Chapter 12 ♦ Services and Nonprofit Organization Marketing 15
GREAT IDEAS FOR TEACHING CHAPTER 12
Kay Blythe Tracy, Gettysburg College
SERVICE LEARNING AS A MARKETING PROJECT
Service learning benefits both the community and the students. This service learning project allows marketing
students to put what they are learning in class into practice, and to see some of their ideas actually implemented,
while providing much needed assistance in marketing to local not-for-profit agencies. Previous and current clients
include the SPCA, Family Planning Center, WeeCare Day Care Center, YWCA, a rape crisis center, a shelter for
battered women, Rural Opportunities (which helps migrant workers), and the Office of Aging.
Course Outcomes
Each student consulting group completes a written marketing research report for which they collect primary data on
a research question important to their client. Findings are utilized in developing a marketing plan, which is provided
to the service agency. An additional project requirement is production of at least one promotional item for the client,
and providing specific information as to sourcing and costs for this item. A formal business presentation is made by
each group to their client organization.
Client Responsibilities
For this project, potential clients (local not-for-profit agencies) are contacted and asked to participate. The client
provides a one-page write-up with information about what the agency does, for use for preliminary assessment by
the students. A representative of the agency comes to class and does a brief presentation (limited to five minutes),
covering what the agency would want a marketing group to do for them. After selection by a student group,
arrangements are made to have the students visit on-site with the client for eight hours, to allow the students to
gather firsthand information about the agency. It is important that the client agencies be made aware that the service
being provided is not “go-fer” or secretarial help, but a marketing plan that will include marketing research and one
or more promotional items, and that this plan will be developed over the semester. At the end of the semester, the
agency representative is asked to return to class for a formal presentation of marketing research results, the
marketing plan, and the promotional item(s). Agency representatives have a folder of information, including a
description of the program, what they can and cannot expect from the student consulting groups, who to contact in
case of problems, and the semester schedule. Representatives are asked to keep a contact log, documenting the
students’ initial time on-site and other visits or telephone calls.
Student Responsibilities
Before enrolling in the course, students are advised that it is a service learning experience, which will require a
higher commitment of time and effort on their part than the standard marketing course. The syllabus indicates that
course assignments will be tied to client service organizations’ needs, and that the project requires a tolerance for
ambiguity, adjustment, change, and group work.
Students in the marketing class are divided into groups of three or four. They are given written client information
prior to the clients’ visits to class, and the group makes a preliminary choice of their preferred clients. Actual client
choice is done following the clients’ presentations in class, by a lottery system. Groups have previously drawn a
number, and number one gets first choice as to the client they want to work with. At this first meeting with the client
representative, contact information is exchanged, and a schedule to allow each student to be on-site at the client’s
place of business for eight hours is established. The hours do not need to be consecutive, and the students can go
individually at different times to accommodate their schedules. I build two free class periods into the syllabus as
“compensation time” to allow the groups to go together for their first visit.
Student groups choose one of their members as the contact person. Groups are urged to have all communications
with the client go through this contact person, who maintains a contact log.
16 Chapter 12 ♦ Services and Nonprofit Organization Marketing
Record Keeping
On their initial visit, clients are given a folder with project information. Clients and the student consulting groups
keep logs (blank forms are provided), to ensure that a reasonable level of interaction is maintained. Clients are
contacted by mail about mid-semester with a “just keeping in touch” letter. Clients are reminded about the
presentation date and time by letter about three weeks prior to the presentation. After the presentation, both clients
and students are asked to complete a service learning assessment form.
Time Line
Week 1: explanation of project (expect a few students to drop when they hear the details)
Week 2: selection of student consulting groups; handouts of client information; clients’ presentations in class
Week 3: two free class periods for group on-site visits
Week 4: determine client’s marketing research question
Week 5: develop questionnaire; obtain client approval
Week 6: collect data (50 completed questionnaires)
Week 7: code and enter data into statistical program
Week 8: analyze data; prepare marketing research report
Week 9: marking research report due
Week 10: begin work on marketing plan based on marketing research; discuss promotional item(s) with client
Weeks 11–13: develop marketing plan and promotional items
Week 14: prepare presentation
Week 15: present marketing plan and promotional item(s) to client
Summary
We are fortunate in having a service learning center on campus, which helps with setting up the clients initially. We
also have college transportation available if needed, but it has not been necessary to use it. The emphasis on
practical application of some marketing topics does mean that some areas/chapters you would normally cover during
a semester are slighted. I would be happy to discuss this project’s positive and negative aspects with anyone who
would like to call me. I can also provide a sample syllabus, handouts, and forms so you don’t have to reinvent the
wheel.
