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1Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Services and Services and
10
Nonprofit Nonprofit Organization Organization Marketing Marketing
Canadian Adaptation prepared by Canadian Adaptation prepared by Don Hill, Langara CollegeDon Hill, Langara College
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2Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning ObjectivesLearning Objectives
1.1. Discuss the importance of services to the economy
2. Discuss the differences between services and goods
3. Describe the components of service quality and the gap model of service quality
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3Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objectives (continued)Learning Objectives (continued)
4. Develop marketing mixes for services
5. Discuss relationship marketing in services
6. Explain internal marketing in services
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4Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objectives (continued)Learning Objectives (continued)
7. Discuss global issues in services marketing
8. Describe nonprofit organization marketing
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5Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Discuss the importance of services to the economy
Onlinewww.intrawest.com
1
11
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6Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
ServiceService
1
ServiceService
The result of applying human or
mechanical efforts to people or objects.
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7Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
The Importance of ServicesThe Importance of Services
1
Service sector accounts fo 70% of Canadian GDP.Service sector accounts fo 70% of Canadian GDP.
75.8% of workers are in service sector. 75.8% of workers are in service sector.
Service occupations will be responsible for nearly all net job growth through 2012.Service occupations will be responsible for nearly all net job growth through 2012.
In 2006, 53.8% of household spending on services.In 2006, 53.8% of household spending on services.
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8Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
The Importance of The Importance of ServicesServices
1
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9Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Discuss the differences between services and goods
Onlinewww.westinbayshore.com
2
22
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10Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
IntangibleIntangible
InseparableInseparable
HeterogeneousHeterogeneous
PerishablePerishable
How Services Differ from GoodsHow Services Differ from Goods
Onlinehttp://www.amctheatres.comhttp://www.movietickets.com
2
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11Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Describe the components of service quality and the gap model of service quality
3
33
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12Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Components of Service QualityComponents of Service Quality
TangiblesTangibles The physical evidence of a service.
The physical evidence of a service.
EmpathyEmpathy Caring, individualized attention to customers.Caring, individualized attention to customers.
AssuranceAssurance The knowledge and courtesyof employees.
The knowledge and courtesyof employees.
ResponsivenessResponsiveness The ability to provideprompt service.
The ability to provideprompt service.
ReliabilityReliability The ability to perform the service right the first time.The ability to perform the service right the first time.
3
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13Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
The Gap Model of Service The Gap Model of Service QualityQuality
3
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14Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Develop marketing mixes for services
4
44
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15Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Product Strategies for ServicesProduct Strategies for Services
4
ServiceMix
ServiceMix
Standardizationor
Customization
Standardizationor
Customization
Core andSupplementary
Core andSupplementaryProcessProcess
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16Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Service ProcessingService Processing
ServiceServiceProcessingProcessingCategoriesCategories
ServiceServiceProcessingProcessingCategoriesCategories Mental Stimulus
ProcessingMental Stimulus
Processing
People People ProcessingProcessing
People People ProcessingProcessing
PossessionProcessing
PossessionProcessing
InformationProcessing
InformationProcessing
4
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17Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Core and Supplementary ServicesCore and Supplementary Services
CoreServiceCore
Service
SupplementaryService
SupplementaryService
The most basic benefit the consumer is buying.
The most basic benefit the consumer is buying.
A group of services that supportor enhance the core service.
A group of services that supportor enhance the core service.
4
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18Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Mass CustomizationMass Customization
4
Mass CustomizationMass Customization
A strategy that uses technology
to deliver customized services
on a mass basis.
