Chapter 12 Services and Nonprofit Organization Marketing 12 1 The Importance of Services Service the result of applying human or mechanical efforts to people or objects 12 2 How Services Differ From Goods Services have 4 unique characteristics o Intangible the inability of services to be touched seen tasted heard or felt in the same manner that goods can be sensed Search quality a characteristic that can be easily accessed before purchase Services have less search qualities Experience quality a characteristic that can be accessed only after use Credence quality a characteristic that consumers may have difficulty accessing even after purchase because they do not have the necessary knowledge or experience Services have more experience and credence qualities o Inseparable the inability of the production and consumption of a service to be separated consumers must be present during the production o Heterogeneous the variability of the inputs and outputs of services which causes services to tend to be less standardized and uniform than goods o Perishable the inability of services to be stored warehoused or inventoried 12 3 Service Quality consistently trust Reliability the ability to perform the service dependably accurately and Responsiveness ability to provide prompt service Assurance knowledge and courtesy of employees and their ability to convey Empathy caring individualized attention to customers Tangibles physical evidence of the service Gap model a model identifying 5 gaps that can cause problems in service delivery and influence customer evaluations of service quality o Gap 1 the gap between what customers want and what management thinks customers want results from lack of understanding o Gap 2 the gap between what management thinks customers want and the quality specifications that management develops to provide the service results from management s inability to translate customers needs into delivery systems within the firm o Gap 3 the gap between the service quality specifications and the service that is actually provided results from inability of employees and management to do what should be done o Gap 4 the gap between what the company provides and what the customer is told it provides misleading deceptive advertising o Gap 5 the gap between the service that customers receive and the service that they want 12 4 Marketing Mixes for Services Product service strategy o Service as a process People processing takes place when the service is directed at a customer transportation healthcare Possession processing occurs when the service is directed at customers physical possessions lawn care dry cleaning vet Mental stimulus processing refers to services directly at people s minds theater performances education Information processing describes services that use technology brainpower directed at a customer s assets insurance consulting o Core and supplementary service products Core service the most basic benefit the consumer is buying Supplementary services a group of services that support enhance the core service emphasized to create a competitive advantage o Customization standardization Customized more flexible respond to customer needs higher price Standardized more efficient cost less Mass customization a strategy that uses technology to deliver customized services on a mass basis uses both customized and standardized o Service mix Each part of the service mix should make a different contribution to achieving the firm s goal Place distribution strategy o Focus on convenience number of outlets direct vs indirect distribution location scheduling Promotion strategy o Stressing tangible cues a tangible cue is a concrete symbol of the service offering o Using personal information sources use a celebrity o Creating a strong organizational image McDonald s arches o Engaging in post purchase communication follow up activities Price strategy o It is important to define the unit of service consumption Based on completing the task or time based o Should pricing be based on a bundle of elements of whether each element should be priced separately o Revenue oriented pricing focuses on maximizing the surplus of income over costs however determining costs can be difficult o Operations oriented pricing seeks to match supply and demand by varying prices o Patronage oriented pricing tries to maximize the number of customers using the service 12 5 Relationship Marketing in Services Membership services services received on a continuing basis Relationship marketing can be practiced at 3 levels o Level 1 firm uses pricing incentives to encourage customers to continue doing business with it least effective in long term frequent flyer program o Level 2 also uses pricing incentives but seeks to build social bonds with the customers stays in touch with customers learns about their needs designs services to meet those needs o Level 3 the firm uses financial and social bonds but adds structural bonds to the formula structural bonds are developed by offering value added services that are not readily available from other firms 12 6 Internal Marketing in Service Firms Quality of a firm s employees is important Employees will deliver superior service if they are happy Internal marketing treating employees as customers and developing systems and benefits that satisfy their needs 12 7 Global Issues in Services Marketing To be successful globally you must determine your core product then the marketing mix elements 12 8 Nonprofit Organization Marketing Nonprofit organization an organization that exists to achieve some goal other than the usual business goals of profit market share or return on investment Nonprofit organization marketing the effort by nonprofit organizations to bring about mutually satisfying exchanges with target markets o Identify the customers they wish to attract explicitly or implicitly specify objectives develop manage eliminate programs services decide on prices to charge schedule events programs communicate their availability through signs announcements advertisements Unique aspects of nonprofit organization marketing o Objectives not profit o Target markets Apathetic or strongly opposed targets nonprofits target those who are apathetic about or strongly opposed to the service instead of targeting those who are likely to respond to an offer Pressure to adopt undifferentiated segmentation strategies Complementary positioning o Product decisions Benefit complexity the benefits that a person
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