Chapter 12

Services and Non-profit Marketing

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Services Defined

A service is the .............of applying human or mechanical efforts to .................

A service involves a .........., ............or ...........that can not be physically possessed.

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Services Defined

A service is the result of applying human or mechanical efforts to people or objects.

A service involves a deed, performance or effort that can not be physically possessed.

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Services contribute to our economy- GREATLY

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0

10

20

30

40

50

60

70

80

1929 1948 1969 1977 1984 1999

Per

cent

of U

.S. L

abor

For

ce

Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.

Year

Services Manufacturing Mining & Agriculture

Percent of U.S. Labor Force by Industry

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The Service Product Continuum

Most offerings lie somewhere in the middle

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Services Marketing Differs from Product Marketing

Heterogeneous

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Implications of IntangibilityServices cannot be _________________

Services cannot be easily ___________

Services cannot be _________________

Pricing is _________________

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Implications of HeterogeneityService delivery and customer satisfaction

depend on _________________

Service quality depends on many _________________

There is no sure knowledge that the service delivered matches what was planned and promoted

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Implications of Simultaneous Production and Consumption

Customers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

_________________ is difficult

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Implications of PerishabilityIt is difficult to synchronize supply and

demand with services

Services cannot be _________________

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Service Quality is more difficult to determine than goods quality: we need:

Ability to perform the promised service dependably and accurately.

Knowledge and courtesy of employees and their ability to inspire trust and confidence.

Physical facilities, equipment, and appearance of personnel.

Caring, individualized attention the firm provides its customers.

Willingness to help customers and provide prompt service.

Tangibles

Reliability

R…………………

A…………..

E…………..

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Service Failures

What are your experiences of horrible customer service?

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Service recovery paradox

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PerceivedService

Expected Service

CUSTOMER

COMPANY

CustomerGap

Gap 1

Gap 2

Gap 3

External Communications

to CustomersGap 4ServiceDelivery

Customer-Driven Service Designs and

Standards

Company Perceptions of Consumer Expectations

Gaps Model of Service Quality/Extra

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How to Give Horrible Service(Service Gaps)

1. Don’t listen to what your customers want (i.e., only listen to your CEO or wallet)- customer gap

2. Don’t act on customers’ wants3. Hire people without skills or a care, and don’t

train them4. Tell the customer whatever they want to hear

(i.e., overpromise and underdeliver)5. Don’t meet (or barely meet) customers’

expectations (i.e., ignore people and insult their intelligence)=Customer Gap

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Expanded Mix for Services --The 7 PsProductPricePlacePromotionPeople

All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.

Physical Evidence The environment in which the service is delivered and where the

firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Process The actual procedures, mechanisms, and flow of activities by

which the service is delivered—the service delivery and operating systems.

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ACSI and Annual Percentage Growthin S&P 500 Earnings

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Customer Satisfaction and Customer Loyalty

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

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Excellentservice

and value

1. Financial

bonds

2.Socialbonds

4. Structural

bonds

3. Customization

Bonds

Volume and frequency rewards

Bundling and cross selling

Stable pricing

Social bonds among

customers

Personal relationships

Continuous relationships

Customer intimacy

Mass customization

Anticipation/ innovation

Sharedprocesses

and equipment

Joint investments

Integrated information

systems

How to create relationships (loyalty) in Services

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Services and ProfitNot all services are for profitNon profit services and organizations are a

large part of societyWhat nonprofits can you think of?

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Non-Profit Marketing

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Non-Profit MarketingNon-profits are over 20% of U.S. economic

activityGovernment taxes> housing, healthcare, or

food costsHard to service someone who doesn’t want

it (e.g., AA, gambling help)Must complement (vs. compete with) for

profit businesses

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Questions?