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Chapter 12: Services and Nonprofit Organization Marketing
21
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 the production of at least one promotional item for the client, and the provision of
specific information about 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, which is used 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 so that the students can
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 the following information: course assignments will be tied to
client service organizations’ needs, and 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
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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.
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
Time Line
Week 1: Explain the project (expect a few students to drop when they hear the details).
Week 2: Select student consulting groups. Hand out client information. Show clients’
presentations in class.
Week 3: Have two free class periods for group on-site visits.
Week 4: Determine the client’s marketing research question.
Week 5: Develop questionnaire, and obtain client approval.
Week 6: Collect data (50 completed questionnaires).
Week 7: Code and enter data into statistical program.
Week 8: Analyze data, and prepare marketing research report.
Week 9: The marking research report is due.
Week 10: Begin work on a marketing plan based on marketing research, and discuss
promotional item(s) with the client.
Weeks 11–13: Develop a marketing plan and promotional items.
Week 14: Prepare a presentation.
Week 15: Present a marketing plan and promotional item(s) to the client.
Summary
We are fortunate in having a service learning center on campus, which helps with setting up the
Chapter 12: Services and Nonprofit Organization Marketing
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clients initially. We also have college transportation available if needed, but it has not been
necessary to use it. The emphasis on the 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 they 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.
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
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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).
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.
• Students are not given enough information by the firm to address issues thoroughly.
• Students are not taken seriously by the firm or not given enough of the manager’s time
• Competitors, who may even donate to the university, may get upset with other businesses
getting free advice.
• 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.
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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—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.
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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
Chapter 12: Services and Nonprofit Organization Marketing
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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 and 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!
Sources: McAfee website, www.mcafee.com; Barry McPherson, “McAfee Response to Current
False Positive Issue,” April 21, 2010; 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,
http://www.informationweek.com/mcafee-bug-forces-massive-pc-cleanup/d/d-id/1088513?;
“McAfee to Compensate Home Users for Bad Update,” CNet, April 26, 2010,
https://www.cnet.com/news/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 release can virtually shut someone’s computer down. It is
Chapter 12: Services and Nonprofit Organization Marketing
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ANS: T
PTS: 1 OBJ: 10-4 TOP: AACSB Reflective Thinking
KEY: CB&E Model Product MSC: BLOOMS Level I Knowledge
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
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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.
invest in brand loyalty
d.
ultimately protect its brand equity
e.
address each gap in the gap model
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.
to do “whatever it takes” to stay in business
c.
an external communication gap
Chapter 12: Services and Nonprofit Organization Marketing
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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®
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• Ezo®
• Freezone®
• Kerodex®
Household brands included:
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:
Chapter 12: Services and Nonprofit Organization Marketing
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Three, the company looks closely at the financial characteristics of all potential acquisitions: the
accretion of 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 in the 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
OTC Category
Brands
Cough/Cold
Chloraseptic®, Luden’s®, Pediacare®, Little Remedies®, Nasalcrom®
Oral Care
Efferdent®, Effergrip®, The Doctor’s® Night Guard™, Ezo®
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
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for Efferdent® and Effergrip®.
A Major Milestone
Prestige Brands’ net revenue for the first nine months of fiscal 2011 grew by 8 percent to $240.1
million. As a result of the increased advertising and support behind the core OTC health-care
franchise, the core OTC portfolio significantly outperformed their respective categories for the
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 example, the acquisition of Blacksmith Brands was considered a
transformational acquisition for the company, as it was a meaningful step in its long-term
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
Chapter 12: Services and Nonprofit Organization Marketing
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categories: oral care, eye and ear care, skin care, cough/cold/allergy/sinus, and house and
home.
Oral Care is five deep:
• The Doctor’s® Brush Picks®
Eye & Ear Care is five deep:
• Clear Eyes®
Skin Care is ten deep:
• Cloverine®
• Compound W®
• Dermoplast®
Cough/Cold/Allergy/Sinus is five deep:
• Chloraseptic® Sore Throat Relief
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The company also has two brands that do not fit easily into any of the major product
categories:
• Compoz®
• Momentum®
Naturally, the pace at which company management is acquiring brands means that this
categorization is changing quickly. For example, soon after this case was written, Prestige
Brands acquired Dramamine®, which fits nicely with the Compoz® product offering—
suggesting that the company has plans for that product category.
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.
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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
Chapter 12: Services and Nonprofit Organization Marketing
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b.
Test marketing
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
