Download MARKETING MIXES FOR SERVICES

CHAPTER TWELVE
SERVICES AND NONPROFIT
ORGANIZATION MARKETING
Prepared by Jack Gifford
Miami University (Ohio)
©
2000 South-Western College Publishing
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IMPORTANCE OF SERVICES
A
service is the result of applying human
or mechanical efforts to people or objects
Services involve a deed, a performance,
or an effort that cannot be physically
possessed
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2000 South-Western College Publishing
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IMPORTANCE OF SERVICES
80%
Service
Sector
70%
60%
SERVICE
WORKERS
50%
40%
GDP
Nonservice
Workers
30%
20%
10%
More than 8 of 10
workers currently labor
to produce services
0%
Service Product
The service sector accounts for 74% of the U.S.
Gross Domestic Product
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2000 South-Western College Publishing
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HOW SERVICES DIFFER FROM GOODS
Intangibility
Inseparability
Heterogeneity
Perishability
©
They cannot be touched,
seen, tasted, heard, or felt or
stored.
 Few search qualities
(characteristics that can be
easily assessed before
purchase)
 More experience quality (can
be assessed only after use)
 Credence quality (difficult to
assess even after purchase;
i.e. medical services)

2000 South-Western College Publishing
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HOW SERVICES DIFFER FROM GOODS

Intangibility
Inseparability
Production and consumption
activities are inseparable
 Airline
and flight from A to B
 Surgeon and patient

Heterogeneity
Services cannot normally be
produced in a centralized
location and consumed in
decentralized locations
 Your
Perishability
©
hotel room and you must be
in the same physical location

Service quality is largely
dependent upon the quality of
employees
2000 South-Western College Publishing
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HOW SERVICES DIFFER FROM GOODS
Services tend to be less
standardized and uniform than
products due to their
dependence upon the
performance of individual
employees/individuals
 Some level of consistency is
gained through training,
standard operating procedures,
and mechanization of support
areas

Intangibility
Inseparability
Heterogeneity
Perishability
 Airport
X-ray surveillance
 Automatic coin receptacles on
toll roads
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2000 South-Western College Publishing
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HOW SERVICES DIFFER FROM GOODS
Intangibility

Services cannot be stored,
warehoused or inventoried
 An
empty seat in a theatre
cannot produce revenue
later
 A car not rented results in no
revenue for that day
Inseparability
Heterogeneity
Perishability
©

This condition of
perishability results in
discount pricing of services
at almost any price greater
than their variable cost.
2000 South-Western College Publishing
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SERVICE QUALITY
 Business
executives
and consumer rank
the improvement of
service quality as one
of the most critical
challenges facing
them today.
 Quality is normally
judged on the basis
of…
©
•Reliability
•Responsiveness
•Knowledge, courtesy and
trust (Assurance)
•Empathy
•Tangibles (physical
evidence of the service, such
as uniforms, diplomas, office
ambiance, etc.)
2000 South-Western College Publishing
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Managing service quality
 The
effective marketing of services requires that
managers learn what customers want and expect
in their interaction with the service provider
(service encounter). If expectations do not equal
experience, a gap exists.
EXPECTED SERVICE-PERCEIVED
SERVICE GAP ANALYSIS
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2000 South-Western College Publishing
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GAP ANALYSIS

Mgt. expectations of
customer expectations
Customer
expectations
 Knowledge gap
 Standards gap