Overall, my experiences with service learning projects have been positive. Service learning projects do require more
work on the professor’s part, but have resulted in very positive experiences and teaching evaluations. The students
have almost uniformly felt that the extra work is well worth it. Client agencies have been pleased with the results of
the projects, and 99 percent have indicated that they would like to have another group work with them. If you have
small classes and some support, I recommend this project highly.
Chapter 12 ♦ Services and Nonprofit Organization Marketing 17
Allan C. Reddy, Valdosta State University
A LIVE PROJECT FOR SERVICES MARKETING COURSE
Teaching the Services Marketing course can be an interesting and rewarding experience with a live class project
included along with the typical lecture, test, and term paper format. A project that involves student participation
invariably creates more enthusiasm about the course among the students. Also, it cultivates a group spirit or
camaraderie in them.
As part of the learning process, students in my Services Marketing course evaluate two similar service
establishments in the area. For convenience, we choose any two identical restaurants in the area—for example, Red
Lobster and Ruby Tuesday or Applebee’s. The students will first establish the goals for the project and then choose
variables they wish to measure and the measuring instrument they want to use. Once this is done, each student is
equipped with two copies of the measuring instrument—one for each restaurant.
Typically, the project goals center on measuring service quality, price, speed of service, and so forth. Often, the
measurement instrument is the Semantic Differential method with ten bipolar adjectives reflecting potency
(ambience), competency (service quality), and evaluative (food quality) dimensions. The students visit these
restaurants in two- or three-member groups and eat there to evaluate the restaurants on ten determined semantic
differential scales. They will include items such as food quality, variety, price, service quality, atmosphere,
furniture, location, layout, speed of service, and cleanliness, to be ranked on a seven-point scale (1 being good and 7
being bad).
These values are totaled in class followed by a good class discussion on what is wrong with each of the restaurants
and how they can possibly improve the quality of their service mix while recognizing the fact that giving a perfect
service is not practical and is expensive to do so.
As stated earlier, this mini-project is both entertaining and educative, and it helps to cultivate a group spirit in the
class (of 20 or more students). The students eat out together (the student pays for his or her food) to evaluate two
identical restaurants (preferably chains). Also, it helps students to have a hands-on experience in setting objectives
for the measurement, developing scales of measurement, applying a method of measurement, and analyzing and
interpreting the data generated by this method. Thus, the major aim of the project is to educate students on setting up
measurement objectives and using a measurement instrument to compare two identical service establishments. This
measurement procedure is transferable to other applications, such as evaluating any two similar types of businesses
(dry cleaning, auto service, hospitals, and so on).
18 Chapter 12 ♦ Services and Nonprofit Organization Marketing
Jacqueline K. Eastman, Valdosta State University
NONPROFIT MARKETING PLAN PROJECT
Marketing professors like to give their students the opportunity to do “real world” projects, especially in a capstone
undergraduate marketing course or an MBA marketing strategy course. Working with for-profit businesses,
however, can be problematic for a variety of reasons: 1) students are not given enough information by the firm to
address issues thoroughly; 2) students are not taken seriously by the firm or not given enough of the manager’s time;
3) competitors, who may even donate to the university, may get upset with other businesses getting free advice; and
4) students may feel they are doing the grunt work for a potential paid consulting project for their professor.
One way to give the students the needed experience in creating a marketing plan while avoiding the above problems
is to work with nonprofit organizations. One’s local United Way Director may be an excellent resource for steering
Marketing professors to those nonprofit organizations who are willing to work with students and have more of a
marketing orientation. The purpose of this marketing plan project is to allow the students the opportunity to apply
what they have learned regarding marketing strategy, management, and planning. This project allows students the
chance to provide a real service to the community while practicing their marketing skills.
If possible, one should find a couple of organizations to give students a choice of who they would like to work with
and through the presentations made at the end of the quarter, to expose the entire class to different marketing issues.
