Services and Nonprofit Organization

Marketing

Key Concepts

The Importance of Services

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

81%

Services as a percentage of GDP

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

81%

Services as a percentage of employment

ServicesDeedPerformanceEffort

DeedPerformanceEffort

How Services Differ from GoodsHow Services Differ from Goods

What are the differences between services and goods?

How Services Differ from Goods

IntangibleIntangible

InseparableInseparable

HeterogeneousHeterogeneous

PerishablePerishable

How Services Differ from Goods

IntangibilityIntangibility

Search Qualities

Experience Qualities

Credence Qualities

Components of Service Quality

TangiblesTangibles The PHYSICAL EVIDENCEof a service.

The PHYSICAL EVIDENCEof 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.

Marketing Mixes for Marketing Mixes for ServicesServices

Develop marketing mixes for services

Product Strategies for Services

ServiceMix

Standardizationor

Customization

Core andSupplementary

Process

Service as a Process

Mental StimulusProcessing

Mental StimulusProcessing

People Processing

People Processing

PossessionProcessing

PossessionProcessing

InformationProcessing

InformationProcessing

The Service Factory

Possession processing

Mental-stimulus processing

The Service Offering

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 SUPPORT

or ENHANCE the core service.

A group of services that SUPPORT

or ENHANCE the core service.

Core and Supplementary Services for FedEx

Overnight Overnight transportation transportation and delivery of and delivery of

packagespackages

Problem solving

Billing statements

TracingDocumentation

Order taking

Supplies

Pickup

Advice andinformation

Customization/Standardization

A strategy that uses

technology to deliver

CUSSTOMIZED

SERVICES on a

MASS basis.

MassCustomization

MassCustomization

The Service Mix

Determine what new services to introduce

Determine target market

Decide what existing services to maintain and to eliminate

Place (Distribution) Strategy

SchedulingScheduling

LocationLocation

Direct or indirect distribution

Direct or indirect distribution

Number of outletsNumber of outlets

ConvenienceConvenience

Promotion Strategy

Stress tangible cues

Use personal information sources

Create a strong organizational image

Engage in postpurchase communication

Price Strategy

Pricing Challenges for Services

Define the unit of service consumption

Determine if multiple elements are “bundled” or priced separately

Pricing Objectives

Revenue-OrientedPricing

Operations-OrientedPricing

Patronage-OrientedPricing

Maximize the surplus of income over costs

Match supply and demand by varying price

Maximize the number of customers by varying price

Marketing Mixes for Services

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

Internal Marketing

Internal Marketing

Internal Marketing

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

Nonprofit Organization Marketing

LO8

NonprofitOrganization

Marketing

NonprofitOrganization

Marketing

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

Government

Museums

Theaters

Schools

Churches

Nonprofit Organization Marketing

Market intangible productsMarket intangible products

Production requires customer’s presenceProduction requires customer’s presence

Services vary greatlyServices vary greatly

Services cannot be storedServices cannot be stored

Shared Characteristics

with Service

Organizations

Shared Characteristics

with Service

Organizations

Nonprofit Organization Marketing

Identify desired customersIdentify desired customers

Specify objectivesSpecify objectives

Develop, manage, eliminate programs and servicesDevelop, manage, eliminate programs and services

Decide on pricesDecide on prices

Schedule events or programsSchedule events or programs

Communicate their availabilityCommunicate their availability

Unique Aspects of Nonprofit Organization Marketing Strategies

Setting of marketing objectives

Selection of target markets

Development of marketing mixes

Objectives

Provide services that respond to the wants of :

Users

Payers

Donors

Politicians

Appointed officials

Media

General Public

Target 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 of Nonprofit

Organizations

Product Decisions

Distinctions between Business and Nonprofit Organizations

Benefit complexity

Weak or indirect benefit strength

Low involvement

Promotion Decisions

Sales promotion activities

Public service advertising

Professional volunteers

Pricing Decisions

Below-cost pricingBelow-cost pricing

Separation betweenpayers and users

Separation betweenpayers and users

Indirect paymentIndirect payment

Nonfinancial pricesNonfinancial prices

Pricing objectivesPricing objectives

Characteristics Distinguishing

Pricing Decisionsof Nonprofit

Organizations

Characteristics Distinguishing

Pricing Decisionsof Nonprofit

Organizations

Nonprofit Organization Marketing

TARGET• Apathetic or

strongly opposed• Undifferentiated

segmentation• Complementary

positioning

PRODUCT

PROMOTION

PLACE

PRICE

Professional

volunteersSales

Public ServiceAdvertising

Involvement

Benefitstrength

Benefitcomplexity

Specialfacilities

Nonfinancial

Indirect payment

Separation

Below costpricing

MARKETING OF FAMILY PLANNING SERVICES & AIDS PREVENTION

The special case of

CABBAGES AND CONDOMS

program in Thailand