to
maintain and which to eliminate
4
17
Place (Distribution)
Strategy
Convenience
Convenience
Number
Number of
of outlets
outlets
Direct
Direct or
or indirect
indirect
distribution
distribution
Location
Location
Scheduling
Scheduling
4
18
Promotion Strategy
Stress tangible cues
Use personal information
sources
Create a strong
organizational image
Engage in postpurchase
communication
4
19
Price Strategy
Pricing Challenges for Services
Define the unit of service consumption
Determine if multiple elements are
bundled or priced separately
4
20
Pricing Objectives
Revenue-Oriented
Pricing
Maximize the surplus of

income over costs
OperationsOriented
Pricing
Match supply and demand

by varying price
PatronageOriented
Pricing
Maximize the number of

customers by varying price
4
21
Relationship Marketing in Services
Discuss
relationship
marketing in
services
22
5
Relationship
Marketing in Services
3
Structural
Social
Financial
2
Social
Financial
Creating valueadded services

not available
elsewhere
Design services
to meet
customer needs
1
Financial
Pricing
incentives
5
23
Internal Marketing in Service Firms
Explain internal
marketing in
services
24
6
Internal Marketing
Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.
6
25
Nonprofit Organization Marketing

Describe
nonprofit
organization
marketing
26
7
Nonprofit Organization
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
7
27
Marketing
Market
Market intangible
intangible products
products
Shared
Shared
Characteristics
Characteristics
with
with
Service
Service
Organizations
Organizations
Production
Production requires
requires
customers
customers presence
presence
Services
Services vary
vary greatly
greatly
Services
Services cannot
cannot be
be stored
stored
7
28
Marketing Activities
Identify
Identify desired
desired customers
customers
Specify
Specify objectives
objectives
Develop,
Develop, manage,
manage, eliminate
eliminate programs
programs
and
and services
services
Decide
Decide on
on prices
prices
Schedule
Schedule events
events or
or programs
programs
Communicate
Communicate their
their availability
availability
7
29
Unique Aspects of Nonprofit

Organization Marketing Strategies
Setting of marketing objectives
Selection of target markets
Development of marketing mixes
7
30
Objectives
Provide services that respond to the
wants of:
Users
Payers
Appointed
officials
Donors
Media
Politicians
General Public
7
31
Target Markets
Apathetic
Apathetic or
or
strongly
strongly opposed
opposed
targets
targets
Pressure
Pressure to
to adopt
adopt
undifferentiated
undifferentiated
segmentation
segmentation
Unique Issues
of Nonprofit
Organizations
Complementary
Complementary
positioning
positioning
7
32
Product Decisions
Distinctions between
Business and Nonprofit Organizations
Benefit complexity
Weak or indirect benefit
strength
Low involvement
7
33
Promotion Decisions
Professional volunteers
Sales promotion activities

Public service advertising
7
34
Pricing Decisions
Pricing
Pricing objectives
objectives
Characteristics
Characteristics
Distinguishing
Distinguishing
Pricing
PricingDecisions
Decisions
of
ofNonprofit
Nonprofit
Organizations
Organizations
Nonfinancial
Nonfinancial prices
prices
Indirect
Indirect payment
payment
Separation
Separation between
between
payers
payers and
and users
users
Below-cost
Below-cost pricing
pricing
7
35
Global Issues in Services

Marketing
Discuss global
issues
in services
marketing
36
8
Global Issues in
Services Marketing
The U.S. is the worlds largest
exporter of services.
The marketing mix must
reflect each countrys cultural,
technological, and political
environment.
8
37
Chapter 12 Video
Pepes Pizzeria
Pepes is a family owned and operated pizzeria in
Connecticut. The original Pepe earned the
nickname Old Reliable for his customer service,
and his grandchildren carry out that value today.
This video discusses the various ways that Pepes
Pizzeria works to provide great, consistent service
and why it is important.
CLICK TO PLAY VIDEO
38
Cengage Learning Inc. 2015. All Rights Reserved.
Part 3 Video
Scripps Networks Interactive
Product Decisions
Scripps Networks Interactive is a media
company that operates popular channels such
as Food Network, DIY, and other lifestyle
channels. In this video, employees discuss
how Scripps manages and develop their new
cross-platform products, such as social media
and apps for mobile devices.
CLICK TO PLAY VIDEO
39
Cengage Learning Inc. 2015. All Rights Reserved.

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Service and

Cengage Learning 2015. All Rights

Discuss the importance of services to the

Discuss the differences between services

Describe the components of service quality

Develop marketing mixes for services

Discuss relationship marketing in services

Explain internal marketing in services

Describe nonprofit organizational

Discuss global issues in services

2015 by Cengage Learning Inc. All Rights Reserved.

The Importance of Services

How Services Differ from Goods

No physical object makes it hard to

When Services are

Marketing Mixes for Services

The Service Offering

A strategy that uses

The Service Mix

Maximize the surplus of

Match supply and demand

Maximize the number of

Relationship Marketing in Services

Creating valueadded services

Internal Marketing in Service Firms

Nonprofit Organization Marketing

Unique Aspects of Nonprofit

Sales promotion activities

Global Issues in Services

Cengage Learning Inc. 2015. All Rights Reserved.

Cengage Learning Inc. 2015. All Rights Reserved.

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