  Delivery gap
Standards specifying
services to be
delivered

Retail
communications
about services
 Communications
gap
 Service gap

Actual services
delivered

©
Customer perception
of service
2000 South-Western College Publishing
DISCUSS
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MARKETING MIXES FOR SERVICES
Elements
of the marketing mix (product,
distribution, promotion, and pricing) need
to be adjusted to meet the special needs
created by the unique characteristics of
services just discussed
Two hour repair service
guarantee for business
computers by...
©
2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES:
Product
Product
(Service Strategy)
People
processing (transportation services,
health clubs)
Possession processing (lawn or car repairs)
Information processing (accounting, training,
financial services)
Core and supplementary services
Core
Federal Express services = overnight delivery
Supplementary services = package tracking and
capturing the signature of the recipient
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2000 South-Western College Publishing
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CORE AND SUPPLEMENTARY SERVICES
Clean clothes
•On hangers or folded
•Level of starch
•Bagged in plastic or boxed
•Drive-through pick and drop
off
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2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES:
Product
Product
(Service Strategy) - continued
Customized
services vs standardized services
Standardized
Economies
of scale
Lower
cost
More efficient
Customized
May
better satisfy the needs of the customer
Higher cost and less efficient
Mass
customization
The
use of technology to deliver customized services on a
mass basis. Major direction of the future of service
marketing!
©
2000 South-Western College Publishing
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CONCEPT OF MASS CUSTOMIZATION
 Relates
to the ability of
marketing service organizations
to offer “packages” of services
individually adjusted for each
customer to a large target
market.
 Medical
benefit packages
 Travel and vacation packages
 Airline service (time, food, music)
©
2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES: Service
and Distribution
The
Service Mix
Service
organizations offer multiple services.
Designing a service strategy means deciding
what new services to introduce to which target
markets, what existing services to maintain,
and what services to eliminate.
Distribution
Strategy
Number
of outlets
Direct vs indirect distribution
Location(s)
Scheduling
©
2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES:
Promotion
 Promotion
Strategy
 Stressing
tangible clues (You’re in
good hands... with Allstate)
 Using personal information sources
(celebrity endorsements)
 Create a strong organizational image
(McDonald’s Golden Arches)
 Engage in post purchase
communication (call to make sure your
car service repair experience was
satisfactory)
©
2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES: Price
 Price
Strategy
 Pricing
may be based
upon a specific task
accomplished, time
consumed by the task,
the consumption of
goods, or the expertise
of the service provider
 Prices are sometimes
bundled and other
times a la carte.
©
•Pricing strategies might
include:
•Revenue-oriented
pricing
•Operations-oriented
pricing
•Patronage-oriented
pricing
•A combination of
the above
2000 South-Western College Publishing
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MARKETING MIXES FOR SERVICES:
Relationship Marketing
 Involves
ongoing
interaction between
the service
organization and the
customer.
 Desire to create
loyalty, mutually
beneficial
transactions, and a
win-win environment
©
•Pricing incentives, like
frequent flier programs
•Social incentives, like an
online reminder to renew
ones driver license (AAA)
•A combination of the
above, such as the no
hassle Hertz rental
program for frequent
users.
2000 South-Western College Publishing
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INTERNAL MARKETING ENHANCES
RELATIONSHIP BUILDING
 Public
relations
efforts to own
employees
 Employee
empowerment
 Participative
management
“We love to fly and it shows!
Delta Airlines
©
2000 South-Western College Publishing
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NONPROFIT MARKETING
 A nonprofit organization is an organization
that exists to achieve some goal other than the
usual business goals of profit, market share, or
return on investment.
Account for over 20% of the economic activity
in the united States. The largest nonprofit entity
by far in the United States includes federal, state
and local government expenditures and purchases.
©
2000 South-Western College Publishing
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WHAT IS NONPROFIT ORGANIZATION
MARKETING?

Is the effort by nonprofit
organizations to bring
about mutually satisfying
exchanges with target
markets through the
following marketing
activities:
 Identify customers they
wish to serve or attract
 Specify objectives
 Develop and manage
programs and services
©
 Decide
on prices to
charge (fees, donations,
tuition, fares, fines, rates,
etc.)
 Schedule events or
programs and determine
where they will be held or
where services will be
offered
 Communicate through
signs, brochures,
advertisement, or public
service announcements
2000 South-Western College Publishing
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UNIQUE ASPECTS OF NONPROFIT ORGANIZATIONS
MARKETING STRATEGIES
Objectives are very different
 Target marketing differences
 Product and Service decisions
 Distribution decisions
 Promotional decisions
 Pricing decisions
 Measures of success

©
•Change opinions
•Correct social problems
•Provide ideas and beliefs
•Target individuals that
may not desire their
services or are not
adequately provided for
from other sources
2000 South-Western College Publishing
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UNIQUE ASPECTS OF NONPROFIT ORGANIZATIONS
MARKETING STRATEGIES
Objectives are very different
 Target marketing differences
 Product and Service decisions
 Distribution decisions
 Promotional decisions
 Pricing decisions
 Measures of success

•Market complex
behaviors or ideas
•Sometimes weak
benefits perceived
•May involve low or high
involvement messages
•Often marketed where
and when the target
market dictates
©
2000 South-Western College Publishing
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UNIQUE ASPECTS OF NONPROFIT ORGANIZATIONS
MARKETING STRATEGIES
Objectives are very different
 Target marketing differences
 Product and Service decisions
 Distribution decisions
 Promotional decisions
 Pricing decisions
 Measures of success

•Number of persons
helped
•Attitudes changed or
converted
©
•Volunteers
•Sales promotion activities
•Public service advertising
•Licensing agreements
•Prices to support costs
•Indirect payment through
taxes
•Payment through
contributions
•Below cost pricing
2000 South-Western College Publishing
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