Chapter 11

Services and Non-profit MarketingServices and Non-profit Marketing

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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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Examples of Service IndustriesHealth Care

hospital, medical practice, dentistry, eye careProfessional Services

accounting, legal, architecturalFinancial Services

banking, investment advising, insuranceHospitality

restaurant, hotel/motel, bed & breakfast ski resort, rafting

Travelairline, travel agency, theme park

Othershair styling, pest control, plumbing, lawn maintenance,

counseling services, health club, interior design

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Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

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Characteristics of ServicesCompared to Goods

Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity

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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

Responsiveness

Assurance

Empathy

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Service Failures

What are your experiences of What are your experiences of horrible customer service?horrible customer service?

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Service recovery paradox

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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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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

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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?What 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?