Chapter 15: Marketing in Specialised Markets

Services Marketing

A service is a result of both human and/or mechanical effort focused on people or objects. Services
are deeds, performances or efforts that cannot be physically possessed. It is intangible

How Services Differ from Physical Products

 Intangibility: Services cannot be touched, seen, tasted heard or felt in the same manner in
which physical products can be experienced. Services cannot be stored and are often very
difficult to duplicate. Services are seldom based on any hidden technology, and no patent
protection exists for services. Evaluating the quality of services before or even after making a
purchase is more difficult than evaluating the quality of products because, compared with
products, services tend to exhibit fewer search qualities. Services tend to exhibit more
experience and credence qualities. An experience quality is a characteristic that can be
assessed only after use. A Credence quality is a characteristic that consumers may have
difficulty assessing even after purchase because they do not have the necessary knowledge
or experience. These characteristics also make it difficult for marketers to communicate the
benefits of an intangible service. Customer perceptions of services are influenced by tangible
cues, such as decor, clutter or neatness of service area, and staffs demeanour.
 Inseparability: Physical products are produced, then sold, and then consumed. By contrast
however services are often sold and produced and consumed at the same time and in the
same place. The production and consumption are inseparable activities. Because consumers
have to be present during the production of services, they are actually involved in the
production of the service. Services cannot normally be produced in a centralised location
and consumed in decentralised locations. The quality of services that firms are able to
deliver depends on the quality of the employees.
 Heterogeneity: Services tend to be less standardised and uniform than goods. Services tend
to be labour-intensive and production and consumption are inseparable, consistency and
quality control can be difficult to achieve. Standardisation and training help service providers
increase consistency and reliability of their service delivery.
 Perishability: Services cannot be stored, warehoused or inventorised for later consumption.
Most important challenges is finding ways to synchronise supply and demand.

Marketing Mixes for Services

 People: Includes all people who play a part in the service delivery and in doing so influence
the customers perception of the service firm. Customers can also influence service delivery
and by doing so influence the service quality and their own satisfaction. The behaviour of
customers can enhance or detract from how other customers experience a service.
 Processes: Includes all activities, procedures, and mechanisms involved in producing and
delivering the service. The actual delivery steps the customer experience, or the operational
flow of the service, also provide customers with evidence by which to judge the service.
Importance of the process is that it provides a customer with s form of evidence with which
to judge the service.
  Physical Evidence: Includes both the physical environment in which a service is delivered as
well as all the tangible components that facilitate the performance or communication of the
service. The physical environment in which a service is delivered is called the 'servicescape'.
Customers expect servicescapes to adhere to certain minimum requirements in terms of
hygiene, neatness or other important criteria. Customers rely on the cues offered by these
tangibles just as they rely on cues provided by the people and the service process. Physical
evidence cues provide ample opportunities for the firm to send consistent, strong messages
about the firm and its service.

Non-Business Marketing

Exists to achieve some goal other than the usual business goals of profit, market share, or return on
investment.

 Social Marketing: Spread socially beneficial ideas or behaviours. Can be used by private and
for-profit firms as well as NPO.
 Non-Profit Organisation Marketing: Effort by NPO to bring about mutually-satisfying
exchanges with target markets.
Perform following marketing activities.
1. Identify the customers they wish to serve or attract
2. Explicitly or implicitly specify objectives.
3. Develop, manage, & terminate programmes and services
4. Decide on prices to charge.
5. Schedule events or programmes and determine where they will be held or where services
will be offered

Factors Contributing to the Acceptance of Marketing by NPO

 Increased Privatisation: Governments are giving increasing attention to privatisation as an

innovative means of lowering costs and improving the effectiveness of programmes
traditionally managed by government departments. In short governments want to rid
themselves of these functions.
 Decreased Support From Traditional Sources: Excluding their direct income from sales and
services rendered, many NPO's are highly dependent for their financial resources on
government subsidies or grants, and corporate and private donations. For many NPO's all
these sources of income are either declining or at risk. Difficult financial times for businesses
usually mean reduced financial support for NPO's.
 Increased Competition among NPO's: Some NPO's have managed to become very effective
at marketing themselves. Some large NPO's even employ highly sophisticated marketing
strategies. Creating pressure for competing NPO's that are not skilled in marketing.
 Increase in the Number of NPO: There is an increases in NPO's that attended to relatively
newer phoneme.
 Absence of Tax Incentives: Contributions to registered NPO's have not qualified for
deductions from income for tax purposes.

Dual Role of Marketing in NPO's

  NPO's have to market themselves to various stakeholder, such as the general public and
government. The stakeholders are very diverse in nature. NPO's must market itself to its
beneficiaries as well as appeal to donors and volunteers.
 When marketing to beneficiaries the marketing objective will focus on the problem to be
solved or the relief to be provided. When marketing to donors & volunteers it should ensure
that its activities fall within its declared mission statement.
 A good fit between the NPO's activities & the donors mission is essential for effective
solicitation of donor funds.