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19Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Mass CustomizationMass CustomizationC
ust
om
izat
ion
Cu
sto
miz
atio
n
Low
Lo
w
High
Hig
hCustomizedCustomized
FocusFocus
StandardizedStandardizedFocusFocus
CostCost
MassMassCustomizationCustomization
4
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20Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Service Mix StrategyService Mix Strategy
Determine what new services to introduce
Determine target market
Decide what existing services to maintain and eliminate
4
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21Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Distribution Strategy IssuesDistribution Strategy Issues
SchedulingScheduling
LocationLocation
Direct or indirect distribution
Direct or indirect distribution
Number of outletsNumber of outlets
ConvenienceConvenience
4
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22Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Promotion Strategy IssuesPromotion Strategy Issues
Stress tangible cues
Use personal information sources
Create a strongorganizational image
Engage in postpurchase communication
4
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23Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Price StrategyPrice Strategy
4
Pricing Pricing ChallengesChallenges
Pricing Pricing ChallengesChallenges
Base price on completion of service taskBase price on completion of service task
Determine if multiple elements are “bundled”Determine if multiple elements are “bundled”
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24Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Pricing ObjectivesPricing Objectives
Onlinehttp://www.etrade.comhttp://www.ameritrade.comhttp://www.schwab.comwww.canadianisp.com
4
Revenue-OrientedPricingRevenue-OrientedPricing
Operations-OrientedPricingOperations-OrientedPricing
Patronage-OrientedPricingPatronage-OrientedPricing
Maximize the surplus of income over costsMaximize the surplus of income over costs
Match supply and demand by varying priceMatch supply and demand by varying price
Maximize the number of customers by varying priceMaximize the number of customers by varying price
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25Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Marketing Mixes for ServicesMarketing Mixes for Services
4
PLACEPLACE PROMOTIONPROMOTION PRICEPRICEPRODUCT
= SERVICE
PRODUCT =
SERVICE
ProcessProcess
Core and Supplementary
Core and Supplementary
Mass Customization
Mass Customization
StandardizationStandardization
Number ofoutlets
Number ofoutlets
DirectDirect
IndirectIndirect
LocationLocation
Tangiblecues
Tangiblecues
Personalinformation
Personalinformation
Strong imageStrong image
Post-purchasecommunication
Post-purchasecommunication
Revenueoriented
Revenueoriented
Operationsoriented
Operationsoriented
Patronageoriented
Patronageoriented
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26Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Discuss relationship marketing in services
5
55
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27Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Relationship Marketing in Relationship Marketing in ServicesServices
5
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28Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Explain internal marketing in services
6
66
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29Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Internal MarketingInternal Marketing
6
Internal Marketing Internal Marketing
Treating employees as
customers and developing
systems and benefits that
satisfy their needs.
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30Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Internal Marketing ConnectionsInternal Marketing Connections
6
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31Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Internal Marketing ActivitiesInternal Marketing Activities
Competing for Talent
Competing for Talent
Offeringa VisionOfferinga Vision
StressingTeamworkStressingTeamwork
TrainingEmployeesTraining
Employees EmpowermentEmpowerment
KnowingEmployees’
Needs
KnowingEmployees’
NeedsRewarding
PerformanceRewarding
Performance
6
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32Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Discuss global issues in services marketing
7
77
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33Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Global Issues in Services Global Issues in Services MarketingMarketing
7
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34Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Learning Objective Learning Objective
Describe nonprofit organization marketing
8
88
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35Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Nonprofit Organization MarketingNonprofit Organization Marketing
8
Nonprofit Organization Marketing Nonprofit Organization Marketing
An organization that exists to achieve
some goal other than the usual business
goals of profit, market share, or return on
investment.
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36Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Nonprofit OrganizationsNonprofit Organizations
GovernmentGovernment
Private MuseumsPrivate Museums
TheatersTheaters
SchoolsSchools
ChurchesChurches
Other Non-GovernmentOther Non-Government
Nonprofit Nonprofit OrganizationsOrganizations
Nonprofit Nonprofit OrganizationsOrganizations
8
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37Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
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
8
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38Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Nonprofit Organization Marketing Nonprofit Organization Marketing ActivitiesActivities
Identify desired customersIdentify desired customers
Specify objectivesSpecify objectives
Develop, manage, eliminate programs and servicesDevelop, manage, eliminate programs and services
Set pricesSet prices
Schedule eventsSchedule events
Communicate their availabilityCommunicate their availability
8
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39Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Unique Aspects of Nonprofit Unique Aspects of Nonprofit Organization Marketing StrategiesOrganization Marketing Strategies
Setting of Marketing ObjectivesSetting of Marketing Objectives
Selection of Target MarketsSelection of Target Markets
Development of Marketing MixesDevelopment of Marketing Mixes
Onlinehttp://www.peta.com
8
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40Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Provide Services to:
Market ObjectivesMarket Objectives
Users
Payers
Donors
Politicians
Appointed officials
Media
General Public
8
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41Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
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
8
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42Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Distinctions between Business and Nonprofit Organizations
Product DecisionsProduct Decisions
Benefit complexity
Weak benefit strength
Low involvement
8
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43Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Onlinehttp://www.adcouncil.org
Promotion DecisionsPromotion Decisions
Sales promotion activities
Public service advertising
Professional volunteers
8
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44Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
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
8
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45Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 10
Nonprofit Organization MarketingNonprofit Organization Marketing
8
TARGET• Apathetic or
strongly opposed
• Undifferentiated segmentation
• Complementary positioning
PRODUCT
PROMOTION
PLACE
PRICE
Professional volunteers
Sales
Public ServiceAdvertising
Involvement
Benefitstrength
Benefitcomplexity
Specialfacilities
Nonfinancial
Indirect payment
Separation
Below costpricing