1. Lamb, Hair, McDaniel
Chapter 12
Service and
Nonprofit
Organization
Marketing
2013-2014

2. © 2013 by Cengage Learning Inc. All Rights Reserved. 2
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
1
4
2
3

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Discuss relationship marketing in
services
Explain internal marketing in services
Discuss global issues in services
marketing
Describe nonprofit organization
marketing
1
4
2
3

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Discuss the importance
of services to the
economy
The Importance of Services
1

5. The Importance of Services
During recession, ten of eleven
service sectors had increased
revenues.
Services involve:
• Deed
• Performance
• Effort
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1

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Discuss the differences
between services and
goods
How Services Differ from Goods
2

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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

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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

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Describe the
components
of service quality
and the gap model
of service quality
Service Quality
3

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Components of Service Quality
Tangibles
The physical evidence
of the service.
Empathy
Caring, individualized
attention to customers.
Assurance
The knowledge and courtesy
of employees.
Responsiveness
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
3

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Develop marketing mixes
for services
Marketing Mixes for Services
4

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Product Strategies
for Services
Service
Mix
Customization
or
Standardization
Core and
Supplementary
Process
4

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Service as a Process
Mental Stimulus
Processing
People
Processing
Possession
Processing
Information
Processing
4

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The Service Offering
Core
Service
Supplementary
Service
The most basic benefit the
consumer is buying.
A group of services that
support or enhance the
core service.
4

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Customization/Standardization
A strategy that uses
technology to deliver
customized services
on a mass basis.
Mass
Customization
4

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The Service Mix
Determine what new services to
introduce
Determine target market
Decide what existing services to
maintain and to eliminate
4

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18
Place (Distribution) Strategy
Scheduling
Location
Direct or indirect
distribution
Number of outlets
Convenience
4

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Promotion Strategy
Stress tangible cues
Use personal information
sources
Create a strong
organizational image
Engage in postpurchase
communication
4

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Price Strategy
Define the unit of service
consumption
Determine if multiple elements
are “bundled” or priced
separately
Pricing Challenges for Services
4

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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

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Discuss relationship
marketing in services
Relationship Marketing in Services
5

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Relationship
Marketing in Services
2
Social
Financial
1
Financial
3
Structural
Social
Financial
Pricing
incentives
Design services
to meet
customer needs
Creating value-
added services
not available
elsewhere
5

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Explain internal
marketing in services
Internal Marketing in Service Firms
6

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Internal Marketing
Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.
6

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Discuss global issues
in services marketing
Global Issues in Services Marketing
7

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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

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Describe nonprofit
organization marketing
Nonprofit Organization Marketing
8

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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

30. Nonprofit Organization
Marketing
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Market intangible products
Production requires
customer’s presence
Services vary greatly
Services cannot be stored
Shared
Characteristics
with
Service
Organizations
8

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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

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• Setting of marketing objectives
• Selection of target markets
• Development of marketing mixes
Unique Aspects of Nonprofit
Organization Marketing Strategies
8

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Objectives
Provide services that respond to the
wants of :
 Users
 Payers
 Donors
 Politicians
 Appointed
officials
 Media
 General Public
8

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Target Markets
Apathetic or
strongly opposed
targets
Pressure to adopt
undifferentiated
segmentation
Complementary
positioning
Unique Issues
of Nonprofit
Organizations
8

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 Benefit complexity
 Weak or indirect benefit strength
 Low involvement
Product Decisions
Distinctions between
Business and Nonprofit Organizations
8

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Promotion Decisions
Sales promotion activities
Public service advertising
Professional volunteers
8

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Pricing Decisions
Below-cost pricing
Separation between
payers and users
Indirect payment
Nonfinancial prices
Pricing objectives
Characteristics
Distinguishing
Pricing Decisions
of Nonprofit
Organizations
8

38. © Cengage Learning Inc. 2013. All Rights Reserved.38
Chapter 12 Video
Pepe’s Pizzeria
Pepe’s 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 Pepe’s
Pizzeria works to provide great, consistent service
and why it is important.
CLICK TO PLAY VIDEO

39. © Cengage Learning Inc. 2013. All Rights Reserved.39
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