Case: Real Choices at Frito-Lay

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Services and Other Intangibles: Marketing the Product That Isn’t There

Real People Profiles

A Decision Maker at the Philadelphia 76ers Lara Price is senior vice president of busi- ness operations for the Philadelphia 76ers professional basketball team. When Lara was elevated to vice president of market- ing in August 1998, she became one of only 18 female vice presidents in the NBA (National Basketball Association). After being named the team’s senior vice president in August 2001, Price was pro- moted to her current position in June 2003

and continues to oversee the day-to-day activities of the 76ers business operation. She is responsible for the team’s sales and marketing along with the communica- tions department, which includes public relations, community relations, and new me- dia, as well as game entertainment. She also oversees the Sixers’ television and radio broadcasts.

The recipient of several awards for excellence in advertising and public rela- tions, Price joined the 76ers in 1996 as director of marketing after serving as man- ager of team services for the NBA. She also served as director of team services for the Continental Basketball Association. A native of Boulder, Colorado, Price is a graduate of Colorado State University, where she was also a member of the women’s basketball team.

Lara’s Info

What do I do when I’m not working? A) Running or walking my Rottweiler, Deuce.

First job out of school? A) Continental Basketball Association.

Career high? A) Going to the NBA Finals in 2001 and helping to organize the NBA All-Star Weekend Celebration that honored the 50 greatest players. Having the opportunity to stand with all of them and organize them before they went out on the court.

A job-related mistake I wish I hadn’t made? A) Letting a vendor talk me into using more fireworks than we should have used for opening night. The haze/smoke didn’t lift for at least 5 minutes. This delayed the game and the team was fined.

Business book I’m reading now? A) Competing on Analytics by Thomas H. Davenport and Jeanne G. Harris.

My hero? A) My parents.

My motto to live by? A) Never quit and the Golden Rule.

What drives me? A) Passion.

My management style? A) Hands on!

My pet peeve? A) People who blame others and don’t try to resolve the issue or problem at hand. Figure out why it happened, correct it, and move on.

Profile Info

Lara L. Price

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Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall. Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.

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To better serve its fans (customers), the 76ers needed to compile more detailed information

about its customer base. The team’s management had access to several data sources; these included some surveys, notes from customer service represen- tatives that recorded highlights of conversations with fans, and a ticketing sys- tem (which showed past purchases)—but this system only recorded a ticket

buyer’s name, address, length of being a sea- son ticket holder, and any miscellaneous notes that customer service representatives added to the account. Lara knew that she needed a better system to compile buying habit infor- mation to predict what Sixers fans wanted, as opposed to the poorly organized “spray and pray” strategy the team was currently using.

Sports have been a little bit slower than other industries to jump on board with CRM techniques (customer relationship manage- ment; see Chapter 7). Many professional teams don’t have the resources or type of in-

ternal culture that encourages a lot of rigorous analysis of what fans want and do, but Lara recognized the value of systematically tracking this information to fine-tune her marketing strategies. Still, she acknowledged that you can’t run before you can walk: The company (not just the 76ers but the team’s parent company, Comcast Spectacor, which owns the Flyers, 76ers, Phantoms, the Wachovia Center/Spectrum, and Comcast SportsNet) needed to find a work- able CRM solution. This solution had to grow with Comcast’s business needs; it wouldn’t work to put an overly sophisticated system in place that was too complicated to use and would be rejected before it had a chance to show why it was superior to the way the team tracked customers’ buying habits now.

Lara considered her Options 1 • 2 • 3 Phase in a CRM database approach. This would allow Lara to obtain a full view of her customers and segment her base ac- cording to relevant drivers, such as purchasing behaviors, Web site viewing habits (even which specific pages customers were going to on the site), which e-mails people are opening, who re- sponds to direct mail/letters, text messages, and so on. This sys-

tem is more efficient in the long run because it tracks behaviors (purchasing) and requires minimal human input. However, to adopt such a system would require buy-in from the company at all levels (including senior management), and it wasn’t clear that her colleagues would be receptive to this more ana- lytical approach to monitoring fans’ behavior as opposed to a more tradi- tional “hands-on” perspective. And, depending upon the CRM system the company adopted, this could be a pricey option, ranging from six figures to more than $2 million.

See what option Lara chose and its success on page 291

Send out several surveys to season ticket holders each year. These would request feedback about many topics includ- ing game operations, payment options, broadcast preferences, and the general direction of the team. Although this is a proven (and relatively inexpensive) method to get feedback from cus- tomers, mail surveys might not capture rapid changes in prefer-

ences. In addition, it’s risky to base business decisions on customers’ opinions rather than taking into account their actual behaviors.