I have used a local domestic violence shelter and a local chapter of Second Harvest Food Bank for this project. I had
their directors come make a short presentation to my class about their organizations early in the quarter. At the end
of the quarter, the directors return for the students’ oral presentations of the marketing plan and they receive a copy
of the final plan, as do I.
Finally, the Marketing Plan the students create needs to address the following areas:
I. Executive Summary (synopsis and major aspects of the marketing plan)
II. Situation Analysis (examine the environment)
SWOT Analysis
A. Internal strengths and weaknesses (recognized by customers—both those who use the service and donors
and critical internal concerns)
B. External opportunities and threats (external threats to marketing activities and opportunity analysis)
III. Desired Outcomes/Marketing Objectives (Goals and Objectives)
IV. Marketing Strategies
A. Target market selection (either a specific target market of donors or users of the nonprofit’s services)
B. Marketing mix (product, price, promotion, place)
V. Action Plans (Tactics)
VI. Implementation, Controls, and Evaluation
A. Measures of performance
B. Monitoring and evaluating performance
VII. Financial Projections and Budget
A. Delineation of costs
B. Estimates of sales (donations) and revenues
Part 3 ♦ Product Decisions 19
Part 3 – Integrated Case Assignments
MARKETING MISCUES
McAfee Virus Protection Update Crashes Computers Worldwide
Headquartered in Santa Clara, California, McAfee was founded in the late 1980s and is now one of the world’s
largest dedicated security providers. McAfee’s customers range from individual home users to large corporations to
governments around the world. The company segments its markets into home, small business, mid-sized business,
and enterprise. Annual revenue has grown to around $2 billion. The business market is about 60 percent of the
company’s revenue, with the remainder from the consumer marketplace. Geographically, approximately 60 percent
of revenue is derived from the North American marketplace. McAfee’s online subscription site,
http://home.mcafee.com, provides online software delivery to over two million paid subscribers, making the site one
of the largest paid subscription sites on the Internet.
The Botched Update
While the online software delivery has been a hallmark of McAfee’s product design and delivery, it was almost the
downfall of the company in early 2010. At that time, a faulty anti-virus update file caused havoc for McAfee
customers as computers worldwide were shut down by the update file. Essentially, the anti-virus update
misclassified a fundamental Windows XP system file as a malicious program. As such, McAfee’s anti-virus
program was instructed to detect and delete the threat. Unfortunately, since this was an essential Windows XP
program, computers were rendered useless as many experienced the dreaded “blue screen of death.”
The extent of the impact upon McAfee’s customer base was never clearly disclosed. Media reports and Twitter
postings suggested that the affected users numbered in the thousands, while the company suggested that the affected
group was less than half of a percent of the company’s customers. While the actual number of affected home and
business customers might never be known, there were notable shutdowns that were brought to the public’s attention.
For example, it was reported that a third of the hospitals in Rhode Island had to suspend treatment to non-trauma
emergency room patients and state police patrol car computers in Kentucky were shut down. One large U.S.
multinational company reported that 50,000 personal computers could only be repaired manually by a technician
sitting at each computer.
The Aftermath
Although the faulty update product was removed from all McAfee download servers within hours after it was
discovered, it took almost 36 hours for McAfee to render an apology to its customers. McAfee’s executive vice
president of technical support posted an apology on McAfee’s blog site. McAfee customers were not necessarily
appeased by the apology, as they felt that it took too long for the company to render its apology and that it
downplayed the number of affected customers. Importantly, however, the aftermath of the faulty product focused on
the poor levels of quality assurance at McAfee.
According to some reports, McAfee followed shoddy quality assurance procedures that enabled the release of
the faulty product. Critically, the faulty product had not been tested on the version of Windows XP for which the
product ultimately crashed. With Windows XP in use by a large number of computer users, many questioned why
this configuration was left out of the testing processing. Apparently McAfee had recently changed its quality
assurance process. In doing so, it allowed the faulty file to get past the test environment and onto the computers of
its customers.