Sources of Competition Faced by NPO's

 Competition with for-profit firms:

 Competition with the public sector:
 Competition with other NPO's:
 International competition:

Non-Business Marketing Strategies

 Objectives: Non-business organisations do not pursue profitability for redistribution to

owners or shareholders. Instead, their focus is to deliver the services or products to its
beneficiaries, most non-business organisations are expected to provide equitable and
efficient services that respond to the needs and preferences of multiple constituencies.
These include users, players, donors, politician, appointed official and the media.
 Target Markets:
o Apathetic or Strongly Opposed Targets: Private-sector firms usually give priority to
developing those market segments that are most likely to respond to particular
offerings. By contrast, non-business organisation must often target those who are
apathetic about or strongly opposed to receiving their services.
o Pressure to Adopt Undifferentiated segmentation Strategies: Non-business
organisations often adopt undifferentiated strategies by default. Sometimes they fail
to appear to offer economies of scale and low per capita costs
o Complementary Positioning: Non-business organisation must often compliment
rather than compete with the efforts with others. The positioning task is to identify
underserved market segments and develop marketing programmes that match their
needs, rather than to target the niches that may be most profitable.
 Product Decisions:
o Benefit Complexity: The benefits that a person would receive are complex, long term
and intangible and may, therefore, be difficult to communicate to consumers.
o Benefit Strength: The benefit strength of many non-business offerings is quite weak
or indirect.
o Involvement: Many non-business organisations market products that elicit either
very low involvement or very high involvement. In the case of private-sector goods
and services, the typical involvement range is much narrower. Traditional marketing-
communication tools may be inadequate to motivate the adoption of either low- or
high-involvement products.
  Distribution Decision: The nature of services means that distribution channels must often be
direct from producer to consumer and that services cannot be inventorised in anticipation of
demand. Non-Business organisations share these characteristics with profit-sector service
firms. A NPO's capacity for distributing its service offerings to potential customer groups
when and where they want those services is usually a key variable in determining the
success of those service offerings. The extent to which a service depends on fixed facilities
has important implications for distribution decisions. Fund-Raising also requires good
channel of distribution.
 Marketing Communication Decision:
Many Non-Business Organisation are explicitly or implicitly prohibited from advertising
which obviously limits their advertising and promotion options. Other Non-Business
Organisations simply do not have the resources to utilize the services of advertising
agencies, promotion consultants or marketing staff for fund-raising purposes. However,
Non-Business organisations have at their disposal unique adverting and promotion options
o Professional Volunteers: Non-Business Organisations often contract marketing, sales
and advertising professional to help them develop and implement marketing-
communication strategies. In some instances, an advertising agency donates its
services in exchange for long-term benefits. Donated services create goodwill,
personal contacts, and general awareness of the donors organisation, reputation
and competency.
o Sales Promotion Activities: Sales promotion activities that make use of existing
services or other resources are increasingly being used to draw attention to the
market offering of Non-Business Organisations.
 Price Decisions:
o Pricing Objectives: Revenue is the main pricing objective in the profit sector,
specifically, profit maximisation, sales maximisation, target return on sales or
investment, Non-Business Organisations must also be concerned about revenue, and
strive to defray costs either partially of fully, rather than achieve profit for
distribution to owner or shareholders, Non-Business Organisations aim to
redistribute income, they strive to allocate resources fairly among individuals or
households or across geographic or political boundaries.
o Non-Financial Prices: Consumers are not charged a monetary price, but instead must
absorb non-Monetary costs. Non-Monetary costs consist of the opportunity cost of
time, embarrassment costs and effort costs.
o Indirect Payment: Indirect payment through taxes is common to marketers of 'Free'
Services, such as libraries, fire protection & police protection. Indirect payment in
not a common practice in the for-profit sector.
o Separation between Payers and Users: The services of many charitable organisations
are provided to those who are relatively poor, and largely supported by those who
are financially better off.
o Below-Cost Pricing: Public colleges and universities price their services at below full
cost. This practice also exists in the profit sector, although it is generally an
undesirable, temporary situation

Business - To - Business Marketing

Business-To-Business marketing is the marketing of goods and services to individuals and
organisations for purposes other than personal consumption. Business-To-Business products include
those that are used to manufacture other products, that become part of another product, that aid
the normal operations of a firm, or that are acquired for resale without any substantial change in the
form. The key characteristic distinguishing Business-To-Business products from consumer products is
"Intended Use" rather than "Physical Characteristics". A product that is purchased for personal or
family consumption or as a gift is a consumer product.

Business-To-Business Customers

 Producers: The producer segment of the Business-To-Business market includes profit-

orientation individuals and organisations that use purchased good and services to produce
other products, to incorporate into other products or to facilitate the daily operations of the
firm. Individual producers often buy large quantities of goods and services.
 Resellers: The reseller market includes retail and wholesale businesses that buy finished
goods and resell them for a profit. A retailer sells mainly to final consumers; wholesalers sell
mostly to retailers and other organisational customers. They often carry thousands of items
in stock and employ sales forces to call on business customers. Business-product
intermediaries are wholesalers that buy business products and resell them to business
customers.
 Government: Contracts for government purchases are often put out to tender. Interested
suppliers submit tenders to provide specified products during a particular time. sometimes
the lowest tenderer is awarded the contract. when the lowest tender is not awarded the
contract, strong evidence must be presented to justify the decision. Grounds for rejecting
the lowest tender include: Lack of experience, inadequate financing, or poor past
performance. Tendering allows all potential suppliers a fair chance of winning governments
contracts and helps ensure that public funds are spent wisely.
 Central Government: A central government can be described as a combination of several
large firms with overlapping responsibilities and thousands of small, independent units.
 Institutions: Institutions that seek to achieve goals different from such ordinary business
goals as profit, market share and return on investment. This segment includes schools,
hospitals & universities.