Analyze the lifetime value of customers by projecting how their spending habits over time will provide revenue to the organization. This technique would allow Lara to iden- tify her most profitable customers to be sure she was allocating her marketing dollars toward satisfying their needs. The Sixers’ full season ticket holders are the lifeblood of the team’s busi-

ness, but other segments such as partial plan holders, individual game pur- chasers, and broadcast viewers are very important as well. This approach would let Lara’s staff identify which types of customers provide the largest revenue to the company over time and tailor its promotions accordingly. A lifetime value analysis is useful because it’s based on actual behavior rather than on what fans say they will do in the future. On the other hand, these behaviors don’t tell the whole story: It’s still important to know about cus- tomers’ demographics and psychographics (see Chapter 5) to enable the team to market one-to-one. For example, a lifetime value analysis doesn’t in- dicate if a customer wants her Sixers information delivered via the Web, phone, or mail.

Now, put yourself in Lara’s shoes: Which option would you choose, and why?

You Choose

Which Option would you choose, and why?

1. YES NO 2. YES NO 3. YES NO

Real People, Real Choices

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Option

Option

Option

Here’s my problem. . .

Things to remember

The Philadelphia 76ers didn’t have a rigorous system in place to measure their fans’ experiences. The team needed to do a better job of tracking the specific aspects of its service that either attracted or turned off potential ticket buyers.

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Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall. Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.

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Marketing What Isn’t There What do a Lady Gaga concert, a college education, a Cubs baseball game, and a visit to Walt Disney World have in common? Easy answer—each is a product that combines experiences with physical goods to create an event that the buyer consumes. You can’t have a concert without musical instruments (or bizarre masks, in Lady Gaga’s case), a college education without textbooks (Thursday night parties don’t count), a Cubbies game

without a hot dog, or a Disney experience without the mouse ears. But these tangibles are secondary to the primary product, which is some act that, in these cases, produces enjoyment, knowledge, or excitement.

In this chapter we’ll consider some of the challenges and opportunities that face marketers whose primary offerings are intangibles: services and other experience-based products that we can’t touch. The marketer whose job is to build and sell a better football, automobile, or smartphone—all tangibles— deals with issues that are somewhat different from the job of the marketer who wants to sell tickets to a basketball game, limousine service to the airport, or al- legiance to a hot new rock band. In the first part of this chapter, we’ll discuss services, a type of intangible that also happens to be the fastest-growing sector in our economy. As we’ll see, all services are intangible, but not all intangibles are services. Then we’ll look at a few other types of intangibles as well.

What Is a Service? Services are acts, efforts, or performances exchanged from producer to user without ownership rights. Like other intangibles, a service satisfies needs when it provides pleasure, information, or convenience. In 2010, service in- dustry jobs accounted for over 75 percent of all employment in the United States and over two-thirds of the gross domestic product (GDP).1 If you pur- sue a marketing career, it’s highly likely that you will work somewhere in the services sector of the economy. Got your interest?

Of course, the service industry includes many consumer-oriented ser- vices, ranging from dry cleaning to body piercing. But it also encompasses a vast number of services directed toward organizations. Some of the more com- mon business services include vehicle leasing, information technology services, insurance, security, Internet transaction services (Amazon.com, Google, on- line banking, etc.), legal advice, food services, consulting, cleaning, and main- tenance. In addition, businesses also purchase some of the same services as consumers, such as electricity, telephone service, and gas (although as we saw in Chapter 6 these purchases tend to be in much higher quantities).

The market for business services has grown rapidly because it is often more cost effective for organizations to hire outside firms that specialize in these services than to hire a workforce and handle the tasks themselves.

Characteristics of Services Services come in many forms, from those done to you, such as a massage or a teeth cleaning, to those done to something you own, such as having your com- puter tuned up by the Geek Squad or getting a new paint job on your classic 1965 Mustang. Regardless of whether they affect our bodies or our posses-

Chapter 10

274 PART THREE | CREATE THE VALUE PROPOSITION

Objective Outline 1. Describe the characteristics of

services and the ways marketers classify services.

MARKETING WHAT ISN’T THERE (p. 274)

2. Appreciate the importance of service quality to marketers.

HOW WE PROVIDE QUALITY SERVICE (p. 281)

3. Explain the marketing of people, places, and ideas.

MARKETING PEOPLE, PLACES, AND IDEAS (p. 286)