While the company did offer to reimburse home and home office customers for expenses incurred to fix the
computer problem and/or to extend antivirus subscriptions for two years free of charge, customers were not easily
appeased. The reputation of software security providers such as McAfee hinge on their ability to prevent problems,
not cause them. Thus, the lack of confidence in McAfee was exemplified by home customers who disparaged the
company’s quality control with blog comments such as, “If this release of McAfee’s passed their quality control, it
seems to me they have no quality control” and “What a spectacular failure of QC.” One software consultant noted
that 75 percent of the company’s clients had been switched away from McAfee prior to the disaster. The company
was thankful it had done that since their technicians were in a chaotic frenzy running all over town, billing their
clients for a software glitch in a product that the consulting company had recommended to the client to start with. To
sum up the concerns, one customer noted that as a security protection product offering, McAfee should not be on the
list of risky software downloads!
20 Part 3 ♦ Product Decisions
Sources: McAffee Web site, www.mcafee.com; Barry McPherson, “McAfee Response to Current False Positive
Issue,” April 21, 2010, http://blogs.mcafee .com/enterprise/support/mcafee-response-on-current-false-positive-issue;
Larry Barrett, “McAfee Moves on Following Massive Miscue,” eSecurity Planet, April 27, 2010,
www.esecurityplanet.com/news/article.php/3878861 /McAfee–Moves-On–Following-Massive-Miscue.htm; Antone
Gonsalves, “McAfee Bug Forces Massive PC Cleanup,” InformationWeek, April 22, 2010,
www.informationweek.com/news/software/app_optimization/showArticle .jhtml?articleID=224600157; “McAfee to
Compensate Home User for Bad Update,” Technology News, April 26, 2010, www.the-technology-news.com
/2010/04/mcafee-to-compensate-home-users-for-bad-update; Larry Seltzer, “Lessons of the McAfee False Positive
Fiasco,” PCMag, April 23, 2010, www .pcmag.com/article2/0,2817,2363018,00.asp; Lance Whitney, “McAfee
Apologizes for Antivirus Update Disaster,” CNet, April 23, 2010, http://news.cnet .com/8301-1009_3-20003247–
83.html.
Open-ended questions
1. What is the role of quality assurance in McAfee’s product development process?
Quality assurance should be an integral component of McAfee’s product development process since a faulty product
2. Describe McAfee’s customer service recovery process.
• Faulty product removed from McAfee’s download servers within hours of its discovery
Close-ended questions
TRUE/FALSE
1. For home users, McAfee’s antivirus program would be called a specialty product.
2. McAfee’s problem was exacerbated because it was a global brand.
3. Antivirus software is a membership service.
4. Although relatively few customers experienced the blue screen of death that afflicts a stricken Windows computer,
the real harm done was to McAfee’s brand equity.
Part 3 ♦ Product Decisions 21
MULTIPLE CHOICE
1. Perhaps more than any other product or service, antivirus software is subject to the following—almost on a daily
basis.
a.
quality assurance
b.
planned obsolescence
c.
product modification
d.
functional modification
e.
perishability
2. McAfee has antivirus products designed for its consumer and enterprise segments. However, the corrupted data and
quality assurance problem affected all market segments. Which of the following seems a likely reason?
a.
standardized components
b.
research & development
c.
Windows XP
d.
package uniformity
e.
mass customization
3. The McAfee antivirus program illustrates what aspect of the classic definition of a product?
a.
A product need not be delivered in a package.
b.
A product includes both its favorable and unfavorable characteristics.
c.
A product is an item in a product line.
d.
A product consists of the equity it produces.
e.
A product is anything that satisfies an individual’s personal wants.
4. The remedies that McAfee took to placate subscribers impacted by its failure in quality control were intended to
__________.
a.
reposition its virus program as reliable
b.
improve an existing product
c.
investing in brand loyalty
d.
ultimately protect its brand equity
e.
address each gap in the gap model
22 Part 3 ♦ Product Decisions
5. The 36-hour delay in responding to the defective security upload on the part of McAfee’s executive vice president is
__________.
a.
the gap between the service that customers receive and the service they want
b.
doing “whatever it takes” to stay in business
c.
an external communication gap
d.
the inability of management and employees to do what needs to be done
e.
all of the above
6. What kind of protection best describes McAfee’s response to those customers inconvenienced by its software
update?
a.
express warranty
b.
implied warranty
c.
free repairs of computers
d.
subscription extensions
e.
limited warranty
CRITICAL THINKING CASE
Prestige Brands, Inc.: Transforming the Business
Prestige Brands markets, sells, and distributes over-the-counter healthcare and household cleaning products to retail
outlets in the United States, Canada, and certain international markets. In September of 2010, the company’s over–
the-counter (OTC) healthcare products included:
• Chloraseptic® Sore Throat Relief
• Clear Eyes®
• Cloverine®
• Compound W®
• Compoz®
• Dermoplast®
• Ezo®
• Freezone®
• Kerodex®
• Little Remedies®
• Momentum®
Part 3 ♦ Product Decisions 23
• Mosco®
• Murine® Earigate®
• Murine® Ears
• Murine® Homeopathic
• Murine® Tears
• New-Skin® Liquid Bandage
• New-Skin® Scar Fade
• Outgro®
• Oxipor®
• Percogesic®
• The Doctor’s® Brush Picks®
• The Doctor’s® Night Guard™
• Wartner®
Household brands included:
• Chore Boy®
• Cinch®
• Comet®
• Comet® Spray Gel Mildew Stain Remover
• Spic and Span®
Shareholder Value Creation Strategy
Shareholder value creation at Prestige Brands follows a three–pronged strategic approach: driving core organic
growth, a merger-and-acquisition effort focusing exclusively on OTC, and strategic portfolio management. To drive
organic growth, the company focuses on five key areas: brand positioning, compelling creative concepts, increasing
advertising and marketing support, listening to and responding to retail customers, and connecting with consumers
as they are end users of the brands. The second prong of the strategy to create shareholder value involves an
exclusive OTC merger-and-acquisition focus. The company has three major acquisition criteria. One, the focus is
exclusively on the OTC healthcare market. The OTC healthcare market is a growth market with favorable
demographic trends and attractive margins. Two, the company seeks to acquire brands that are broadly recognized
by consumers, possess scale strength to make them particularly relevant to retailers, and are additive to the core
categories within the company. Three, the company looks closely at the financial characteristics of all potential
acquisitions: accretive to growth and earnings, a prudent capital structure, and economics driven by the brand’s
ability to enhance potential shareholder value. The third prong of the corporate strategy is to effectively manage the
portfolio of products and brands over time. Specifically, this prong involves periodically reassessing which brands
are the best long term from a portfolio standpoint and then adjusting the portfolio accordingly.
A Transformational Acquisition: Blacksmith Brands
With core organic growth and strategic portfolio management in mind, Prestige Brands acquired Blacksmith Brands
in the fall of 2010. Blacksmith Brands owned five leading consumer OTC brands:
• Efferdent® Denture Cleanser
• Effergrip® Denture Adhesive
• Luden’s® Throat Drops
• NasalCrom® Nasal Allergy Spray
• PediaCare® Children’s OTC Medicines
This was considered a transformational acquisition for the company, as it was a meaningful step in its long-term
strategy of an increasing presence in the OTC healthcare arena and in building a brand portfolio that would enable
organic growth. The addition of the well-known Blacksmith brands would strengthen Prestige’s platform in its core
cough/cold and oral care categories. In particular, Prestige was strengthening its position in key categories with the
additions of Efferdent®, PediaCare®, and Luden’s®. These three scale brands competed in attractive categories that
Prestige Brands knew well, and they offered a clear path for shareholder value creation through increased brand
support and line extensions. The acquired brands were well aligned across Prestige’s key OTC categories:
OTC Category
Brands
Cough/Cold
Chloraseptic®, Luden’s®, Pediacare®, Little Remedies®, Nasalcrom®
Oral Care
Efferdent®, Effergrip®, The Doctor’s® Night Guard™, Ezo®
24 Part 3 ♦ Product Decisions
Eye & Ear Care
Clear Eyes®, Murine®
Skin & Foot Care
Compound W®, Wartner®, New-Skin®, Dermoplast®
Other
Percogesic®, Compoz®
Increased support of the core OTC healthcare franchise after the acquisition of Blacksmith Brands focused on
innovative advertising and promotional campaigns and new product launches. The commitment to equity-building
brand support of the acquired brands was reflected in a national television campaign and digital marketing for
PediaCare®; a radio campaign, digital marketing, sampling, and free-standing inserts (FSIs) for Luden’s®; and
bonus packs and FSIs for Efferdent® and Effergrip®.
A Major Milestone
Prestige Brands’ net revenue for the first nine months of fiscal 2011 grew 8 percent to $240.1 million. As a result of
the increased advertising and support behind the core OTC healthcare franchise, the core OTC portfolio significantly
outperformed their respective categories for the period. Overall, during the latest quarter, Prestige Brands (with the
Blacksmith acquisition) experienced a 26.5 percent gain in consumption of its core OTC sales versus flat category
consumption of these categories in aggregate. According to Matthew Mannelly, CEO, “The acquisition of
Blacksmith Brands represents a transformative and exciting opportunity for us. Our strategy seems to be working, as
evidenced by our growth in revenues and data demonstrating our brands’ growth at a rate significantly faster than
the overall category growth. And, the Company is strengthened by having a stronger brand portfolio to offer our
retail customers.”
Source: “About us,” Prestige Brands Web site, www.PrestigeBrands.com (Accessed April 20, 2011).
Open-ended questions
1. What role can acquisitions play in building a product portfolio?
At Prestige Brands, acquisitions played a critical role in the development of the company’s product portfolio. For
2. Outline the product line depth, product mix width, and individual product items at Prestige Brands.
Students should be directed to go to www .prestigebrands.com to learn more about each of the company’s product
offerings. The product mix is comprised of five major product categories: oral care, eye & ear care, skin care,
cough/cold/allergy/ sinus, and house & home.
Oral Care is five deep:
• The Doctor’s® Brush Picks®
Eye & Ear Care is five deep:
Skin Care is ten deep:
Part 3 ♦ Product Decisions 25
• Cloverine®
• Compound W®
• Dermoplast®
• Freezone®
• Kerodex®
• Mosco®
• New-Skin® Liquid Bandage
• Outgro®
• Oxipor®
• Wartner®
Cough/Cold/Allergy/Sinus is five deep:
• Chloraseptic® Sore Throat Relief
House & Home is five deep:
• Chore Boy®
Close-ended questions
TRUE/FALSE
1. Looking at its list of OTC healthcare products, Prestige Brands, did not improve its positioning in eye care products.
2. The acquisition of Blacksmith left Prestige’s depth in household brands unchanged.
3. Given some redundancy in its product mix, Prestige is not immune from cannibalization.
4. One benefit that Prestige probably does not enjoy is an extreme economy of scale in its advertising.
26 Part 3 ♦ Product Decisions
MULTIPLE CHOICE
1. Efferdent, PediaCare, and the other products Prestige picked up from its Blacksmith acquisition should be more
correctly seen as __________ rather than __________.
a.
product mixes/brands
b.
product lines/product items
c.
product item/product lines
d.
product items/brands
e.
product mixes/product lines
2. One aspect of expanding a portfolio through acquisition is a new product mix. Compoz and Momentum brands have
a product depth of 1. What term best describes them?
a.
unsought products
b.
noncore brands
c.
convenience products
d.
product lines
e.
all of the above
3. The acquisition of Blacksmith is called a “transformational acquisition” for what reason?
a.
It made Prestige an even larger niche marketer of minor brands.
b.
It addressed stockholder concerns about a lack of focus.
c.
It eliminated a competitor.
d.
It provided more product line depth to a core business.
e.
It evened out a sales pattern that had been dependent on the cough, cold, and flu season.
4. The third prong of Prestige’s corporate strategy involves periodically reassessing which brands are the best for the
company in the long term from a portfolio standpoint and then adjusting the portfolio accordingly. Peter Drucker
gave this a name. What is it?
a.
product demixing
b.
product line attrition
c.
organized abandonment
d.
periodic audit
e.
organized delisting
5. Which of the following expenses does Prestige most likely not eliminate by its reliance on acquisition over new
product development?
a.
R&D
b.
testmarketing
c.
commercialization
d.
business analysis
e.
none of the above
6. Venerable brands such as Luden’s (cough drops originally formulated over a century ago) and Efferdent (virtually
synonymous with denture adhesive since the days of early television) give Prestige what important attribute?
a.
brand equity
b.
a major position in both segments
c.
two brand marks
d.
household words
e.
manufacturing brands to go with its private brands